America’s Petroleum Renaissance
Oil has been the foundation of the expansion and modernization of America’s economy for more than a century. While the United States in recent history largely looked to foreign nations to satisfy its demand for oil, new cutting-edge technologies now enable America to capitalize on abundant domestic petroleum resources to increasingly meet its own current and future energy needs.
The results are striking. Since 2008, America’s crude oil production has surged by 70 percent, rising from an average of 5 million barrels per day in 2008 to 8.6 million barrels per day in August 2014. At its current production rate, the United States is anticipated to surpass both Saudi Arabia and Russia, historically two top energy producers, to become the world’s largest producer of oil this year.
Not surprisingly, America’s new era in oil production has reverberated throughout the economy. The oil and natural gas industry contributed $1.2 trillion to U.S. Gross Domestic Product (GDP) in 2011, and at a time when other industries have been slow to add jobs in the wake of the recent recession, the oil industry supports 9.8 million jobs across the nation, up 600,000 from just two years earlier.
Looking to tomorrow, petroleum will continue to be fundamental to America’s economic growth and prosperity. Oil represents the lifeblood of the U.S. economy, providing for more than one-third of our current energy needs, and this is not expected to change significantly over the next quarter century. With smart policies that encourage the safe production, transport and refining of North America’s abundant oil supplies, the United States can continue to be a global economic and energy leader well into the future.
A Foundation for America’s Economic Recovery
The oil industry has been a steady source of growth and job creation in a still-struggling economy, and families and local communities are reaping the benefits. The industry supports 8 percent of the U.S. economy. The refining industry alone, which plays a critical role in powering America’s economic engine by producing fuels and petrochemicals, supports $289 billion in U.S. GDP and another 529,000 jobs. At the height of the recession when the economy was losing jobs, direct employment in extraction grew by more than 300,000 jobs between 2009 and 2011, according to two reports from consulting firm PwC US.
Jobs in the industry span a number of specialized fields, and workers earn higher-than-average wages — in fact, nearly double the national average wage across all industries. Career opportunities will continue to grow with the industry, particularly among women and minorities. Of the nearly 1.3 million new job opportunities expected to be created by 2030, 408,000 of them are projected to be held by African-American and Hispanic workers, and women are expected to fill 185,000 of them.
As the industry expands, its strong commitment to safe operations remains unwavering. The API Standards Program has developed more than 600 industry standards, and more than 100 of them have been cited in existing federal regulations. These standards, along with the creation of the Center for Offshore Safety and development of the API Process Safety Site Assessment Program to conduct safety systems assessments at refineries, help the industry continue its strong safety record.
An Essential Source of Energy Tomorrow
The rise in U.S. oil production has provided needed economic stimulus and been a valuable source of job creation, but petroleum’s importance to the economy is much more profound. As America engages in important discussions about future energy use, oil’s strong connection to our economic prosperity cannot be overstated.
Simply put, sustaining even modest economic growth in the years to come will require significantly more energy production. U.S. energy demand through 2040 is expected to increase by 12 percent, according to the U.S. Energy Information Administration. Oil will play a fundamental role in meeting our future energy demand and fueling America’s economic growth and prosperity in decades to come.
For consumers, U.S. refineries will continue to produce cleaner gasoline and diesel fuel for use in cars and trucks. As fuel requirements for vehicles have changed to make them more efficient and produce up to 99 percent fewer emissions, the refining industry has successfully met the need for these cleaner-burning fuels. In fact, meeting new vehicle emission requirements are largely possible through fuel advancements achieved at refineries.
Just as important is oil’s substantial contribution to specific industry sectors that factor significantly into U.S. economic growth. The transportation sector, which accounts for nearly 28 percent of energy demand today, relies on oil to meet 92 percent of its energy needs. The industrial sector uses oil for 40 percent of its primary energy requirements. In 25 years, this is projected to change very little. The transportation sector will still rely on oil for 87 percent of its energy needs in 2040, and the industrial sector will need oil for 39 percent of its primary energy requirements.
Oil is an essential energy resource that plays a crucial role in the economy today, and it will be equally indispensable to our economic future. No other transportation fuel provides more energy by volume than gasoline and diesel or is more easily stored as an energy source in cars and trucks. Like all of America’s energy sources, it must be encouraged if the economy is to thrive.
Ensuring the Availability of Petroleum
Oil can continue to be an affordable, abundant and readily available energy source for consumers and businesses, and help fuel the economy well into the future, but public policies must keep pace with our energy revolution.
A strong domestic refining industry is essential to America’s energy and economic security. Cleaner-burning gasoline and diesel, as well as biofuels, jet fuel and heating oil, fuel our homes and businesses and enable the movement of goods and people that is essential to a growing economy. Thanks to more efficient operations, U.S. refiners have increased capacity by roughly 16 percent over the past two decades and today are refining near record amounts of crude oil. America became a net exporter of petroleum products in 2011, demonstrating the economic advantages of a robust domestic refining base that has access to overseas markets while meeting U.S. demand.
We must also support vital infrastructure projects, such as the Keystone XL pipeline. This much-needed addition to America’s energy infrastructure would have the capacity to transport up to 830,000 barrels of oil a day. Adding to the already operational southern leg, Keystone would bring both Canadian and U.S. oil to refineries for processing. Additionally, about 10 percent of the pipeline’s capacity could also be used to bring oil produced in remote areas of North Dakota and Montana to market. Approving Keystone will enable the U.S. to make significant strides toward meeting all of its liquid fuel needs from North American oil by 2024, and create and enhance efficiencies between the production and refining sectors.
Also, federal lands and offshore resources must be opened for development. Developing oil and natural gas resources that have been kept off-limits by Congress could result in more than $1.85 trillion in government revenue over the life of the resource. Recent studies by Quest Offshore estimated that opening up offshore regions in the Atlantic, Pacific and the eastern Gulf of Mexico for development could result in 839,000 new jobs and generate $38 billion per year for state and federal governments by 2035.
Finally, with the United States on the verge of becoming the world’s largest oil producer, eliminating trade restrictions dating back to the 1970s that prohibit crude oil exports would strengthen America’s position as an energy resource to the world and its economic outlook. A recent study concluded that allowing crude oil exports could save consumers as much as $5.8 billion a year in lower fuel costs and add up to 300,000 jobs. In fact, the 2014 U.S. trade deficit through August, all else equal, was nearly 18 percent lower due to petroleum product exports, according to data from the U.S. Census Bureau.
Oil is vital to sustaining our economy now and in the decades to come. By making sound decisions today, America can continue to reap the benefits of this vast domestic resource and ensure a prosperous future.
Content developed with: The American Petroleum Institute