By James Hamilton, Econbrowser It is looking unlikely that there will be more stimulus from either fiscal policy or monetary policy. Former President Bill Clinton has called for suggestions for other policy options that might be helpful. Here are a few ideas along those lines.
Approve the Keystone Gulf Coast Expansion Project. I earlier highlighted the great need for an oil pipeline to transport low-cost crude from Canada and the U.S. Williston Basin to Gulf Coast refineries. TransCanada claims that building the pipeline would generate 15,000 high-wage manufacturing and construction jobs directly from the construction itself, and I see huge benefits for U.S. oil producers, refiners, and consumers. It would cost the government nothing, and indeed would generate substantial new tax revenues for local, state, and federal governments. The only reason unemployed Americans aren’t working on the project right now is because the U.S. State Department has been holding up approval of the pipeline. Grant more permits for offshore oil drilling. Although some analysts had estimated that the offshore moratorium could cost tens of thousands of jobs, the actual losses appear to have been substantially less than this. Nevertheless, we do know that three more rigs left the Gulf last week headed for other countries. Nearly a third of the deepwater rigs previously in the Gulf of Mexico will have ended up leaving due to the drilling stoppage that followed the spill in April 2010. The process of issuing new permits has been slow, and the Houston Chronicle reported on June 3:
Develop Alaskan energy sources. Shell Oil Company claims that developing Alaskan offshore oil would create 50,000 jobs per year, and the company has invested more than $3.5 billion in leases and in supporting infrastructure. The latest roadblock is the ruling by the EPA’s Environmental Appeals Board that Shell had not taken into consideration emissions from an ice-breaking vessel when calculating overall greenhouse gas emissions from the project, some 70 miles away from the nearest residents in remote Kaktovik, Alaska. Apply sensible cost-benefit analysis. Here’s a report from ABC News:
Granted, the employment benefits possible from following the suggestions above would be a drop in the bucket as far as the millions of Americans still needing work. But I think they illustrate the possible benefits of a sweeping directive from the President to all administrative agencies that jobs really do come first. If such an announcement were made from the White House in conjunction with the four specific steps noted above, I could imagine an immediate boost to consumer sentiment and perhaps a noticeable drop in oil prices as well. My basis for the latter claim is the huge disparity in price between Brent and West Texas Intermediate, which suggests potentially significant effects of a commitment to produce more domestic crude and make sure it gets to refineries on the U.S. coasts. May I also suggest that, in addition to providing a boost to the economy, such an initiative might prove helpful for the President’s poll numbers. James D. Hamilton is Professor of Economics at the University of California, San Diego.