One of the favorite terms that anti-drilling politicians and environmentalists like to use when attacking domestic energy production is “big oil” – the idea that the energy industry is just a bunch of huge, monolithic, faceless entities. But a new study shows just how wrong they are.
Last week, a report from Sonecon, an economics and security consulting firm based in Washington, shows that “big oil” is actually “middle-class American oil.” According to the research, in 2014 individual investors who are not company executives or directors own 65.5 percent of publicly traded oil and natural gas companies. Most of this – 46.8 percent – is held in pension plans and retirement accounts.
The study concludes that the ownership of companies “is very broad-based, including large holdings in the retirement plans of ordinary investors”; that middle-class households “dominate” ownership of these companies; and that “by owning oil and gas company stock, these middle-class households benefit from the industry’s strong returns.”
Forgive me for a second, but I’m going to climb back up on my soapbox about political hypocrisy.
President Obama and members of his administration have for years been railing against the oil and gas industry. They’ve criticized “subsidies” that aren’t subsidies. They’ve gone after industry tax breaks while omitting the fact that those breaks are available to other manufacturers. They’ve assailed federal tax policies that, in fact, are more beneficial to small, independent companies than to “big oil.”
And at they same time, they have taken credit for a surge in production that has created jobs, generates tax revenues, reduced our dependence on foreign oil, and pulled a sluggish U.S. economy back from the brink.
Now, to paraphrase Ronald Regan, there they go again.
The White House has positioned itself as a big defender of the middle class. Yet on energy, its rhetoric – and, I suspect, the regulations that will come after next month’s elections – is aimed at an industry that to a large degree is owned by the middle class. So when the administration tries to turn public opinion against oil and gas companies, it’s the middle-class that could pay the price – literally.
Richard L. Burleson
Last week, I had the honor of serving as keynote speaker for a meeting of the International Association of Drilling Contractors. It was a great opportunity to spend some time with folks who have had a big rule in America’s surge in domestic energy production.
The topic was hydraulic fracturing; more specifically, the risks involved in fracking. But I took a bit of a different approach. My remarks focused on looking at the so-called “risks” that drilling opponents keep talking about – but then offering some facts and figures (a lot of them, actually) to point out just how overblown and unfounded those criticisms are.
The bottom line was this:
Despite all the rhetoric and fear-mongering coming from the environmental movement over fracking, the industry has the facts, data, and truth on its side. We’ve done a good job – a great job, actually – of reducing methane emissions, for example, and have shown steady progress recycling wastewater. It’s just a matter of telling our story better.
You can read a full text of my prepared remarks (from which, like most speakers, I deviated on occasion) by clicking here. And if you have any information that I may have missed, I’d love to hear from you.
The good news about the oil and gas industry’s economic impact on Texas rolled in again last week, but this time it came with something of a caveat.
A report by the Texas Independent Producers and Royalty Owners Association, or TIPRO, found that the Lone Star State employed 411,600 oil and gas workers in 2013 That was up 23,100 from the year before, an increase that amounted to three-fourths of all new jobs in the sector nationally. The state now employs 40 percent of U.S. oil and gas workers, the most in the country.
Those jobs come with a hefty annual salary, too – $118,900. That’s about 1.3 percent higher than what the average private sector employee makes and is $15,000 more than the average for the industry’s workers in general.
Beyond that, Texas oil and gas companies paid $13.6 billion in oil and gas taxes and state royalties – a record high and an increase of $1.2 billion from 2012.
That’s the good news. Here’s the caveat: What the Houston Chronicle called the Texas “juggernaut” faces threats from two quarters, TIPRO said.
The first comes from unnecessary regulations from the Environmental Protection Agency, which is currently considering rules that could impact hydraulic fracturing and, potentially, cripple the growth in domestic energy production. The second is from environmentalists, who are committed to pushing the government further to the left nationally, while in the state they’re waging a fight in Denton to ban fracking.
I can't speak to the Denton vote, other than to repeat that a ban would be a massive mistake that would cost the city and its taxpayers millions. I’ve said before that it’s a bad move, it’s an illegal move, and it’s a purely political response to a policy issue that, if saner heads prevailed among the activists, could probably be managed reasonably.
But as to new regs from EPA, there is a simple solution: Stay out of our energy business and leave rule-making to the Texas Railroad Commission.
The idea of federal rules on fracking, for example, completely ignores the fact that the commission knows the state better than the feds do. It knows our issues and concerns better than the feds do. It knows our geology better than the feds do. It knows our people better than the feds do.
In other words, our regulators know what’s better for Texas than Washington does. And, as TIPRO pointed out, overregulation – a specialty of the federal government and, unfortunately, one of the few things it does well – is only going to hurt a state economy that is the envy of the nation and world.
This isn’t an argument for less regulation or no regulation. It’s an argument for smart regulation. And if recent history has taught us nothing else, it’s that “smart” isn’t a trait easily attached to bureaucrats in Washington.
Critics of drilling tend to be all over the place when it comes to their unfounded attacks on the industry. One day they’re talking about water usage, the next day it’s air issues. Lately, though, their villain of choice has been methane emissions. My guess is they won’t have much to say about a recent report from the Environmental Protection Agency.
In its annual Greenhouse Gas Reporting Program, EPA said:
(Last year) reported methane emissions from petroleum and natural gas systems sector have decreased by 12 percent since 2011, with the largest reductions coming from hydraulically fractured natural gas wells, which have decreased by 73 percentduring that period. EPA expects to see further emission reductions as the agency’s 2012 standards for the oil and gas industry become fully implemented.
The agency’s data also shows that while overall greenhouse gas emissions from all large industrial facilities rose 0.6 percent in 2013, they actually declined 1 percent in the oil and gas sector.
While the EPA conclusions need no embellishment, I want to make three points.
First, the decline in emissions is coming during a period when domestic energy development – driven largely by the shale boom and hydraulic fracturing – has been increasing. In other words, as shale gas production has gone up, methane and other greenhouse gas emissions have gone down.
Second the reduction in methane emissions came despite the fact the number of sources reporting to the government increased by 13 percent. In other words, while the number of emissions sources went up, the amount of emissions went down.
Third, this decline in methane and other emissions is due largely to voluntary efforts by oil and gas companies and the use of sophisticated technologies in both monitoring and drilling. In other words, as companies’ commitment to environmental responsibility has continued to go up, the need for the feds to come in and further regulate the industry – which, inexplicably, is still on the table – continues to go down.
This is a good news story that, of course, is being largely ignored by the media and has pretty much generated nothing but silence from the activist community. That probably says a lot about a lot of things, most of which are better left unsaid. But what I will say is this:
The industry will just have to be content to let its actions speak louder than words, and that’s okay. Because when you look at EPA’s data, it says unmistakably that oil and gas companies are committed to doing what’s right for the environment.
No one can deny that the domestic energy boom has had a profound affect on state, local, and the U.S. economies. And in the past couple of weeks, we’ve seen some data about its continuing role in job creation and job support – in and out of the industry – that really drives the point home.
To start with, a report prepared for the Energy Equipment & Infrastructure Alliance concluded that companies supplying goods and service to shale oil and gas producers will create over 233,000 new jobs in the next decade on top of the 524,000 jobs that already exist in the energy supply chain. That’s a 44 percent growth in the workforce.
Interestingly, the jobs are not located solely in the shale regions, but are spread all over the country. They pay well, too, averaging $79,000 per year – well above the average of $68,000 for all U.S. workers.
This follows a couple of reports out of Texas that further underscore the staggering job growth that’s being fueled by surging domestic development.
Last week, the University of Texas at San Antonio released a study showing that oil and gas production in the Eagle Ford Shale supported nearly 155,000 fulltime jobs in 2013. The number is expected to grow by almost 30 percent, to 196,000 jobs, by 2023.
And the Texas Petro Index – which compiles data primarily in the upstream sector – reported that at the end of July, 302,700 workers were employed in the exploration and production and energy services segments. That’s the first time the total exceeded 300,000 since the index began tracking jobs in 1995.
Finally, there was a study from the American Petroleum Institute earlier in the month that found small and mid-sized businesses are a big contributor to the energy revolution. It lists a diverse range of nearly 30,000 businesses that support the industry, including real estate companies, uniform providers, equipment suppliers, warehousers, and the like.
These don’t represent Big Oil. On the contrary, they are smaller, often locally owned businesses that are creating jobs in their communities and driving economic growth across the energy supply chain nationwide.
I’ve said it before, but in the context of all these reports, it bears repeating:
In a overall job climate that one analyst has said is stuck “slightly ahead of neutral,” the energy industry is in overdrive. Were it not for oil and gas jobs, my guess is that the economy wouldn’t be idling in neutral. It would probably be in reverse.
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