Despite all the climate-based hysteria put out into the public domain in recent weeks attacking the oil and natural gas industry (even the Weather Channel got into that act recently), three key factors continue to give policymakers pause about acting in ways that would negatively impact the ongoing boom. Those factors are:
- Jobs;
- Ancillary stimulative impacts on other industries; and
- National Security.
The reality for the United States is that the oil and natural gas industry has greatly enhanced the picture around all three of these critical factors in recent years, nowhere more than in my home state of Texas.
Where jobs are concerned, Texas has consistently outperformed the national economy in terms of job creation and rate of unemployment in every month since the advent of the Great Recession and the discovery of the Eagle Ford Shale play, both of which took place in October of 2008. Indeed, during the 24 month period from July 2009 through June of 2011, Texas created 49% of all new jobs created in the United States, and the vast majority of those jobs were either directly or indirectly the result of the state’s oil and natural gas boom, centered in plays like the Eagle Ford in South Texas, the Permian Basin of West Texas, and the Granite Wash play in the Texas Panhandle.
Nationally, the story is almost as good. Investors Business Daily ran a great piece on February 19 detailing much of the story from a national standpoint. Here is a key excerpt:
The oil and gas boom is producing millions of jobs, and not just where you might expect. Employment is up 40% in the oil and gas fields since the recession began in late 2007. But in every one of the 10 states where hydrocarbon production is on the rise, overall employment growth has outperformed the nation.
Direct employment in the oil and gas industry rose 40% from 2007 through 2013, as compared to a decline of about 3% in the overall U.S. economy. All the new oil production that has come online since 2008 has reduced oil imports by about 50%, and lower natural gas prices brought about by the boom in supplies of that commodity. This has in turn attracted a rush to invest in new plant and equipment among industries that use petroleum products as feedstocks – think fertilizers, chemicals, plastics, cosmetics and many more – or service or sell products to the industry.
IBD points out that more than 100 new plants and factories in a variety of such industries are planned to come online by 2017, and “When all are up and running, another $300 billion will be pumped into GDP and 1 million more jobs created.”
One industry that is often overlooked in this discussion is the U.S. shipping industry, which is experiencing a boom of its own as demand increases for the ability to move oil and liquefied natural gas between U.S. ports or overseas. As CNBC pointed out last October, the Jones Act mandates that all goods moved from one U.S. port to another – as much crude oil must be in order to be refined – be carried on vessels that are built and flagged in the United States. U.S. shipbuilders are having a field day attempting to fill this new, growing demand for their products, and according to the U.S. Department of Transportation, are experiencing their largest boom in more than 2 decades.
And the boom cascades on down to the ports that service and supply the ships. About mid-year in 2013, the Port of Houston surpassed the port of New York City to become the nation’s top export market. To no one’s surprise, this was due mainly to the surge in oil and gas related activity at the port.
The Port of Corpus Christi has also seen a similar rapid ramp-up in activity, and now exports almost 400,000 barrels of oil each day overseas and to other U.S. ports. The surge in Corpus Christi has come mainly from light sweet crude produced in the nearby Eagle Ford Shale.
The oil and gas boom has also served to significantly enhance the national security positioning of the United States, reducing the country’s dependence on unstable parts of the world, like the Middle East, and enhancing its ability to conduct effective negotiations with hostile nations such as Iran. Writing in the March/April issue of Foreign Affairs, Robert D. Blackwell and Meghan L. O’Sullivan do a wonderful job of detailing the myriad ways in which the oil and boom enhances U.S. standing in the international community, arriving at this conclusion:
The energy boom will add fuel to the country’s economic revitalization, and the reduction of its dependence on energy imports will give it some measure of greater diplomatic freedom and influence… the huge boom in U.S. oil and gas production, combined with the country’s other enduring sources of military, economic, and cultural strength, should enhance U.S. global leadership in the years to come -- but only if Washington protects the sources of this newfound strength at home and takes advantage of new opportunities to protect its enduring interests abroad.
And that is the challenge faced by policymakers at the state and national level: to avoid – to put it in crude terms – screwing all of this newfound opportunity up with misguided policy decisions.
Hysteria mongers like
Even in Texas, we see these groups becoming increasingly active and getting more attention in the state’s media outlets. Those who feel strongly about the need to avoid bad policy decisions that could prematurely end this ongoing boom should get active and communicate your views to your various government representatives. They need to hear from you, because you can rest assured they are hearing from the very loud – if tiny – minority who would kill this boom each and every day.
God Bless Texas.
