Today President Obama spoke about energy policy at Prince George’s Community College in Largo, Maryland. The President said we need an energy strategy for the future and an “all of the above” strategy for the 21^st century that develops every source of American-made energy.

The Administration seems to have missed the mark again. Clearly every source is not in the Administration’s plan as the EPA’s Utility MACT regulation is forcing the closure of clean coal power plants throughout the country, resulting in lost jobs.

The President also stated that his Administration has approved dozens of new pipelines to transport oil:

We’ve quadrupled the number of operating oil rigs to a record high.  I want everybody to listen to that — we have more oil rigs operating now than ever.  That’s a fact.  We’ve approved dozens of new pipelines to move oil across the country.  We announced our support for a new one in Oklahoma that will help get more oil down to refineries on the Gulf Coast. 

The pipeline in Oklahoma the President is referencing is what will be a section of the Keystone XL pipeline which TransCanada announced they will begin construction on soon in Oklahoma and Texas. The President decided that it wasn’t in the nation’s best interest back in January to approve the entire stretch of the pipeline from Canada down to Texas. Keystone XL would bolster our supply and provide manufacturers with an affordable source of energy.

Manufacturers can’t afford more of the same policies from Washington which are driving up energy prices and stifling growth. It’s time for a real “all of the above” approach which includes developing all domestic sources of energy to drive down energy prices.

It’s extremely disappointing the Senate failed today to take a stand for jobs and manufacturers by voting down important amendments to the transportation bill that would delay the harmful Boiler MACT regulations, expand exploration of the Outer Continental Shelf and approve the Keystone XL pipeline project. Senators failed to pass these amendments which would have saved jobs, created jobs and injected the economy with new life. 

There were 52 votes in support of the Collins amendment. Lisa Jackson, the Administrator of the Environmental Protection Agency (EPA), has spent much of the past eight days up in the Senate meeting with Democratic Senators trying to convince them that there was really no need for the Senate to pass legislation. The standards the EPA has put forward are not achievable with our current technology, and the EPA knows this.

Manufacturers want reasonable and achievable regulations. They want some degree of certainty. They want government to quit trying to pick winners or favorites.

The Vitter amendment to expand drilling in the Outer Continental Shelf (OCS) was rejected on a 46-52 vote. Senators need to realize that every barrel of oil produced in North America is another barrel that we don’t have to pull from somewhere else in the world. The more sources of oil and the more supply of oil means energy will be more affordable for manufacturers and that means more jobs. The Vitter amendment would open up vast tracks of the OCS to oil exploration and make the country more self-reliant.  (continue reading…)

The Bureau of Labor Statistics released its the Producer Price Index (PPI) data this morning, showing that overall prices for finished goods rose 0.7 percent in March.  Excluding food and energy costs, finished goods rose 0.2 percent. 

Within manufacturing, the PPI was up 2.2 percent for the month and 7.7 percent from last year.  Industries with the greatest gains in producer prices in March include petroleum and coal products manufacturing, primary metal manufacturing, textile mills, and food manufacturing.

While the PPI increase was less than in February, the overall trend shows a steady increase since early 2009 (see the accompanying picture), potentially squeezing profits for those firms which are unable to pass those higher costs along to the consumer.  One of the largest drivers of this increase has been higher energy costs, which rose 2.6 percent in March.

The picture for intermediate goods is mostly the same, spurred on by higher energy costs.  The PPI for intermediate materials, supplies, and components was up 1.5 percent, with the core PPI (which excludes food and energy) increasing 0.9 percent.   Processed fuels and lubricants costs saw the highest increase month-to-month, jumping 4.2 percent for manufacturing industries.  Materials and components for construction and overall supplies for manufacturers rose 0.8 percent for the month.  In terms of crude materials for further processing, however, crude fuel costs actually fell for the month.  For manufacturers, crude fuel prices fell 4.3 percent, reflecting some volatility.

In summary, producer prices are rising, continuing a trend that we have seen for much of the past two years, and much of that increase is due to higher energy costs, with the overall “core” PPI increasing moderately.   

Chad Moutray is chief economist at the National Association of Manufacturers.