It’s About Jobs: Powering Economic Growth
It seems that people are starting to notice the benefits of the energy boom in North America, as a result of increased domestic crude oil and natural gas production. Everyday people are seeing it in their wallets, and the U.S. economy is experiencing gains all over the place.
The oil and gas pipeline industry may be facing increased regulations and public scrutiny over infrastructure projects than a decade ago, but the fact is people need energy.
“The economics of energy are too compelling [for pipelines] not to get built to take that product to market,” Jack Bolton of Volvo Construction Equipment told me (see the full story on page 20), regarding Canadian oil sands. The same can be said about the increased natural gas reserves in North America.
According to a study released earlier this month by the business analysis firm IHS, unconventional oil and gas activity — e.g., from shale — has increased the disposable income by an average of $1,200 per U.S. household in 2012.
The study, “America’s New Energy Future: The Unconventional Oil and Gas Revolution and the Economy — Volume 3: A Manufacturing Renaissance,” also shows this activity is boosting trade and contributing to a new increase in U.S. competitiveness in the world economy. Previous IHS studies found that this sector of the energy value chain supports more than 1.7 million jobs and will grow to nearly 3 million by the end of the decade.
In response to this study, Erica Bowman, vice president of research and policy analysis at America’s Natural Gas Alliance, said, “This study documents the dramatic economic and employment growth occurring in our nation thanks to America’s shale revolution. From lifting the disposable income of virtually every American household to helping renew our manufacturing sector to creating jobs throughout our nation, the United States’ vast shale resources are not only transforming our energy choices, but our economy as a whole.”
As energy consumption continues to grow, these economic benefits will follow suit. And grow is exactly what consumption is expected to do, according to the International Energy Outlook 2013 just released by the U.S. Energy Information Administration (EIA).
Over the next three decades, world energy consumption is projected to increase by 56 percent, the report predicts.
Heck, even the White House has taken note of the trend. In a blog posted Aug. 29, authors Jason Furman, chairman of the Council of Economic Advisors, and Gene Sperling, director of the National Economic Council, credited oil production for the recent upturn in the economy, citing the revised estimate by Bureau of Economic Analysis of second quarter GDP from 1.7 percent to 2.5 percent.
“This stronger estimate of growth was a result of an upward revision in net exports, with the trade data showing that a key part of the revision is because the trade deficit in petroleum fell to a record low in June,” Furman and Sperling wrote.
The authors also reported that net petroleum imports in 2012 fell by one-third since 2008 to the lowest level in 20 years — and they’re continuing to fall this year. The effects of increased domestic energy production are resulting in more jobs, faster economic growth and lower trade deficit. They reported that nearly 35,000 jobs have been created in the last four years as a result of oil and gas extraction alone.
“We will shortly be at the point where domestic crude oil production exceeds imports on a sustained basis for the first time since the early 1990s,” Furman and Sperling said.
Continued job creation and economic growth should only serve to improve the public perception of the oil and gas pipeline industry. It’s high time more people take notice of the benefits this industry provides.