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3 Myths on Our Natural Gas Boom

April 04, 2014

By Mark P. Mills

The reality is that the new energy explosion helps us all.

For all the coverage America's energy boom has gotten, there are still a lot of common assumptions about the oil and natural gas business that are flat out wrong.

We know the good news: Oil and gas production is rising so fast that U.S. dependence on imports will soon disappear. Growth in natural gas has made America the world's largest producer and could soon make us a huge exporter. In the past half-dozen years, America's hydrocarbon juggernaut has boosted our economy by hundreds of billions of dollars.

To keep the boom going, the federal government needs to keep out of the way, even as pressure grows to tighten energy-industry regulation. That's why is is important to unbundle three myths about the boom:

The profits are all going to Big Oil. Wrong. There are more than 20,000 small and midsize oil and gas firms in America, with a median size of 15 employees. They produce 75% of America's oil and gas and are responsible for nearly 100% of the boom.

Energy is an old, dirty business, not the future. Wrong, again. We're in a tech boom. What changed the game is the emergence of information-centric "smart" drilling, which relies on sensors, computers and control systems that, when combined with steerable horizontal drilling, fracking and a skilled work force, created the boom.

Oil jobs are in just a few boom towns. New jobs reach far beyond hard-hat work in a few obvious states such as Texas and North Dakota. For every job in the oil field, we find three or four created in everything from information services to education. In every one of the 10 states with increased hydrocarbon production, statewide employment growth has outperformed the nation for six years. Fact is, hydrocarbon-supported jobs are in many places you might not expect. California ranks second, behind Texas. Florida, New York, Illinois and Ohio are among the top oil and gas employers.

Investors and businesses around the world understand the opportunity. In 2012, the latest figures available, foreign firms invested $166 billion here.

The two fastest growing categories, petroleum refining and extraction, and hydrocarbon-based manufacturing, grew more than 40% annually between 2008 and 2012. The American Chemistry Council has mapped out over $100 billion in investments in manufacturing plants scheduled to come on line in a few years. These plants will generate more than 600,000 jobs immune to outsourcing.

If we want to keep our hydrocarbon boom going, there are two things the federal government could do. First, abandon the antiquated laws that restrict natural gas exports. More customers for U.S. gas mean more investment and more jobs. Second, resist the temptation to layer job-killing federal regulations on top of state efforts. States are doing the job just fine.

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