President Trump is dubbing this “Made in America Week” as he tries to emphasize the economic benefits of revitalizing the U.S. manufacturing sector. Many economists tend to push back against such efforts, asserting there are numerous benefits to global trade and economic integration. But there is at least one sector where “Made in America” means a stronger economy — not a weaker one.
On Monday, the president hosted companies from every state in an attempt to “show off” products that are made entirely in the United States. However, one product was conspicuously missing from the White House’s list of companies and their products: fossil fuels.
It’s certainly not because the president is stiffing the energy industry, as President Obama habitually did. Trump may be the most pro-energy president we’ve had in decades.
But it’s easy to overlook — or simply not know — that fossil fuel production and refining are part of the manufacturing sector. Indeed, it is one of the top four manufacturing sectors.
According to Statista, U.S. oil and gas revenue was $129.8 billion in 2015, down from $220.4 billion in 2014, but not because companies were producing less. Rather, innovative drilling techniques have dramatically increased the supply of crude oil and natural gas, which resulted in falling prices — not to mention cheaper gasoline at the pump.
One of Trump’s key campaign themes was to encourage manufacturers to keep their operations U.S. based. Most U.S. oil and gas production already does exactly that—because here is where the oil and natural gas is.
The president has been critical of U.S. companies moving factories to other countries and offshoring their jobs. While there can be good reasons for doing so — e.g., the company has lots of customers in another country, to acquire technical skills in short supply in the U.S., to lower taxes, and, yes, sometimes to employ cheaper labor — the public tends to want U.S.-based companies creating jobs at home. And the energy sector has been doing that.
For example, the U.S. Energy Information Administration (EIA) says there were 216,000 producing oil wells in 2015, up from 181,000 in 2011. And there likely would have been more had the Obama administration not slow-walked and roadblocked applications to drill on federal lands and offshore.
Moreover, the energy boom is coincidentally addressing another Trump campaign promise: reducing the trade deficit.
On the campaign trail, Trump frequently mentioned that the U.S. had an $800 billion trade deficit in manufactured goods. While most economists tend to dismiss the trade deficit as inconsequential, to Trump a large trade deficit is a clear sign of American manufacturing in decline.
The good news is since the U.S. is producing more of its own fossil fuel needs, it’s buying less from other countries. According to the EIA, U.S. crude oil imports peaked in August 2006 at 456 million barrels that month. Those imports have been on a gradual but steady decline ever since. In April of this year the U.S. imported just only 307 million barrels.
U.S. dollars spent on foreign-produced crude oil added significantly to the trade deficit for decades, but that figure has been declining for 10 years.
Finally, presidents don’t just want to see job creation, they want to tout high-paying job growth. The Bureau of Labor Statistics says that the average hourly earnings for nonsupervisory employees in the oil and gas industry is $39.00 per hour.
So even though Trump didn’t include the fossil fuel industry in his Made in America showcase, he made it clear in his energy speech a few weeks ago that energy discovery and production play a key role in his vision for a stronger America. The energy industry turned the U.S. into an economic powerhouse a century ago, left unshackled it could do so again.