COMMENT LET'S NOT GIVE UP ON AMERICAN JOBS

Charles J. DiBona
President
American Petroleum Institute
Washington, D.C.

In this election year, the cutting issue for the American public is jobs.

There has been lots of rhetoric, but the question persists: Is Congress serious about stimulating employment?

Not from anything that hundreds of thousands of American petroleum workers can see.

Half of the 900,000 jobs that existed in the U.S. oil and gas extraction and refining industries just 10 years ago no longer exist.

While the rest of the economy is slowly emerging from a 2 year recession, the domestic petroleum industry has been mired in a severe depression since the mid-1980s, its problems made worse by government policies that severely limit the industry's ability to compete in a global market.

The oil industry's experience stands in sharp contrast to the U.S. economy as a whole, where, during the past 10 years, the number of jobs has grown by nearly 22%. Even in struggling industries such as motor vehicle manufacturing, lumber, and homebuilding 15% more jobs exist today than a decade ago.

Many factors-the precipitous drop in crude oil prices, increased overseas competition, political actions that constrain domestic production and refining, and to an extent the persistent recession-led to these staggering oil industry job losses. One thing is for sure: The current wave of cutbacks announced by many of America's oil companies are not quick fixes for temporary problems. The crisis the industry faces is real and long term. Many of these jobs will never return.

WHY CARE?

Why should Americans care? For many reasons:

A strong domestic oil industry is a bulwark of our economic and energy security. The two oil shocks of the 1970s were direct results of a foreign oil boycott and a revolution half a world away. Yet, today, our dependence on foreign oil, approaching 50%, is roughly equal to what it was at the height of the two crises. The U.S. Department of Energy projects that our import dependency will rise to 60% in little more than a decade with no leveling off in sight.
Last year, the nation imported $51 billion worth of oil, a figure about two thirds as large as the U.S. trade deficit.
We are losing or exporting quality blue and white collar jobs along with skills and technology, hurting American families and the nation as a whole. According to the U.S. Bureau of Labor Statistics, the average worker in oil and gas exploration and drilling earned $38,300 in 1990, while his counterpart in the refining sector was paid $42,600. On average, oil and gas industry jobs paid two thirds more than other U.S. jobs. And, as a Texas state official explains, "When we lose one person in oil and gas, it has almost twice the impact of other job sector losses because of the ripple effect."

CONGRESS GIVES UP

Congress seems to have a political agenda that gives up on American oil and, with it, American jobs. While almost all nations are encouraging oil and gas exploration and production in their territories, our political leaders have voted to place America's most highly promising land off limits to drilling.

Offshore, more than 400 million acres of the 1.6 billion acre Outer Continental Shelf are closed to leasing until at least 2000. These include areas off California and Southwest Florida, considered the best prospects for new reserves.

Onshore, well over 100 million acres have been placed under land classifications that render them off limits to exploration. Included is the Coastal Plain of the Arctic National Wildlife Refuge. It may hold billions of barrels of domestic petroleum reserves that, in the words of President Bush, "can be tapped safely and with respect for the environment."

The U.S. Department of the Interior estimates that the ANWR Coastal Plain could contain enough reserves to provide 1 out of every 4 bbl of oil produced in the U.S. and, during its development phase, create as many as 735,000 jobs nationwide.

Still, the ban remains in place.

The result is that U.S. oil companies have been forced to cut domestic spending and concentrate on investments overseas.

Salomon Bros.' survey of 247 oil companies forecasts a drop this year of nearly 20% in exploration and production spending in North America. Yet spending by the same companies elsewhere is projected to rise by 9.5%.

Similarly, in the refining sector, regulations requiring expenditures that outweigh any possible gain have helped create a black hole into which American jobs are disappearing. Every dollar we spend to alleviate a hypothetical or theoretical environmental risk involving emissions measured in parts per billion means a dollar not available to fight real environmental problems or to create and protect industry jobs.

jobs are moving from San Francisco to Sumatra, from Dallas to Dhahran. But the American people should understand that we are not abandoning the U.S. We are, in effect, being thrown out.

CONTRAST ABROAD

How different the situation is overseas.

Australia has an active exploration licensing program. The former Soviet Union, China, Viet Nam, and the nations of West Africa are eagerly seeking American technology and investment. There is not a major sedimentary basin outside the U.S. that is not being explored for oil and gas.

Fields being developed in the North Sea probably will push U.K. oil and gas production to record levels. By contrast, U.S. drilling is at its lowest level since records began to be kept 52 years ago.

Forbes magazine asks, "Are the British heedless of the environment? No, but they aren't heedless of economics either."

It's time for America's political leader to do some heeding, too.

Perhaps today's massive loss of jobs will serve as a wakeup call to Congress. If not, the situation can only grow worse. Giving up on U.S. oil means taking unnecessary economic and energy security risks. And it means giving up on hundreds of thousands of quality American jobs.