WASHINGTON, April 13, 2016 – The general public typically views the oil and gas industry as a bunch of big companies “charging too much for a gallon of gasoline,” said House Agriculture Chairman Mike Conaway as he opened a committee hearing on the impacts of oil and gas production on the rural economy.

But the committee heard a different story today from a panel of witnesses who described the ways rural America benefits from fossil fuel production.

Conaway, citing a projected decline in net farm decline of 56 percent from 2013 and the hardships that come with that, noted that a 2011 study by PricewaterhouseCoopers found that the oil and gas sector directly employed 9.8 million people.

“A significant number of these jobs were in the rural areas of Wyoming, Texas, North Dakota, Oklahoma, Louisiana, and Pennsylvania – employing as many as 20 percent of a state’s population,” said Conaway. “Unfortunately, what some fail to realize is that oil and gas production creates thousands of upstream and downstream jobs, and many, if not most, of these jobs are in rural areas.”

Conaway emphasized that energy, and the price of energy, has an “obvious direct impact” on fertilizer, diesel fuel and other inputs used by farmers and ranchers. But the energy sector also provides income and revenue for rural residents and their communities in the form of royalty payments and tax revenues.

Did you know Agri-Pulse subscribers get our Daily Harvest email and Daybreak audio Monday through Friday mornings, a 16-page newsletter on Wednesdays, and access to premium content on our ag and rural policy website? Sign up for your four-week free trial Agri-Pulse subscription.

Today’s three witnesses were:

Angie Sims, testifying on behalf of the Association of Energy Service Companies. Sims, the CEO of Buster’s Well Service Inc. from Kermit, Texas, cited the construction of a local hospital partially funded by property taxes based on oil production, and the creation of training programs at local colleges for industry jobs, including blue collar jobs paying $25,000 to $150,00 a year. Business has declined due to the fall of oil prices, Sims said, but she expects prices, and production, to start ramping up soon. She says that Texas is used to boom-and-bust cycles, and that there are more hotels and restaurants being built, and more jobs, even with a decrease in tax revenues. “Kermit won’t become a ghost town again,” she said. She also cited the steps industry has taken to improve safety and the environment, including placing nets over open tanks to protect birds, working to contain flaring, and coordinating with OSHA on rig safety. 

Jackie Root, president of the Pennsylvania chapter of the National Association of Royalty Owners. Root stressed the importance of royalties paid to private citizens for extraction rights. Income from these payments not only bolsters local economies but allows farmers to stay on their land, plan for the future, educate their children.

Martin T. Causer, chairman of the Agriculture and Rural Affairs Committee in the Pennsylvania House of Representatives. Causer, who was born and raised on a dairy farm, cited ancillary businesses that benefit from the oil and gas industry, including hotels, restaurants and pipe suppliers. He compared rural Pennsylvania, where residents are being paid for drilling rights on their properties, to New York State where there is a moratorium on fracking, and called New York’s policy “very shortsighted.”  He said farmers there are struggling and some rural areas are becoming virtual “wastelands.” Causer said that pipeline development is very important. “You can drill a well, but it needs to go somewhere,” he said. He feels that stringent regulations hamper the industry and that state agencies push regulations too far. He said regulators must not “stand in the way” and instead should let private industry move forward, providing benefits to rural America.

The jobs created by the oil and gas industry, Conaway said, “give rural America the ability to retain young people with new opportunities, attract new residents, and increase the standard of living for all people of the community. Just like the farm economy, oil and gas is on the downturn and as a committee it is essential we recognize the hard times our rural economy is facing and explore all policy options available to mitigate the economic damage to rural America.”