Close to one-quarter of the jobs added to U.S. payrolls since the economic downturn began in 2008 is the result of the booming natural gas and oil industry, former Federal Reserve chairman Ben Bernanke said Friday.
Bernanke was keynote speaker on the closing day of IHS CERAWeek in Houston, arguably the highest profile energy conference in the country. The natural gas industry expansion is "one of the most meaningful developments" since the financial markets began to collapse six years ago, he said.
Gas and oil production today is helping to reduce the U.S. trade balance and lifting its competitive position in the world. The surge in natural gas output in particular has revived the U.S. industrial and manufacturing sectors, which in turn also has contributed to job gains.
"The U.S. had a very big trade imbalance, 6% of GDP in 2008," Bernanke said of gross domestic product. "Now it's closer to 2-3%. Some of it is structural change, but the decreasing reliance on foreign energy has a significant role."
Energy sector growth overall in the United States "has clearly been one of the most beneficial developments," Bernanke said. "Foreign companies are investing in the U.S. instead of jobs going out. I don't want to overstate it, because the U.S. economy has a ways to go, but it's one of the bright spots. We are in fact regaining our very strong position in energy production."
The speech was Bernanke's first public event since ending his second term as Fed chairman in January. The country hasn't returned yet to its full economic potential since the Great Recession, but gains in domestic employment are encouraging, he said. Investment levels have fallen in the United States since 2008, but there are signs of more normal investment levels returning this year and in 2015.
The Fed began to see signs that the U.S. economy was faltering in 2007, and in August 2007 more controls were implemented by the agency. However, the U.S. government wasn't prepared at that time to deal with the crumbling financial sector, whose impact spread across the economy.
"We've seen what the downside is and we need to avoid having short-term memories," Bernanke said of financial controls that were implemented, including the Dodd-Frank Wall Street Reform Act. The legislation has drawn withering criticism from some members of Congress and the energy sector.
"We need to make sure these lessons are learned" from the recession, he said. "We're moving much more in that direction."
Less pushback from Congress over the U.S. debt limit and the budget should help alleviate some concerns among investors, said the former Fed chief. However, he said more still needs to be done to limit the risks that financial institutions may take -- what he called the "too big to fail" rules.
U.S. Environmental Protection Agency (EPA) Administrator Gina McCarthy also addressed delegates last week. It was the first speech ever by an EPA official at the annual gathering. Proposed regulations to enact greenhouse gas regulations at power plants won't be "shutting down business in its tracks," she assured the audience. Rules to limit carbon emissions are scheduled to be proposed by this summer.
"We don't have to choose between a healthy environment and a healthy economy," McCarthy said. She has run EPA for close to a year.
"We know conventional fuels like coal and natural gas are going to continue to play a critical role in in a diverse U.S. energy mix." Fossil fuels should be part of an all-of-the-above strategy, she said, echoing President Obama.
Energy and environmental rules are "two sides of the same coin" that can be enacted together. As an example, she credited updated fuel efficiency standards for vehicles as part of the resurgence of the U.S. auto industry. Manufacturing vehicles with better mileage appeal to consumers.
"Go figure," she said. "An environmental rule helped fuel a resurgent American auto industry."
The EPA plans to work with the states on their unique energy and regulatory needs, she said. Texas has the most oil refineries, while Maine produces a lot of pellet fuel for wood stoves.
The first priority for EPA is to halt the growth in carbon emissions, said McCarthy. Not reducing emissions and their effect on climate change would cost the U.S. economy more than complying with regulations.