High Oil Prices Help Revive US Steel Industry, Create American Jobs

chinese steel mill photo

Jeff Rubin, chief economist for CIBC World Markets, and predictor of $10 gasoline, notes who is profiting from high oil prices:

"Soaring transport costs, first on importing iron to China and then exporting finished steel overseas, have already more than eroded the wage advantage and suddenly rendered Chinese-made steel uncompetitive in the US market....China’s steel exports to the US are now falling by more than 20% on a year-over year basis—the worst performance in almost a decade. While many might attribute this decline to the slowdown in the US economy, it is noteworthy that US domestic steel production has risen by almost 10% during the same period."
cost advantage for china lost image

Stacey Feldman of Solve Climate summarizes: "For the first time in ten years, US steel producers have a cost advantage over China, whose exports are dropping. As long as oil hovers above $100, that trend could ripple through the whole global economy, in industry after industry."

Rubin predicts: "Instead of finding cheap labor half-way around the world, the key will be to find the cheapest labor force within reasonable shipping distance to your market."

steel-production.jpg
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This graph says it all: even in a recession, US steel production is going up, imports from China are going down. Expensive oil is helping parts of the American economy- the rust belt states that have suffered the most from the offshoring of their jobs to China. Any politician who cares about their votes should be pointing out that any effort to depress the price of oil for short term political gain is going to cost them jobs.

Rationally priced oil brings jobs back to America. Cheap oil sends them across the Pacific. It's right there in black and white. ::Solve Climate read Rubins report: PDF Here
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Tags: Economics | Oil

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