Petroleum imports were at a record low last year, the lowest since 2005. The United States imported just 27 percent of its petroleum in 2014, with domestic oil and gas companies meeting the rest of the nation’s demand. However, oil imports are starting to creep back up, according to an October 26 Wall Street Journal report. That is a move in the wrong direction because importing oil hurts our economy in a number of ways.
Oil Is a Major Economic Driver
Oil prices affect far more than just the finances of those investing in oil and gas directly. Even with the development of alternative energy technologies, oil is still a core economic driver, impacting the health of the American economy on multiple levels. Political, social and economic instability in many of the world’s oil producing regions contributes to a sometimes wild price volatility. Those price fluctuations are felt throughout the economy, influencing everything from unemployment rates to food prices.
The more oil we import, the more exposure our economy has to potentially damaging oil price volatility and price manipulation. The Council on Foreign Relations points to oil price shocks as being directly associated with “recessions, economic stagnation and high inflation.” Our economy is still struggling toward a full recovery from our most recent downturn. It makes sense to protect this critical economic driver by continuing to reduce oil imports.
Decreased Domestic Production
When oil imports lead to decreased production in the U.S., high-paying petroleum sector jobs are lost. Right now, American oil boom regions are feeling the pinch of decreased production, according to a Bloomberg Business report. In Texas, unemployment insurance claims from laid-off well drilling workers and other energy sector employees have shot up more than 100 percent over the past 12 months. Weekly wages for North Dakota’s Bakken oil workers fell by an average of 10 percent during the first part of 2015. Local economies in these regions are feeling the loss of those wages. Oil and gas companies helped fuel a lot of the economic growth in those areas.
Other Costs Involved in Importing
As the RAND Corporation, a nonprofit and nonpartisan research organization, points out, we pay more than the price of oil when we import. Importing oil from conflict regions, such as the Persian Gulf, comes with the additional cost of protecting the supply of oil and the trade routes used in its transport. We’ve been using our military to maintain and protect access to Middle Eastern oil since the 1930’s, according to a recent article in Air and Space Power Journal, and we’ve spent trillions doing it. Importing oil can lead to additional military expenditures, such as when foreign oil profits fund threats to our national security, such as actions by the Iranian government or radical Islamic groups.
Good for Taxpayers, Good for America
Continuing to reduce oil imports is the right direction for America. New technologies have been an important part of domestic oil and gas companies being able to access resources in shale regions. We need to continue our research and development efforts so we can make the most of the energy resources we have right here in the United States.
To learn more about the hidden costs of importing oil and how those costs hurt our economy, contact us. Hill Country Exploration is a family-owned and operated oil & gas company that helps eliminate oil importation with drilling projects on U.S. soil.