President Obama was in New Orleans on Friday afternoon, his first order of business being to obliquely disparage Louisiana Gov. Bobby Jindal and the other red-state governors who have dared to defy the administration’s wishes on expanding their Medicaid programs, and his second being to rehash some of his old-and-tired, Keynesianish economic baloney — if only to try and distract everyone for five seconds from his epic disaster of a health care rollout.
The economy-centric portion of his speech included yet another idea for furthering the lofty goal he set back in 2010 of doubling U.S. exports within five years:
President Obama headed to the Port of New Orleans on Friday to call on Congress to get behind his plan to pour tens of billions of dollars into the nation’s infrastructure, action that he says is crucial to bolster U.S. exports. …
Obama wants Congress to spend $50 billion for roads, bridges and ports, and establish a National Infrastructure Bank. He says such steps would help attract more private-sector investment to repair the nation’s infrastructure and create American jobs. …
“In today’s global economy, businesses are going to take root and grow wherever there is the fastest and most reliable transportation and communications networks,” Obama said. “They can go anywhere. So China is investing a whole lot in infrastructure. Europe is investing a whole lot in infrastructure. Brazil is investing a whole lot in infrastructure. What are we doing?”
You can probably guess about my feelings on this latest of his incessant iterations of faux-stimulus “infrastructure spending,” but I would just point out once again that President Obama himself seems to recognize the inherent economic benefits of allowing for free global trade and increased exports. Hold onto that.
We haven’t made much progress on that increased-exports goal of his (surprise, longest economic recovery, evah!), and as I have already argued several times over, he could really do himself a big fat favor if he would just direct his administration to get to work on more quickly approving those twenty or so pending applications on which companies are waiting to export more natural gas — but in that same vein, it appears that Congress might actually be getting ready to reopen the possibility of easing up on the export restrictions currently hampering natural gas’s cousin, the oil industry. Bloomberg reports:
Congress probably will consider loosening restrictions on U.S. oil exports, though a push by industry to sell more crude overseas will be resisted by members concerned about the impact on gasoline prices, lawmakers said.
Senator Lisa Murkowski, the top Republican on the Senate Energy and Natural Resources Committee, believes the debate on oil exports will happen “sooner rather than later,” according to Robert Dillon, a spokesman for the Alaska lawmaker.
“It’s something we are looking at,” Dillon said.
The chairman of the committee, Senator Ron Wyden, an Oregon Democrat, agrees the debate is coming though he would need to see benefits to consumers before supporting such a move, said spokesman Keith Chu in an e-mail. …
Ah yes, Wyden — the same Democrat who has been so instrumental is making a gigantic headache out of the natural-gas export battle I’m always going on about. What Wyden and his ilk seem determined to neglect to realize is that the United States government selectively choosing which industries and products can and cannot enjoy the benefits of free trade in any case is nothing more than another means of artificially manipulating free-market signals and dishing out another form of special treatment to rent-seeking lobbyists at the direct expense of more robust economic growth and the most fruitful, efficient dispersion thereof.
Unfortunately, I think the specific case of allowing for more oil exports will attract even more as well as bipartisan opponents who will want to reassure fretful constituents about “energy independence” and the potential risk for rising gas prices, and it’s liable to be a tough Congressional contest.
Although, sidebar: While increased exports can indeed increase the price of products by opening them up to the (healthy, innovative, beneficial competition of the) world’s markets, I’m not at all convinced that that would necessarily be the case here. The U.S. still imports about 40 percent of our petroleum products; not all refining capacity is identical; our consumption is leveling off as our production capacity increases; and the prices we pay at the pump are already largely determined by the price of oil as traded on the global market. If we decline to export more of our own stuff, a lot of the oil we currently have the ability to recover is just going to be sitting in the ground twiddling its thumbs. The Financial Times explains further:
US net imports are still running at about 6.2m barrels per day – second only to China’s. If present trends continue they will be much lower by the end of the decade, and imports do not need to fall to zero for the export ban to start to bite. All crudes are not created equal, and North American shale production is typically light and sweet: of lower density and sulphur content.
That would tend to make it more attractive to refiners, except that many refineries in the Gulf of Mexico region, the heart of the US industry, have been expensively built or modified to take more heavy and sour crude from the Middle East and Canada. …
The mismatch of supply and demand means that if US shale oil production continues to grow at the spectacular rates of recent years, it will be possible to have a glut of domestic crude in the gulf region, even as millions of barrels per day of imports are still coming into the country. …
Meanwhile, US consumers would see no benefit, because oil product exports are unrestricted, allowing refiners to receive world prices for their sales. Already US oil product exports are booming, including a thriving trade in lightly refined oil processed just enough to meet regulatory requirements.
The United States’ oil production is the highest it has been in about twenty years, and it’s set to just keep right on rising — an economic boon, to be sure, but one that we can only fully take advantage of by allowing oil companies to sell their wares in the global market.
President Obama himself mentioned in his speech today that in “today’s global economy,” businesses’ want to “take root and grow” in the most advantageous locations possible — “What are we doing?” …OK, yes, he was talking about infrastructure, but government-sponsored infrastructure projects are not exactly the highest thing on the list that businesses consider when they are deciding where to locate and subsequently hire people and produce wealth (which, in case I haven’t been clear, is what actually grows the economy). Policies pertaining to — oh, I don’t know, let’s say — a state or country’s regulatory climate and free trade rules are big determinants of where and how businesses (and, hence, Americans) thrive. Artificially restricting oil companies’ exports is not doing Americans any favors in the long run, and the sooner Congress gets to work on firing up this debate, the better.