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More evidence of the “Marcellus Multiplier” effect

Right on the heels of recent misplaced criticism about how the oil and natural gas industry counts the jobs it helps support comes a report from NPR detailing the multiplier effect of the shale gas industry in Ohio and Pennsylvania.

The story highlights the resurgence of the steel industry due to rising shale gas production – an example I mentioned in my blog post earlier this week. But it also delves into the jobs created because of greater investment in steel production.

A new sandwich shop, filled hotels and increased contractor activity are just a few examples of the multiplier effect of greater shale gas production.

Consider what’s happening at Chapman Corp., a contractor for U.S. Steel: “The $6 million investment that we’re putting into our new fabrication facility shows our confidence that the Marcellus Shale play is here to stay,” Chapman’s vice president for sales and marketing told NPR.

To me, this illustrates one of the most fundamental – and often overlooked – aspects of the entire jobs debate: Larger corporations and industries often help create the demand that enables smaller businesses to get off the ground, expand and eventually hire more employees.

A reporter with Slate recently talked about demand as a determining factor in small business growth in a recent article analyzing the Administration’s small-business loan program: “But if small businesses don’t really believe that those customers are going to come in, well, they tend not to want to take on any debt. At some point, the problem isn’t a lack of credit. It’s an economy-wide lack of demand.”

Another recent report from NPR quoted a CEO who came to a similar conclusion: “Just going out and creating jobs, you can’t do it without demand,” the executive told NPR. “Demand drives the job market.”

When we’re allowed to operate, the oil and natural gas industry creates enormous demand for raw materials, supplies, contract work and countless other services that are a mainstay for other businesses and industries around the country.

But as our chairman and CEO, Rex Tillerson, said at last week’s Washington Ideas Forum, this ripple effect doesn’t happen automatically; it happens “by allowing our industry to do the things we’ve done for decades in this country – and that means we have to go out and have access to acreage to drill wells, develop the capacity, put in facilities, and build the infrastructure so energy is available to the economy.”

  • Worth a deeper look...