NCPA - National Center for Policy Analysis

Will President Obama's Regulations Move U.S. Industries Offshore?

September 9, 2015

In order to decrease CO2 levels by 32 percent as the Clean Power Plan requires, the Energy Information Administration (EIA) estimates the changes will cause electricity prices to rise 16 percent.

High energy prices resulting from the Clean Power Plan could significantly impact U.S. manufacturing. When energy prices were almost 50 percent higher back in 2005, many businesses moved manufacturing overseas. Recently, through the development of hydraulic fracturing which has lowered the price of natural gas and increased the amount produced, companies are returning to the U.S.

  • General Electric moved a washing machine, refrigerator and heater manufacturing plant from China to Kentucky.
  • According to the Boston Consulting Group, 37 percent of companies with annual sales over $1 billion stated they were planning or actively considering shifting production facilities from China to the United States.
  • Keer, a Chinese textile company, recently built a yarn manufacturing plant in South Carolina.
  • Of the 108 American manufacturing firms with multinational operations, 14 percent had plans to move some manufacturing to the United States.

Unfortunately, the higher energy prices resulting from the implementation of the Clean Power Act could cause these and other manufacturers to reconsider moving to the United States. Environmental Protection Agency (EPA) mandates could reduce GDP by $140 billion, abolish 1.4 million jobs and result in an $830 loss in consumption by the average U.S. household every year from 2017 to 2040. The economic implications of the Clean Power Plan are severe and could result in pushing even more countries to consider cheaper alternatives overseas.

Source:  "Will President Obama's Regulations Move U.S. Industries Offshore?" Institute for Energy Research, August 31, 2015.

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