Energy production and the manufacturing industry go hand in hand. As we have written previously, the recent oil and gas boom that has occurred in the U.S. is part of the reason why the domestic manufacturing sector is on the upswing. That's why manufacturing players pay attention when any big news comes out of the oil industry.
Recently, the Obama Administration made a decision that will have major implications for the global oil market. For the first time in more than four decades, the U.S. will allow exports of domestic crude oil. Previously, only refined products could be shipped to other countries.
This regulation dated back to the 1973 Arab oil embargo, when U.S. policymakers feared for their ability to maintain energy security. However, unlike then, domestic oil producers have discovered a significant amount of new oil resources that will allow the U.S. to greatly expand production for years to come—so much so that prices of certain oil products have fallen.
For example, an article on Manufacturing.net noted that the price of condensates—a type of light oil—is about $10 to $30 per barrel cheaper than standard crude oil, partly because there is nowhere to send it. Thanks to the lifting of these restrictions, oil producers will be able to seek out new markets.
Increasing oil exports will improve the economy, particularly in oil producing regions of the U.S. They will also act as a continuing incentive for producers to keep production at its current levels and possibly increase it, which will maintain stable prices. Local machine shops will benefit from a manufacturing sector that continues to grow as a result.