Sticker shock greeted drivers in early 2012. In many parts of the country, Americans filling up their cars, trucks and SUVs saw gas prices surge beyond four dollars.
High gas prices always send policymakers scurrying for solutions. Energy policy, however, should be a priority at all times, not just in times of crisis or sky-high prices. For too long, a viable, pro-growth energy policy has eluded our elected leaders. We hear a lot of rhetoric but don’t see much meaningful action.
For manufacturers, costs are a constant concern – in terms of price of gas and other energy sources. After all, they consume one-third of the energy produced in the United States. Consumers feel the impact too: high energy costs drive the price of goods higher. Affordable energy means more dollars in your pocket, whether you are a manufacturer, a parent or a retiree.
There is a path forward in achieving an affordable and secure energy future: the “all of the above” energy strategy. Such a plan means tapping the resources we have at our disposal and continuing the development of renewable sources. It encompasses traditional and alternative forms of energy.
Many policymakers cling to an unrealistic idea that the country can meets its energy needs without tapping all available resources, particularly traditional forms of energy.
High gas prices, for example, demonstrate the importance of developing oil resources in the United States. Abundant reserves have been locked away – onshore and offshore – denying Americans needed supplies and an important hedge in the international marketplace. If we develop more domestic resources, countries that don’t share our interests or values cannot use our dependence on their energy as a bargaining chip in world affairs. We must not allow ourselves to be held hostage by unstable or unfriendly regimes.
Benefits are clear. Still, some counter with the argument that we won’t see the benefits of increased development of domestic energy sources for years to come. But if we had begun development a few years ago, those new resources would be coming online now.
The United States, however, does not need to adopt a strictly domestic focus. Energy sources from our allies, like Canada, must remain a key part of our energy mix. Canada is developing its oil sands and is ready to export to willing consumers. The United States should be at the front of the line.
We are set to reap the benefits of this new development, if we approve the Keystone XL pipeline. Tens of thousands of manufacturing and construction jobs – 20,000 direct jobs and 118,000 indirect jobs – are ready to be filled once the project receives the go-ahead. But, without the necessary approval, we will continue to forgo these new supplies and jobs.
While Keystone appears a missed opportunity, shale gas is a game-changer for the country – unless politics gets in the way. Political pressures could impede development and ultimately deny this country a secure and abundant energy resource. Politicians and regulators are eager to swoop in with onerous rules and restrictions.
If they do, the impact would be devastating for manufacturers. According to a recent study by PwC (Pricewaterhouse Coopers) and the National Association of Manufacturers (NAM), shale gas development could boost manufacturing employment by one million jobs by 2025. New shale resources coming online will also save manufacturers almost $12 billion in energy costs over the next 13 years.
Coal remains an important part of the United States’ energy mix. It fuels power plants that provide power to homes and manufacturing facilities. Coal-fired power plants, however, face an existential threat. The Environmental Protection Agency (EPA) has proposed regulations on greenhouse gas emissions from power plants – the so-called New Source Performance Standards (NSPS) – that would restrict carbon dioxide emissions from new power plants to a maximum of 1,000 pounds per megawatt-hour. This limit would effectively prevent the construction of new coal fuel power plants.
While the United States must continue to utilize traditional sources of energy, alternative and renewable sources are going to play an increasingly important role in the years ahead. Nuclear energy today provides about one-fifth of the United States’ electricity, but it can contribute more. The federal government has recently issued permits for new nuclear energy facilities – the first such permits in 15 years. While the US has fallen behind other nations with regard to nuclear development, this new permitting activity is a hopeful sign. Wind and solar are showing promise as well, both in terms of energy generation and job creation. Demand for wind and solar power is likely only to increase.
An “all of the above” energy strategy is not just political rhetoric, though some policymakers treat it like it is. The strategy entails all forms of energy at our disposal, not just the ones favored by those currently in power.
If the United States utilizes the energy resources that it has at its disposal, the competitive effects would ripple far beyond manufacturing. The world would see us as nation that is serious about spurring investment and creating a climate for economic growth.
Jay Timmons is president and chief executive officer of the National Association of Manufacturers (NAM) and a leading advocate for the nearly 12 million Americans employed in the manufacturing sector. NAM is the largest US manufacturing association. Its mission is to foster a stronger economy by enhancing the competitiveness of American manufacturers. To learn more about the organization, visit www.nam.org.