Who would have dreamed a decade ago that oil and natural gas would become the impetus for American energy security and a revitalized manufacturing sector? Who would have imagined that OPEC members would be meeting to discuss the U.S. shale revolution and its impact on their economies Yet, without question, the worldwide energy picture has changed dramatically in recent years. The United States, once resolved to dependency on – and some would say subservient to – foreign governments to meet our energy needs, is on a path to becoming an energy super power. Continued investments in new technologies and processes like hydraulic fracturing, advanced imaging and horizontal drilling are unlocking new energy sources, creating jobs and the prospect of revitalizing the American economy in the process.
Supplies of oil, natural gas and natural gas liquids (NGL) from shale development are leading to record-breaking volumes of fuel and raw material that carry enormous opportunities for the nation. In just 2009 alone and amidst a crippling recession, the oil and natural gas industries added an estimated $1.1 trillion to the U.S. economy, the equivalent of eight percent of GDP. And for every job created through oil and natural gas production, three additional indirect jobs are also generated, a welcome relief for many hard hit communities still grappling with the aftermath of the worse financial crisis since the Great Depression.
The benefits from fossil fuels extend far beyond the added revenue, increased jobs and affordable energy for consumers and businesses. NGLs are used to produce petrochemicals, which in turn, are used to produce consumer goods and plastic products. It is this abundant supply of NGLs that has generated $80 to $100 billion in planned petrochemical manufacturing investments in the coming years and the genesis of a manufacturing renaissance. Just recently, the Houston-Sugarland-Baytown area in Texas was recognized as the leader in industrial expansion, and with 26 petrochemical plants in the area, is it any wonder?
Cheaper petrochemical feedstock is causing companies, many of which have previously out-sourced production, to take a second look at the United States as an industrial base. One survey, in fact, found that over a third of companies with more than a billion in annual sales had plans to move facilities back to the United States, a number that climbed to 48 percent of companies with more than $10 billion in sales. Greater availability of our natural resources will have a measurable impact on the nation’s balance of trade.
While the United States boasts the world’s largest economy, it is true that we have continued to run a trade deficit since the 1980s, in part, due to the import of petroleum and petroleum products. But for the first time in six decades, the United States has become a net exporter of refined petroleum products.. Now, much of the world is looking to us to supply liquidfied natural gas and petroleum products as energy consumption across the globe is expected to increase by over 50 percent between now and 2035, according to the Energy Information Agency. Quite the turnaround.
As manufacturing jobs continue to trend upward, with close to a half-million new jobs in this sector added since 2010, all indicators point to increasing domestic growth. According to PricewaterhouseCoopers, one million additional manufacturing jobs are within reach as new factories are built. That the country is once again in control of its destiny – energy, economic, and national security – is indisputable.
Yet U.S. tax and regulatory policies, if not applied fairly and impartially while also accounting for global competition, have the potential to dismantle any recent gains. The oil and natural gas industries must contend daily with a countless regulations, an inordinate number of which are illogical, counter-productive and in some cases contradictory. Excessive and punitive new regulations and unnecessary tightening of existing standards for oil and natural gas production and refinery and petrochemical operations will raise costs for American consumers, with little or no environmental benefit. In addition, these regulations would have the unintended and unfortunate consequence of strengthening the competitive position of foreign refineries and petrochemical manufacturers, which would lead to domestic job losses and a weakened U.S. economy. America could again find itself more reliant on nations in unstable parts of the world for vital fuels and petrochemicals, resurrecting traditional national security concerns.
It is my hope that that the Administration will not impede America’s rightful entitlement to energy independence, economic prosperity and national security, but only time will tell.