Economic Outlook n° 1187 | Special Report | The Reindustrialization of the United States
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them away to compete against the U.S. Taxes on repatriated capital should be removed.
▶ Petroleum
The overwhelming success this industry enjoys is due to insatiable global demand for its products such as personal computers, smart phones, and tablets. Competition and continuous innovation have crea- ted demand for products unimagined just a few years ago. Yet this same competition continuously drives prices down due to increased productivity, automation, off-shoring, and continuous improve- ment in semiconductor design. The industry is fur- ther characterized by a convergence of features on new products, such as cameras, web browsers and email on phones. Research and Design (R&D) spen- ding is critical in this industry.
Globally the consumer electronics industry is expec- ted to grow somewhat more slowly in 2012 than pre- viously anticipated, around 2.5%. The industry is expected to exceed $1 trillion in added value in 2012. Much of the growth is due to emerging markets which are not yet fully penetrated. In the U.S. in 2013however, consumer electronics revenues are expected to grow 4.5% and exceed $215 billion, according to the Consumer Electronics Association (CEA). Smartphone sales will comprise the largest segment of revenue at $34 billion but will only grow 24%. Tablet sales will skyrocket over 80% higher to almost $30 billion. Personal computers have slowed due to cannibalization from tablets, but ultrabook laptop sales are still expected to reach $15 billion. The Manufacturers Alliance for Productivity and Innovation (MAPI) forecasts high-tech industrial pro- duction (computers and electronic products) to grow by 5.7% in 2013 in the U.S. Higher growth in production vs. revenues is to be expected in this industry with ever-falling prices.
California has large crude oil reserves and is the third largest producer of crude in the nation. Much of the demand for this crude comes from within the state itself and this demand is not expected to drop off in the foreseeable future. Of all the states, California has by far the most vehicles. There are 20 million cars in California, 15% of the nation’s total of 135 million. The next closest state, Texas, has a little more than half that many. Including trucks, buses and commercial vehicles, there are a total of 33 million vehicles in Cali- fornia, or 14% of the nation’s total. The vast majority of these vehicles run on gasoline, followed by diesel fuel, and natural gas. Forty percent of all energy consumed in California is for transportation.
California has always been at the vanguard of envi- ronmental protection and as such it has unique requirements for the gasoline that can be used there. As a result, California refineries are ranked third in capacity nationwide and are basically the only ones which produce these blends. The refineries run at almost 100% capacity to meet demand. Furthermore, California refineries have no competition from out- side of the state and are not expected to soon. These present very good conditions for business going for- ward – unquenchable demand and no competitors. California is also the 12th largest producer of natu- ral gas and, again, demand is built-in within the state. Over 57% of the state’s electricity is derived from natural-gas fired plants. And as the price of natural gas fallen, the cost advantages for running vehicles on this fuel will become more apparent. Municipal busses, commercial trucks, and other vehicles are already making the switch. Building the infrastruc- ture to support the growing use of natural gas is likely to be a significant industry going forward as there are very few filling stations available.
Despite its somewhat spotty record, renewable energy is making strong inroads in California and will certainly be a growth industry going forward. For ins- tance, California ranks first in electricity production from renewables such as biomass and geothermal energy. Given the state’s propensity to take the lead on improving energy efficiency, California will likely be the premier market for the development of rene- wable energy. For example California has passed a global warming bill which, according to the state, “establishes a first-in-the-world comprehensive pro- gram to achieve cost-effective reductions in green- house gases through energy conservation and rene-