AMAC Exclusive – By Andrew Abbott
While runaway inflation and record-high gas prices have dominated economic headlines in recent months, another concerning trend has emerged that has garnered far less attention: the U.S. manufacturing sector is struggling to recover from the pandemic more than other industries. Even as Joe Biden has stolen former President Trump’s mantra of “buy American” and has spoken about his commitment to American industry, the Biden administration has failed to grasp that low domestic energy prices were a key factor in the resurgence of U.S. manufacturing under the previous administration.
According to data from the Bureau of Labor Statistics, the U.S. manufacturing sector added 38,000 jobs in March, more or less in line with the previous 6-month average. However, employment in the sector still remains 128,000 jobs below February 2020 levels, and hiring trends show signs of leveling off. One major reason for the struggles seen in the sector appears to be the rising cost of energy, which disproportionately affects manufacturing – industrial activities often require large amounts of heat, power, and electricity, and every penny increase in energy prices can lead to increased costs at every point of the production and distribution chain.
This reality has run into direct conflict with President Biden’s repeated promises to continue the renaissance of American manufacturing seen under President Trump, a comeback that has come to a screeching halt with the change of administrations.
While Biden promised in his State of the Union Address to “make record investments” in manufacturing, he has simultaneously waged war on the domestic energy industries that would make that manufacturing growth possible. His aggressively anti-oil and -gas policies have been a primary reason that gasoline prices had already risen more than $1 per gallon from the time he took office until Putin commenced his invasion of Ukraine. Subsequently, Biden has stubbornly refused to reverse his destructive policies, even as gas prices skyrocket.
Many experts have argued persuasively that the increase in manufacturing that occurred during the Trump administration was a direct result of low energy prices. A state-by-state analysis shows this to be the case; in California, for example, where high gas taxes artificially kept the price of fuel high, the manufacturing sector lost jobs in 2019 and was in the bottom ten states overall in manufacturing. Meanwhile in neighboring Nevada, with low energy taxes, manufacturing surged 32.9% in 2019, the most significant increase in the country.
As of 2018, American manufacturing accounted for 12% of the country’s nominal GDP. That same year, that 12% of the American economy used 32% of all energy produced nationwide.
Accordingly, any increase in domestic manufacturing as Biden has promised would require a return to the energy abundance that characterized the Trump years. Yet today, the U.S. produces 15% less oil and natural gas than it did pre-pandemic. The oil that is produced is being sold at over $100 a barrel, and many experts believe it will go as high as $200.
Unfortunately, President Biden is either unable or unwilling to understand the contradiction between his energy policies and his stated commitment to U.S. manufacturing. He has instead blamed “Putin” and now “corporate greed” for the surge in prices, and has similarly shifted blame for all the ripple effects of price hikes throughout the economy, including in the manufacturing sector. By all indications, Biden seems to have learned nothing from his party’s flirtation with policies inspired by the Green New Deal.
Yet without an affordable supply of energy, manufacturing products at home rather than overseas will become an economic impossibility, even if Biden or any future president imposes high tariffs or employs other measures to entice companies to re-shore. As history has shown, other countries will not abide by the same punitive “environmental” policies the left imposes on energy production here in America.
Many progressives also refuse to acknowledge that almost every advanced renewable technology requires minerals and metals that cannot be fabricated in a lab or factory. They need to be mined. Horrifically, much of the world’s cobalt, essential for advanced renewables, comes from child labor mines in Africa. We could mine many of these minerals domestically, such as in New Mexico’s Mountain Pass mine. Yet doing so would require a major infrastructure investment that would, in turn, require massive energy output – two things that Democrats are unwilling to budge on.
Either way, the American oil and gas sectors are critical to addressing these needs. Biden can say he wants to bring manufacturing back to America, but until he’s willing to unleash the American energy necessary to power it, his words mean little and will accomplish less.
Andrew Abbott is the pen name of a writer and public affairs consultant with over a decade of experience in DC at the intersection of politics and culture.