Increased domestic oil and natural gas production is something “to celebrate,” as it helps pare the U.S. trade deficit and beef up the country’s economic output.
That may sound like a conclusion from the oil and gas industry, but the assessment actually comes from two of the Obama administration’s top economic advisers.
In a blog post on the White House website, Jason Furman and Gene Sperling assert that the decline in the petroleum trade deficit to a record low in June played a large role in the Bureau of Economic Analysis’ upward revision of second quarter gross domestic product last week.
“This is yet another reminder that the president’s focus on increasing America’s energy independence is not just a critical national security strategy, it is also part of an economic plan to create jobs, expand growth and cut the trade deficit,” they wrote.
The economists cast reducing America’s dependence on foreign oil as “a strategy to increase economic growth and reduce economic vulnerability.”
They outline how the U.S. can meet an ambitious goal of cutting oil imports in half by 2020, including increased domestic oil production, developing biofuel substitutes for oil and increasing efficiency to reduce oil demand.
And the pair note that “Every barrel of oil or cubic foot of gas that we produce at home instead of importing from abroad means more jobs,” as well as “faster growth” and “a lower trade deficit.”
The petroleum share of the real trade deficit in goods has fallen from more than 40 percent in 2009 to 25 percent since then, Furman and Sperling say.
“Economic news like this is just one more reason for us to celebrate the resurgence of domestic oil and gas production,” they say.
Federal forecast: Global oil price will decline through end of 2013
Kyle Isakower, vice president for policy and economic analysis at the American Petroleum Institute, said the economists’ message in the blog post clashes with some Obama administration policies that are doing more to discourage oil production than encourage it. In particular, Isakower cited proposals to spike tax deductions cherished by the oil industry and the Energy Department’s slow process of vetting proposals to broadly export liquefied natural gas, which would boost demand for the fossil fuel.
“To me, it’s kind of a mixed message,” Isakower said. “You’ve got production that exceeds imports. We’re reducing the trade deficit. These are all great things that the administration wants to do. Those are their words. But in action, these are not necessarily the things we’re seeing.”
“I’d like to see the administration’s policies match the words of two of their highest, most trusted economic advisers,” Isakower added.
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