Small Firms Dominate "Big Oil"

Bashing so-called "Big Oil" still ranks as a favorite among some politicians, along with various green and anti-free-enterprise movements.

But what exactly is "Big Oil" anyway?

Does it include the thousands of employees that work at large energy firms? Does it include the many individual investors that own American oil companies? As API has reported, ownership of U.S. oil company shares breaks down as 14% IRAs, 23% individual investors, 27% pension funds, 29.5% mutual funds, 5% other institutional investors and 1.5% corporate management.

But there's more here being ignored. That is, the many small and mid-size firms that work in the energy industry.

Consider the following examples (based on the latest 2008 data from the U.S. Census Bureau):

• Oil and gas extraction: 91% of firms have fewer than 20 employees, and 98.6% have less than 500 workers.

• Supporting activities for oil and gas wells: 78.7% of firms have fewer than 20 employees, and 98% have less than 500 workers.

• Oil and gas pipeline and related structures construction: 60.3% of firms have fewer than 20 employees, and 94.7% have less than 500 workers.

• Petroleum refineries: 60.2% of firms have fewer than 20 employees, and 81.6% have less than 500 workers.

• Petroleum and petroleum products merchant wholesalers: 73.6% of firms have fewer than 20 employees, and 96.2% have less than 500 workers.

• Gasoline stations: 91.8% of firms have fewer than 20 employees, and 99.6% have less than 500 workers.

So, from drilling to final sale, it's hard to truly say that the oil and gas industry is all about big business. To the contrary, the industry actually covers firms of all sizes, with most being small firms. And they all started out as entrepreneurial ventures.

It's not so much "Big Oil," as it is "Entrepreneurial Energy."
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Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council. His new book is “Chuck” vs. the Business World: Business Tips on TV.