Something's Not Right
Everyone in the United States has read about, heard about or experienced the dramatic increase in U.S. oil and natural gas production over the last several years. State and federal legislators continually discuss the benefits of U.S. energy independence.
As a result, the energy industry has been a driving force in the domestic recovery from the economic downturn after the 2008 financial crisis. The industry has created well-paying jobs across many walks of life. Construction companies build infrastructure to get equipment into new areas for drilling. The dining and lodging industries can hardly keep up in shale play areas. Trucking companies continue to need to move equipment into the areas where drilling is growing, and E & P companies are increasing the number of wells being drilled — all bringing more and more jobs. The creation of these jobs has had a profound positive impact on the recovering U.S. economy.
The energy sector in turn benefits from the improvement of the domestic economy. A stronger economy provides the energy business with stronger consumers for energy products. Increased domestic production and job growth drives greater energy consumption.
But one area of the energy business has not been aided by the drive for energy independence: the OCTG (oil country tubular goods) industry. This represents a tremendous lost opportunity for our economy. Every drilled well requires OCTG pipe products to extract the natural resources (oil, gas, etc.) that we use for domestic energy consumption. Unfortunately, more than 50 percent of the pipe products being used by companies drilling in the United States are manufactured outside of the United States. Over 3 million tons of foreign OCTG products were imported into the United States in 2013 — and that number is expected to increase in 2014.
The massive level of imported OCTG products hurts the U.S. economy. Jobs are lost in the domestic pipe manufacturing sector. But the damage, however, is much greater than simply adding up the thousands of lost pipe and tube jobs. The 3 million tons (over $5 billion) of import pipe is made from steel manufactured outside of the United States — which is taking jobs from U.S. steel mills. Additional jobs are lost at countless companies in countless industries that support those foreign steel and pipe mills. Certainly, some jobs are created in the process of importing pipe, but not nearly as many jobs as created by U.S. OCTG manufacturers who utilize steel that is also manufactured in the United States.
I have heard it said that no other country would allow imports to take over 50 percent of the market share in a product critical to their economy. I believe this to be true. The U.S. is not like any other country — we are greater! But at some point we need to stand up for our economy and our businesses and workers. We are being taken advantage of in the OCTG market by countries that have found a way to circumvent fair trade, and our current administration seems to be allowing it — almost encouraging it.
In many industries, businesses, workers and consumers request or demand U.S.-made product. Unfortunately, this is all too rare in the OCTG business. I applaud those companies that do demand domestic OCTG! Oil and gas companies are posting very good profits, and they should. But I encourage these companies to also support the domestic marketplace by demanding U.S.-made OCTG products. Not only will this benefit the domestic steel and pipe businesses and workers, but it will also increase the viability of their customer base and help grow their businesses. Increased domestic steel utilization will result in increased energy consumption.
Energex Tube is proud to play a small part in helping the United States grow the economy and become energy independent. That said, when you see all the hoopla about the positive effects of energy independence, please remember that we are missing a tremendous opportunity — and leaving an entire industry behind — by becoming energy independent with foreign pipe.