U.S. Energy Production: An Incredible Small Business Story

By SBE Council at 9 August, 2024, 2:30 pm

by Raymond J. Keating -

In 11 of the past 15 years, U.S. presidential administrations have been downright hostile to U.S. energy production, in particular the production of oil and natural gas. You know, the energy that fuels homes, businesses and our economy.

Nevertheless, the story of U.S. energy production over this period has been remarkable - marked by a period of innovation and investment that in turn has made the U.S. the world's top energy producer. It's an amazing testament to the American private-sector can-do spirit.

Earlier this year, the U.S. Energy information Administration (EIA) published an analysis titled "United States produces more crude oil than any country, ever." As highlighted in the following chart, EIA declared, "The United States produced more crude oil than any nation at any time, according to our International Energy Statistics, for the past six years in a row."

The EIA went on to explain: "Crude oil production in the United States began increasing again in 2009, as producers increasingly applied hydraulic fracturing and horizontal drilling techniques, and has increased steadily since."

The U.S. also is the largest producer of natural gas, and the largest exporter of LNG (i.e., liquefied natural gas), again, thanks to such innovations as improved hydraulic fracturing and horizontal drilling.

The two following charts show industrial production indexes for U.S. crude oil and natural gas production.

Source: Federal Reserve Bank of St. Louis, FRED

Source: Federal Reserve Bank of St. Louis, FRED

And much of this story about innovation and production is a small business story. That is, smaller businesses make up the majority of employer firms in each key sector. For example:

OIL AND GAS EXTRACTION SECTOR	Percent of Firms by Number of Employees
Fewer than 10 employees	82.4%
Fewer than 20 employees	89.3%
Fewer than 100 employees	95.7%
Fewer than 500 employees	98.3%

SOURCE: 2021 U.S. Census Bureau data. Calculations by SBE Council.

DRILLING OIL AND GAS WELLS	Percent of Firms by Number of Employees
Fewer than 10 employees	71.3%
Fewer than 20 employees	82.3%
Fewer than 100 employees	94.6%
Fewer than 500 employees	97.2%

SOURCE: 2021 U.S. Census Bureau data. Calculations by SBE Council.

SUPPORT ACTIVITIES FOR OIL AND GAS OPERATIONS	Percent of Firms by Number of Employees
Fewer than 10 employees	71.6%
Fewer than 20 employees	82.8%
Fewer than 100 employees	95.8%
Fewer than 500 employees	98.6%

SOURCE: 2021 U.S. Census Bureau data. Calculations by SBE Council.

OIL AND GAS FIELD MACHINERY AND EQUIPMENT MANUFACTURING	Percent of Firms by Number of Employees
Fewer than 10 employees	42.2%
Fewer than 20 employees	59.0%
Fewer than 100 employees	83.6%
Fewer than 500 employees	92.2%

SOURCE: 2021 U.S. Census Bureau data. Calculations by SBE Council.

If policymakers are truly concerned about our economy and small businesses, turning away from over-regulation, the pursuit of higher taxes, and anti-domestic-energy-producers rhetoric is essential, giving way to sound policies, such as lower taxes, a lighter regulatory touch, and advancing free trade.

Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council. His latest books on the economy are The Weekly Economist: 52 Quick Reads to Help You Think Like an Economist, The Weekly Economist II:52 More Quick Reads to Help You Think Like an Economist and The Weekly Economist III: Another 52 Quick Reads to Help You Think Like an Economist.

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