Posted on 10/16/2014 4:31:04 AM PDT by thackney
The oil and gas drilling boom has been good news for U.S. manufacturing, keeping factories supplied with cheap chemical feedstocks and powered by inexpensive energy.
Now, a new report from The Aspen Institute and the Manufacturers Alliance for Productivity and Innovation says the United States can further drive the domestic manufacturing renaissance — and keep drill bits turning — by allowing energy companies to sell oil overseas.
The paper hinges on the notion that if the United States eases longstanding restrictions on oil exports, it will prompt further crude production inside the country.
“Higher levels of oil production require higher investment expenditures for capital equipment and construction, which in turn boost overall demand for goods,” the paper says. “This stimulates the manufacturing sector and its supply and distribution chains.”
If oil companies boost their own spending on exploration activities as well as the production and transportation of crude, it will drive activity along the supply chain that provides the industry with pipes, pumps, drilling rigs, earth-moving equipment and trucks.
According to the analysis, investment in machinery for exploration and development would climb by $7 billion in 2020. Capital investment for construction and mining machinery would be up by $3.6 billion.
“Purchases from manufacturers will be direct, as when a driller buys pipe or pumps and compressors,” the paper says. “Much indirect activity also will be stimulated, such as the production of coal, ore, and limestone used to produce the steel that makes up the pipe.”
The analysis, built on economic modeling from the University of Maryland’s Inforum predicts widespread oil exports would give a short-term boost to gross domestic product, tapering along with new capital expenditures after 2017. GDP would be about 0.93 percent higher during 2019 to 2021, according to the paper.
“The general improvement in economic growth and employment will provide manufacturers new ‘induced’ demand for products seemingly far from the oilfield supply chain,” the authors say. “For instance, securely employed steel and oil workers earning higher salaries will be better able to afford a long-delayed new vehicle purchase.”
According to the new study, if oil exports were broadly allowed:
real household income would climb by $2,000 to $3,000 in 2025 There would be an average gain of 37,000 manufacturing jobs each year through 2025 Some big industrial consumers of natural gas — led by the Dow Chemical Co. — have been wary of sending too much of that fossil fuel overseas.
The MAPI-Aspen Institute analysis predicts the refining sector would pare its capital investment by almost $1 billion in 2020.
It is China.
China is challenging American manufacturing supremacy. Some could argue, has already replaced America as the premier exporter.
China needs to be paid attention to.
Bring back American industry.
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