As global demand for energy increases, competition over oil and gas exports has intensified. This is how The Wall Street Journal portrays the situation in a recently published piece, “U.S. and Canada Vie for Big Gas Projects.” The article specifically notes competition from our northern neighbors on Liquefied Natural Gas and the race to build export terminals in North America for transport to Asia.
The Wall Street Journal article says that, “Producers largely have divided up into two camps: One is betting on Canada’s industry-friendly federal government and its closer proximity to Asia. The other group is hoping already-developed infrastructure in the U.S. will outweigh political uncertainty in Washington over large-scale exports of the cheap fuel.” This hits the nail on the head. Indecision and red tape in Washington has badly damaged the American brand.
In the U.S., political mudslinging and demagoguery of the oil and gas sector has made it nearly impossible for American companies to reach their full potential and green light new energy projects. The Keystone XL pipeline is a prime example of Washington’s dithering energy agenda. The Keystone XL pipeline’s approval process has lasted nearly five years despite the fact that the project could create nearly 85,000 jobs by 2020, and it has overwhelming public support. Polling from Pew Research shows that two-thirds of Americans (66%) support the Keystone XL pipeline.
For now Canada continues to wait, however they have made their intentions well known. At some point the country will ship its oil sands resources west for export if the Keystone XL pipeline is not approved. Meanwhile the U.S. economy is stagnant, and our jobs numbers are shameful. Around 12 million Americans are unemployed, and another 8 million more are underemployed and looking for full-time work.
Policymakers must view energy trade and infrastructure projects as an economic opportunity rather than a political opportunity. A recent report, “Game changers:?Five opportunities for US growth and renewal,” published by McKinsey Global Institute, identifies energy trade as one area that can propel the U.S. economy.
According to the McKinsey report, “If the United States fully realizes the opportunity, shale energy could revitalize the oil and gas industry, have downstream benefits for energy-intensive manufacturing, and send ripple effects across the economy. We estimate that it could add 2 to 4 percent ($380 billion to $690 billion) to annual GDP and create up to 1.7 million permanent jobs by 2020.”
This level of economic production hinges however on President Obama, Congress and the U.S. Department of Energy. They must act quickly on oil and gas projects that will have a tangible impact on employment, tax revenue and GDP. Lengthy administrative delays currently faced by energy infrastructure projects is only yielding new competition in the global marketplace. Washington can take proactive steps while continuing to ensure all projects meet the necessary safety and environmental requirements.
The U.S. oil and gas industry currently supports around 9.8 million jobs, yet with expanded shale development, energy infrastructure and LNG exports millions more jobs can be realized. America can no longer rest on its historic reputation as an energy leader and innovator. Emerging markets demanding energy will not wait patiently for the resources they need to grow their economies. With unprecedented global competition, trade deficits and a multitude of domestic economic challenges, American policymakers have no choice but to act. The more Washington delays, the more disadvantages we create for ourselves in the face of growing global competition.
Michael Economides is Editor-in-Chief of the Energy Tribune