We are living in an exciting and pivotal time for our nation and our industry, one that was unimaginable just a few years ago. Technological advancements have led to an increase in shale oil and natural gas production and have put energy independence within reach. As a result, our work as the refining and petrochemical industry could transform the US into a global energy and manufacturing superpower within the next decade if artificial impediments to the nation’s natural resources base are replaced by open access and a free market mentality.
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Now in a second term, President Obama has the chance to write his legacy based on an ‘all of the above’ energy policy, one that acknowledges the role of oil and natural gas in the economic revitalisation of the nation. A first step would be to open more federal land to exploration to take advantage of the large reserves we know exist. If, however, he chooses to pander to ideology, the president will leave future historians to denounce a lost opportunity.
Beyond the ability to become a net exporter of fuel, the refining and petrochemical industry has the means to generate a manufacturing renaissance capable of restoring the US to global manufacturing superiority and with it, economic prosperity to the country. Thanks to the tremendous surge in shale gas production, natural gas costs are down 75% from just a few years ago. The result is lowered operating costs for manufacturing plants dependent on both gas and electricity, since natural gas is a key driver for electricity costs. It has also given them a competitive advantage on the global market, because natural gas liquids, the raw materials used to make petrochemicals, are the beginning of a manufacturing supply chain that produces a large swath of consumer products. A number of companies are reviewing options to build, restart or expand their petrochemical manufacturing facilities in the US, precisely the growth trajectory the country needs.
On the consumer level, there is proven interest in American made products. A national survey commissioned by the Alliance for American Manufacturing and the United Steelworkers, revealed that overwhelming majorities from all political parties support ‘Buy America’ policies. And while Wal-Mart recently announced that over the course of the next decade it will spend an additional US$ 50 billion on goods made in America, it’s a pipedream unless unnecessary and counter productive regulatory roadblocks are removed.
Complicated permitting processes that delay projects and expensive corporate tax rates that deter new plants are but two examples that limit manufacturing. Without significant practical and political course corrections to the current regulatory environment, growth isn’t possible for fuel and petrochemical manufacturers, and ‘made anywhere other than America’ remains status quo.
The infrastructure exists in key regions to promote upstream and midstream build out, linking raw materials and finished goods. If we fix permitting processes and rationalise tax policies, America can be a manufacturing powerhouse once again. That is why AFPM is partnering with leading universities to create a playbook on how to bring manufacturing back to the US. Our recent inaugural event of the Manufacturing Renaissance Series at Carnegie Mellon University focused on the impact shale gas has already had on increased capital investment infrastructure and job creation by both large and small chemical companies. Through 2013, additional roundtables will bring together stakeholders from industry, academia, labour, environment, foundations and non-governmental organisations to identify actions needed for the US to make optimal use of abundant low cost shale gas to develop a manufacturing renaissance roadmap.
As the trade association representing refining and petrochemical manufacturers, AFPM’s job is to ensure that policymakers, media and the public understand the importance of our industry to fulfilling the nation’s energy needs and demand for manufactured goods. The US can be on a pathway to energy independence, economic prosperity and enhanced national security, and AFPM and our allies will continue to expand our message and extend our reach to ensure this opportunity is not squandered.