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Lifting energy export ban would be a boon to Ohio
By Raymond J. KEATING
The interests of Main Street Ohio are not always aligned with the interests in our nation’s capital, but there’s reason to celebrate a new development in Washington. Important voices inside the Beltway are newly urging a rethink of our energy export policy.
An open export policy would mean more jobs and economic growth for states such as Ohio that produce things like oil and natural gas.
Just looking at the recent past, we see the positive economic impact the energy sector has had. A report from the Small Business & Entrepreneurship Council titled “The Benefits of Natural Gas Production and Exports for U.S. Small Businesses,” which I authored, highlights the incredible growth between 2005 and 2010 in the number of employer firms and jobs in the energy sector, and particularly among small businesses.
Energy sector increases
Even more striking is the fact that these increases in the energy sector occurred while total U.S. employment experienced a decline.
As the total number of employers was declining during those years, the number of oil and gas-related employers was actually growing — among businesses devoted to all manner of supporting oil and gas development, including extraction, wells, operations, pipelines, construction, field machinery, and equipment manufacturing. Indeed, the SBE Council study shows that each energy sector is overwhelmingly populated by small businesses.
A December 2012 IHS study projected that unconventional oil and gas production in Ohio could increase related employment from 38,830 jobs in 2012 to 143,595 jobs by 2020. By 2035 there could be 266,624 jobs in Ohio devoted to oil and gas.
The New York Times has noted that in Ohio “natural gas buried in shale thousands of feet below the surface is attracting more than $1 billion in private investment and rapidly reviving the area as an energy producer. ... With all this energy-related construction, industry executives believe that Ohio will produce 2 billion to 3 billion cubic feet of processed gas daily within the decade.”
Export markets
But in order for this boom to continue, a portion of these resources has to be exported, or energy production will start to stall. If that happens, growth and job creation will slow as well.
Current energy export policy has yet to acknowledge these realities. In the case of crude oil, a 1970s-era outright ban on exports is in place. And in the case of natural gas, the Department of Energy must approve licenses at export facilities, which require billions of dollars of investment to come on line. Currently, the department has been delaying approval — in some cases licenses have languished over two years.
Recently, a key lawmaker, Alaska Sen. Lisa Murkowski, has advocated for change to current energy export policy. Sen. Murkowski argues that we must modernize the antiquated regulations that govern energy exports. Her report affirms that lifting export restrictions would sustain job growth, boost our domestic economic output, and increase our geopolitical standing and security. And her state has a lot at stake in this debate: Alaska is now closer than at any time in the last 40 years to developing the large reserves of natural gas located on the state’s North Slope. Just recently, the governor announced a new partnership between the state of Alaska and the major energy producers to build an estimated $45 billion natural gas pipeline and processing facilities.
But the window of opportunity to reform energy export policy is small. Failure to act quickly will let one of the biggest chances for further economic recovery pass. In the case of natural gas, many other countries are already vying for long-term contracts to export gas to countries that are hungry for energy.
Economic opportunity
At a time in our country when small businesses are hurting, our government should be doing all that it can to make the economic situation better, rather than block exports and hinder our economic opportunity.
Oil and natural gas exports are proven to create significant gains in jobs, small business growth, and in the overall economy. It is my hope that Ohio’s elected officials will join the call for the Obama administration to reform energy export policy and unleash a new wave of jobs and small-business growth.
Raymond J. Keating is the chief economist for the Small Business & Entrepreneurship Council.