The Next Step in Pa.’s Shale Boom is LNG Exports: Raymond Keating

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By Raymond J. Keating

At this weekend’s annual Pennsylvania Society Holiday Dinner in New York City, I suspect energy policy will be a frequent topic of discussion — as it should rightfully be.

From Benjamin Franklin’s first experiments with electricity in Philadelphia to the energy revolution taking place in the Marcellus Shale natural gas play, the Keystone State has led the way in developing resources to the benefit of all Pennsylvanians and the entire nation.

For about a decade, natural gas production has been a key driver of new jobs and business growth in the state, and the impact on small companies is noteworthy. In our most recent report, the Small Business Entrepreneurship Council found that the natural gas boom brought a disproportionately positive impact on small and medium sized businesses, which make up an overwhelming majority of the nation’s—and Pennsylvania’s—energy sector.

The next logical step is to open new markets by exporting natural gas to energy hungry countries.

Between 2005 and 2012, Pennsylvania experienced an extraordinary 1,239.3 percent increase in natural production, which contributed significantly to the state’s economy.

Employers during this timeframe added 86,566 jobs, with 18,033 of those jobs occurring in five energy sectors. One in five jobs were created by the natural-gas-related industries of extraction, drilling, support services, pipeline and related structured construction and field machinery manufacturing. The rate of employment growth in these sectors over this period ranged from 37 percent to 512 percent, while U.S. total employment actually declined.

The number of business establishments in the state grew as well, while the number of U.S. businesses declined. With Pennsylvania’s key energy sectors leading the way, most of this tremendous growth was concentrated among smaller businesses.

A common misperception is that dividends from natural gas production go straight to so-called “Big Energy.”  However, our report has found the exact opposite to be true.

Consider, for example, that in the support oil and gas operations sector, the number of employer establishments with less than 20 workers grew by 173.3 percent from 2005 and 2012, and among establishments with less than 500 workers by 236.4 percent.

A boon for small business

We also found that each energy sector is overwhelmingly populated by small businesses. For example, in Pennsylvania, employer establishments with less than 20 workers made up 77.7 percent of businesses in the oil and gas extraction sector.

Make no mistake, Pennsylvania has clearly experienced tremendous benefits from the shale gas revolution, and has an unquestionably large stake in ensuring that this success is not only maintained, but multiplied if at all possible.

Naturally, Pennsylvania does not enjoy these energy benefits simply by sitting atop rich natural gas deposits. Private sector investment and innovation are essential. In turn, such endeavors are affected by public policy choices. Because policies in the state have so far supported energy development, Pennsylvanians have enjoyed these increased job rates and business growth.

The next logical step is to open new markets for these resources by exporting natural gas to energy hungry countries, a path still discouraged by a slow-moving federal bureaucracy.

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