#565 – Removing Oil Exports BanPosted on
Removing Oil Exports Ban
Energy has always been a key component in manufacturing costs. In fact, lower energy costs are one of the key reasons why manufacturing in the U.S. has seen a bit of a resurgence in the past few years. A recent column in USA Today by Thomas J. Duesterberg, former executive director at the Aspen Institute (www.aspeninstitute.org), looked at how removing a decades long ban on crude oil exports would not only benefit the energy sector, but would also boost manufacturing. Following are excerpts from Duesterberg’s article:
Congress lifted a 1975 ban on crude oil exports that is outdated in light of booming U.S. production. Freeing U.S. producers to market their product (including the natural gas frequently associated with new crude) will contribute to rekindling weak U.S. industrial production and capital investments, as well as to meeting the need for energy security for ourselves and our closest allies.
Up to a third of all energy consumed in the USA is in the industrial sector. Ample supplies and low prices have, for example, led to large new investments in the U.S. chemicals industry, including by German and Asian chemical giants moving production to U.S. locations. Over $100 billion in new investments in this sector in the past 10 years has been announced. The chemicals industry enjoys a large trade surplus. Last year, its companies invested $33 billion in capital equipment and structures and plowed $59 billion into research and development.
As supply-and-demand conditions return to a better balance in the next few years, a study… projected that increased U.S. crude oil exports could increase capital expenditures in the USA by $60 billion per year, raise annual gross domestic product over $140 billion, and create 630,000 jobs in peak years as production ramps up. Most of the gains are in high-paying jobs for skilled workers and engineers.
In a period of chronic U.S. economic underperformance, especially in the highly productive and innovative manufacturing sector, which creates millions of good paying jobs for the often forgotten category of skilled workers, such a boost is badly needed. That the new policy should also bolster relations with our allies and keep the strategically vital energy sector from domination by less than friendly actors are added benefits.