Study: Energy jobs buck weak economy
WARREN – Big business aren’t the only companies benefiting from big oil.
A report released last week studying the effects of the oil and gas industry on small business growth between 2005 to 2011 indicates the best is yet to come for Ohio.
The energy sector has bucked the trend, showing significant growth in years of a weak economy, according to the report issued Thursday by the Small Business and Entrepreneurship Council. SBE is a 100,000-member small business advocacy group.
While overall U.S. employment declined by 3.7 percent from 2005 to 2010, jobs grew by 27.6 percent in the oil and gas extraction sector; by 15.1 percent in the drilling oil and gas wells sector; by 38.5 percent in the support sector for oil and gas operations; by 47 percent in the oil and gas pipeline and related structures construction sector; and by 62 percent in the oil and gas field machinery and equipment manufacturing sector, the report shows.
“The energy sector has really been a standout in the last few years, especially in what’s going on in the economy today,” said the study’s author, Raymond J. Keating, chief economist for SBE Council. “It’s not just big oil. The population in these industries are overwhelmingly the small and midsize firms. … We really are a small business country, and that certainly is true for the oil and gas industry as well.”
According to the U.S. Census Bureau data, small business firms with less than 20 workers make up about 90 percent of the 5.8 million employer firms in the U.S. Firms with fewer than 500 workers accounted for 99.7 percent.
SBE president and CEO Karen Kerrigan said these small businesses in the energy industry could range from things like pipeline design, engineering or transportation.
While Keating pointed out that small business has grown significantly in states like North Dakota and Pennsylvania, where shale plays are in full swing, Ohio hasn’t yet gotten out of the gate.
Based on census data through 2011, the year Utica Shale drilling was just beginning in southcentral and southeastern Ohio, the report showed a 7.8 percent decline in the energy sector jobs. Experts in the field pointed out the Ohio industry hasn’t yet hit stride, and the significant growth in Pennsylvania and North Dakota should be good indicators of what is yet to come for the Buckeye state.
“We are at the fifth pitch of the first inning,” said Mike Chadsey, campaign manager of Energy In Depth, an outreach group launched by the Independent Petroleum Association of America.
Rhonda Reda, executive director of Ohio Oil and Gas Energy Education Program, or OOGEEP, also noted that census figures from 2011 would not reflect what has happened as the industry began to take off in areas like Carroll County over the last year and a half.
By comparison, neighboring Pennsylvania reported overall job decline by 2.1 percent, but the number of employers in the oil / gas extraction businesses grew by 81 percent; those drilling oil and gas wells grew by 218 percent and oil and gas support and pipeline contractors grew by more than 120 percent.
“In Pennsylvania, they have 6,000 wells that are producing in the Marcellus Shale Play,” Chadsey said. “They are probably three to five years ahead of us. You will see it slowly ramp up over time.”
Keating expressed excitement at what the report is indicating for small business.
“These really are ‘Wow’ numbers. People know there is an increase in natural gas drilling, but when you look at the job numbers, it really makes people sit up and take notice,” Keating said.