Although entry and exit into the ranks of the majors are infrequent, the rest of the U.S. oil and gas industry has experienced considerable comings and goings of companies. The Arthur Andersen and Company database was reviewed and the independentss were in production in 1985 and 1993), nonsurvivors (companies that were not in production in 1993), and entrants (companies that were in production in 1993 but not in 1985). For the independents overall, total assets declined by about a third between the end of 1985 and the end of 1993 (Figure 8). All of this decline was attributable to exiting companies. Excluding these nonsurvivors, total assets of the independents grew by about a third. Entrant companies accounted for most of the growth. Independents that survived the period as intact corporate entities and are still producing oil and gas showed a modest decline in total assets during the 1980's but have clearly registered some growth in assets in the 1990's.

The U.S. oil and gas industry exhibited considerable dynamism following the oil price collapse. In order to better understand the current and future development of the industry, it is worth inquiring as to what factors contributed to the patterns of growth, decline, and exit following the oil price collapse.

The sources of growth and decline in U.S. oil and gas production are rooted in companies' ability to add efficiently to their reserves. This report turns next to a review of resource development costs. The analysis is directed to the relationships between resource development costs and changes in industry structure and some of the consequences of these relationships for future development of the U.S. oil and gas industry.