The shale revolution here in the U.S. has reduced energy prices for consumers and saved taxpayers money on heating, cooling, and transportation bills. Because of our record production levels, America is less dependent on imports of crude oil and natural gas, which strengthens our trade balances, enhances energy security, and provides widespread economic benefits.
Now the shale revolution will help shippers across the world comply with the International Maritime Organization’s 2020 standards, called “IMO 2020,” which cap sulfur emissions from ships. These standards will have significant benefits for American competitiveness, public health, and the U.S. shale revolution itself.
IMO 2020 reduces the sulfur content in marine fuels from 3.5% to 0.5%, bringing the global limits more in line with what America has already been doing for years. The United States has a proven track record of producing next-generation fuels that are five times more stringent than IMO 2020 and getting them to market. The rest of the world is just now catching up, and U.S. shale is poised to benefit. Other countries will look to the U.S. for help in procuring fuels needed to comply with IMO 2020.
U.S. industry has invested tens of billions of dollars to upgrade the infrastructure necessary to comply. But less complex European refiners have not. They will need to run their facilities more economically by refining lighter, sweeter crude that naturally has lower sulfur content.
Oil produced from American shale also has lower sulfur content, and therefore is desirable for producing IMO-compliant fuel. This will all but guarantee our ability to dominate the market, as well as enhance our energy security and grow our economy.
To produce energy safely and efficiently, the industry needs hundreds of thousands of employees with a mix of backgrounds and skill sets. These are well-paying jobs, with an average annual salary of $116,000 for someone working in oil and gas development.
Because the salaries for these jobs are higher than average, energy production can help spur economic growth and spending in local communities. According to the Federal Reserve Bank of Minneapolis, increased energy production in the Bakken oil region has created new drilling and construction activities, higher wages, more workers and “economic spillovers,” including higher home sales, more student enrollments and a stronger state budget — 23% higher than initially forecast. In 2017, North Dakota led the nation in real GDP growth with an 8.3% increase to $55.2 billion.
Similarly, in the Permian Basin, oil industry jobs are growing at a rate of 25%, as compared to Texas’ overall employment, which grew at an annual rate of just 2.5%. In the surrounding areas of Midland and Odessa, retail spending jumped more than 30% in 2018 over 2017 levels, with automotive spending climbing at similar rates.
IMO 2020 provides an opportunity for other refineries to expand or reopen, which will require additional workers, construction contracts, and indirect jobs in the surrounding communities, like we’ve seen near the Bakken and Permian.
The shale oil revolution has played a significant role in driving up employment in the U.S. energy sector to record-high levels that have continued to grow since 2014. Our trade association, the American Exploration and Production Council, has found that the oil and natural gas sector added 152,000 jobs last year alone. This is because 90% of the growth in production came from light, sweet crude oil between 2010-2017.
Timely implementation of the IMO 2020 standards will ensure these production and job trends continue. Some naysayers will argue for delaying implementation of these standards, but this is counterproductive, because America is ready to produce and sell compliant fuel to buyers all over the world like we already do. To take away this significant market opportunity for the U.S. energy sector could weaken America’s record-high energy production levels and threaten future job creation.
Let’s stay the course on IMO 2020 and lead the world in low-sulfur fuel production.
Bruce Thompson is President of the American Exploration & Production Council (AXPC), whose membership is composed of more than 30 of America’s premier independent oil and natural gas exploration and production companies.
