The Small Business & Entrepreneurial Council’s new study is telling about the potential future for job growth. Entitled, The Benefits of Natural Gas Production and Exports for U.S. Small Businesses, this study makes clear that natural gas has led to the expansion of small business in the US and to the creation of 146,000 jobs between 2005 and 2010 as total US jobs fell by 4.3 million over the same period. As we approach more forums by the Senate Energy and Natural Resources Committee relative to liquid natural gas (LNG) exports, it is worth noting the jobs-related potential that can come from allowing new permits for LNG export.
The Council’s report not only identified the specifics of job growth, it attributed some of the job growth to small businesses. While total employers fell over the five-year period between 2005 and 2010 by 4.2% in the US, small businesses with less than 500 employees in sectors like oil and gas extraction grew by 3%. In some other related sectors, growth percentages were higher in the face of a declining overall US economy.
The forums by the Senate Energy and Natural Resources Committee could make a difference in the potential for future job growth. The US continues to have an enormous potential for the production of natural gas. This huge reserve has meant that the US has very favorable prices for natural gas when compared with the rest of the world. The Council’s study reports recent prices for natural gas in the US of $3 per million metric British thermal units of energy, compared with a price of $11 – 13 in Europe and $18 in Southeast Asia. The price differential explains the potential for exports from the US to the rest of the world – and the potential for additional job growth from large and small US businesses.
Some business representatives, especially in the chemical industry, have argued against permitting additional LNG exports. Their argument for industry protection is associated with their own interest in protection and in producing chemicals at relatively lower prices with cheap US natural gas. This kind of argument for isolating an industry or a country from world markets is one we have seen for centuries. Isolationism and industry protection have not generally proved good for a country’s economy. Some historians have catalogued the decline of the Spanish economy centuries ago to its decision to isolate domestic markets. More recent examples of attempts at isolation are evident in agriculture from both the US and the European Union.
Generally speaking, the economy is a global one, and attempts at isolation are suboptimal. Isolation tends to raise prices for a country’s citizens and limit economic growth. The consequences are slower growth or decline in new businesses and limitations on growth or declines in new jobs. As the US economy remains fragile in its recovery from the recent recession, this is no time for the US Government to take actions, which will be harmful to US job growth. And the argument is easily made that this is especially no time to stifle the potential in an industry like natural gas that has been nearly singular in its job growth in the face of overall decline in most other US industry sectors.