President Barack Obama wants more domestic oil drilling, including off the coast of Alaska and in the Gulf of Mexico.
What will it do for the US economy? In short, it’s going to be good.
The American Enterprise Institute did a study that showed that economies in non-oil producing US states are negatively affected by oil shocks (i.e. a sudden increase in oil prices). Conversely, oil-producing states shrug off the shock and may even benefit.
The same dynamic plays out in the jobs market.
The study confirms the obvious: when oil prices are high (as they are right now), it pays to drill.
Right now, the US economy remains fragile and the jobs market is still weak. Furthermore, high oil prices are eroding consumer and business confidence, hurting household balance sheets, and compressing business margins.
Oil drilling, done safely, will address all of these problems and give America a huge confidence booster – for consumers who will be assured by better labor conditions and for businesses who can plan better with reduced uncertainty over energy prices.
Lastly, it’s a matter of national security to reduce foreign energy dependence, a need heightened by the ongoing Middle East / North Africa unrest.