The oil danger
One of the more bizarre aspects of the UnitedStates administration’s energy policy has been the hesitation in removing the 1974 U.S. oil embargo. This was instigated in the wake of Saudi Arabia’s “punitive” hold-back of its critical America-bound exports due to President Nixon’s backing of Israel, which resulted in that nation’s victory over Egypt and Syria.
In a paradox of approval, the U.S. Energy Agency is giving global oil producer Shell the green light for drilling in the Arctic while nixing the Trans-Canada XL oil pipeline. These direct shipments of Canadian oil sands are craved by the expanded U.S. refineries around the Gulf of Mexico. With oil prices dropping, expensive Arctic drilling, as well as offshore excavation, would seem superfluous in view of a deepening oil glut at this time.
What is further puzzling regarding the government’s approach to America’s dominant energy future is the Environmental Protection Agency’s decision to cut the methane content of oil by 45% in the next 20 years. Although this proposal would in effect scuttle fracking, U.S. oil self-sufficiency and export opportunities, a growing oil surplus is keeping oil prices low enough to discourage further utilization of domestic natural resources.
While a case can be made for sustaining low gasoline prices at the pump, the loss of tens of thousands of high-level jobs will cost billions of dollars in needed U.S. government revenues as well as a brightened employment scenario. It’s no accident that Texas is No. 1 in oil exploration production and refining, producing, by far, more energy-related jobs than any other U.S. state prior to current cutbacks.
It’s becoming increasingly obvious “climatological purity” decisions and the interests of multinational corporations take precedence over America’s world-leading small-business sector.
It should be remembered at the height of the “roaring twenties,” a U.S. economic boom was presided over for six years by President Calvin Coolidge, who pronounced “the business of America is business.”
Energy triple crown
If energy development was a sporting event, the global triple crown of oil, natural gas and coal would be awarded to the U.S. without any competitors in the wings. In fact, America also has emerged as the undisputed winner in natural gas and coal reserves while fracking has pushed U.S. oil production into a virtual 10 million barrel-per-day leadership tie with Saudi Arabia and Russia. The Saudis have been the OPEC swing producer for years, gaining the dominant oil emperor reputation due to their geopolitical clout since they produce nothing else of tangible consequence. Almost 90% of what they produce is exported.
But even in oil, neither the Saudis nor Russia, which uses pipelines constructed into Eastern and Central Europe during the Soviet era which ended in 1990, are no match for the U.S. combination of exploration, pipeline distribution, refining and retail. If renewables get thrown in for good measure, America’s access to indigenous natural resources, together with its productive future growth potential, make the rest of the world no match for the U.S. for the rest of the current century. Even a gaze into the more distant future sees Pan Americana gaining even greater energy domination.
While the overreach of the EPA has attempted to permanently snuff out coal while barely tolerating oil and even natural gas due to their generation of carbon dioxide, this attempt to dethrone all fossil fuels, including natural gas, likely will be curbed by successive administrations.
Coal, in particular, has become so demonized as to endanger America’s still-flourishing coal exports and its need of thermal coal for steel conversion, as well as the tens of thousands of coal miners, concentrated primarily in Appalachia, a region that provides few alternative job opportunities.
Although natural gas has now taken the lead in power generation by electric utilities with coal entirely banished for this purpose on current drawing boards, the tarnished energy source still is the cheapest and most utilized in underdeveloped and developing world nations.On the other hand, natural gas, grudgingly tolerated by the EPA, will become a goldmine for U.S. revenue generation as liquid natural gas exports and overwhelming use by the massive chemical industry puts the U.S. natural gas sector into a global class by itself.
While intrepid business leaders already have found ways to shift banned U.S. oil surpluses to waiting global buyers that prefer the light West Texas Intermediate and bringing Canadian oil sands into capacitated U.S. refineries, America’s energy future looks exceedingly bright as the shining light of an expanding economy.
The economic future
While the steady growth of America’s world-leading gross domestic product of goods and services has depended on a spectacular consumer sector that holds the key to the nation’s economic success, the rest of the world is more dependent on export growth.
China’s currency reversal from its yuan global value to a market-based decline set off alarm bells in U.S. financial markets, resounding to a lesser extent around the rest of the financial world. The reason is that while China had pegged its yuan to the dollar a year ago, other global exporters had incrementally reduced their currency to be globally competitive.
While U.S. exports have, until recently, been considered supplemental to America’s consumer-dominated near $18 trillion annual GDP, to Germany, Japan and China such exports have been the lifeblood of their world-leading economies. This also has been true of the sustained growth by other developed and developing nations around the globe. In effect, the world’s economic forward motion has depended on their respective export success, with the U.S. the only exception.
With the dollar reigning supreme as the world’s dominant “reserve currency,” the U.S. has enjoyed the luxury of not worrying about its exports becoming the target of downward valuation. These have been manifested by the Japanese yen, the Indonesian rupiah and the Korean won, among many others.
The U.S’s phenomenal export growth of aircraft, automotive parts, and armaments, etc., along with huge agricultural shipments, has reached the multi-trillion dollar mark while still clinging to President Nixon’s 1974 oil export embargo.
However, this has not restrained America’s 140 refineries from shipping such oil derivatives as gasoline, diesel oil, heating/air conditioning fuel and jet fuel to Central and South America. Also in its embryonic export stage are light oil distillates and liquid natural gas. These will comprise a fast-growing comprehensive U.S. export addition by 2020.
Even under the restraints imposed on the huge surpluses of crude oil mandated by the current administration, this door likely will be opened in the future as total U.S. exports are justifiably recognized by future government leadership as an incomparable U.S. budget bonanza.
If anything typified America’s initial outburst as the world’s leading industrial manufacturing power in the wake of World War I it was the steel industry and its ultimate corporate pillar — U.S. Steel.
U.S. Steel was founded by multifaceted industrialist Andrew Carnegie, who, along with Thomas Edison (electricity), and John D. Rockefeller (finance), constituted the basis of America’s eventual economic superpower status after World War II.
And no individual corporation propelling the U.S. above all other nations in industrial production magnitude became more synonymous with America’s basic manufacturing dominance than U.S. Steel.
After World War II, the U.S. not only used its industrial might to develop a post-war economic boom at home but also created the Marshall Plan to economically help recreate a decimated Western Europe and Japan, both of which together had literally ruled the world at the beginning of the 20th century.
With steel having become the basis of industrial strength in all its aspects of construction, automotive and aircraft, appliances, and armaments, plus innumerable other end-use products, it was the American steel mill that symbolized the strength of its global industrial genesis. U.S. Steel became the leading generator as well as corporate-leading symbol of the overpowering steel industry.
With the world usage of 150 million tons of steel at the time, U.S. production was more than a third of that total up to the second half of the 20th century. It was then that U.S. Steel was representing America’s overpowering economic leadership of the free world.
In a fast forward to the current world status, one must quickly glance at the rise of China and Japan and the economic recovery of Germany as representing a new industrial world economic power balance. Currently, in a further diffusion of economic and industrial world power, India and much of Southeast Asia, and to a lesser extent Latin America and Russia have diffused the near monopoly of the U.S. industrial/economic power structure, which America held from 1945 until the last third of the 20th century.
With China having become the world’s most dominant manufacturer of steel as well as the outstanding low-cost exporter of that base metal around the world, the downsizing of mighty U.S. Steel represents the fading of the U.S. world position, not only in steel, but in overall industrial manufacturing.
Despite the halting efforts being made in bringing back “Made in the USA” to America’s industrial shores, the hopeful efforts of today’s U.S. Steel in that direction through cutbacks and ultra-modernization may well tell if a new industrial future awaits the overall U.S. economy .