It was an attention-grabbing headline: “NH Export Growth Led Nation in 2013.” First touted by the NH Department of Resources and Economic Development (DRED) on its blog, the news appeared on headlines around the state. That claim was later used by DRED commissioner Jeffrey Rose and Gov. Maggie Hassan as proof of the success of the state’s export efforts and to help defend NH’s recent trade mission to Turkey when it came under fire from Hassan’s Republican opponents.
But like so many statistics, the numbers don’t tell the whole story. That huge spike in exports from NH is illusory at best, bringing little economic benefit to the state.
Export data from the U.S. Census Bureau and U.S. Department of Commerce updated in June does show NH’s exports increased 20 percent between 2012 and 2013 to $4.2 billion. (Data released earlier this year showed 22 percent growth as originally touted by the governor.) Driving that growth was $673 million in crude oil exports to Canada, making it NH’s second largest export. In fact, crude oil exports to Canada from NH skyrocketed 44,053 percent from $1.5 million in 2012.
The only problem? That crude oil merely travels on a train through NH from other locations to Canada, and most likely never stops here. When Business NH Magazine asked a variety of state officials where that oil comes from, given that NH neither produces nor refines oil, no one had an answer. Federal officials also could not offer answers despite issuing the statistics and the U.S. Department of Commerce in Washington D.C. declined to provide more details citing “data disclosure constraints.”
Here’s what we do know. Take out that crude oil and NH exports grew only 0.7 percent.
Tracking the Oil
As NH has no oil drilling, one might assume that someone here is importing crude oil and adding value to the oil. But the Energy Information Administration (EIA) lists no petroleum refineries in the Granite State. Perhaps oil is being shipped by a NH company through the Port of NH in Portsmouth? That’s a “no,” according to Geno Marconi, director of the NH Division of Ports and Harbors, who says there have been no such shipments through the port.
After making dozens of phone calls to directors of a number of NH government offices who had no idea where the oil is coming from, Business NH Magazine pieced together federal data with insights from an economist and Perry Plummer, director of homeland security and emergency management in NH. Plummer confirmed that some of that crude oil came from the Bakken oil fields, which span North Dakota, Montana and Southern Canada. A hydraulic fracturing boom (commonly known as fracking) there has led to the area becoming the second largest producer of crude oil in the United States behind Texas in 2012, according to the EIA. It recently surpassed 1 billion barrels of crude oil production.
Plummer met with train officials this spring following a federal order requiring all railroads to alert state emergency management of trains transporting Bakken crude oil, which oil industry analyst Bob van der Valk in Montana says is more flammable than regular crude. The order mandating such alerts was prompted by the 2013 disaster in Lac-Megantic, in which a train transporting Bakken oil derailed and exploded in the Canadian town, killing 47 people and leveling more than 30 buildings.
Plummer says Pan Am Railways, based in Massachusetts, carried the highly volatile Bakken crude through southeastern NH from March 2013 through August 2013, but crude oil exported during the remainder of 2013 and into 2014 is not the same Bakken crude. In fact, Plummer was not aware of the volume of crude traveling though NH until receiving inquiries for this story.
Plummer says Pan Am Railways was the only railway carrying the Bakken crude. Other railways (there are six others allowed to carry hazardous materials in NH) can and do carry other crude oil and petroleum products, though, they, along with Pan Am, are not required to report what they are carrying if it is not from the Bakken oil fields. While the train companies benefit economically from the oil traveling through NH, that benefit is not represented in the export figures. And the NH Department of Revenue Administration says there are no cargo taxes for rail lines.
Tina Kasim, program manager for the International Trade Resource Center of DRED, says DRED published the information about NH’s export increase with the local U.S. Department of Commerce office. She says the figures came from the U.S. Census Bureau and that she believes the oil was re-exported into Canada from NH, but she did not know how.
Kasim says exports are often credited not in the state producing the export, but rather the products’ final U.S. destination before leaving the country. That said, NH isn’t the final U.S. destination for Bakken crude oil; it’s Maine.
Pan Am confirmed the first time a train carrying Bakken crude oil travelled through Southeastern NH was in May 2012, which correlates with the timeframe NH began exporting crude oil. And Eastern Railroad News reported that train was testing a new route for Bakken crude to get to Irving Oil refineries in Saint John, New Brunswick, Canada. The route the train takes originates in North Dakota, travels through Chicago, over to New York and through Massachusetts before traveling through southeastern NH and up through Maine and ending up in Canada.
While NH was not the final U.S. stop on the route, Economist Dennis Delay of the NH Center for Public Policy Studies says export data is sometimes attributed to the state where the administrative records are kept, which in this case is likely Irving Oil’s U.S. corporate headquarters in Portsmouth. Irving did not respond to requests for an interview. Sprague Energy in Portsmouth, one of the largest independent suppliers of energy and materials handling services in the Northeast, including petroleum products, does not export crude oil, a company spokesman confirmed.
Because of the North American Free Trade Agreement (NAFTA) and assuming Irving is the buyer and exporter, the crude oil would have shipped to Irving’s Canadian office tax free.
For a bit of history, NH reported no crude oil exports in 2010 or 2011, followed by $2 million of oil being shipped in 2012. The Bakken Oil Business Journal, produced by van der Valk, reports that the Irving refinery in Canada started receiving crude oil from the Bakken formation in June 2012, which tracks with spikes in NH’s oil exports.
While Bakken crude oil ceased being transported through NH after August 2013, other types of crude oil continue to roll through. Between January and May 2014, U.S. Commerce data shows crude oil valued at $156.4 million passed through NH and, while that volume of oil moving through the Granite State without the knowledge of state officials is sure to raise eyebrows, the state’s seven railroads all sent letters to Plummer stating they are not currently sending trains with Bakken crude oil through NH.
The State Stands Behind the Figures
"Just because oil isn’t something we produce, that doesn’t mean we haven’t had export growth in the state. New Hampshire companies are coming up with customized solutions for people all over the world. If I take these numbers and pull out the oil numbers and growth drops, that doesn’t negate the fact that there was considerable growth for the state when it comes to exports,” Kasim says.
In fact, U.S. Census data for exports from NH to other countries broken down to specific products shows crude oil as the state’s top export, and when crude oil is taken out, NH exports increased only 0.7 percent between 2012 and 2013—a far cry from the nation-leading 22 percent touted by the state.
Business NH Magazine requested an interview with DRED Commissioner Jeff Rose and received this email response: “State level export data are provided by the U.S. government, primarily through the Department of Commerce and the Census Bureau. The methodology for counting exports is complex and consistent across all states. New Hampshire continues to see positive advancement of exports across multiple sectors and our International Trade Resource Center looks forward to continuing to promote new opportunities for New Hampshire companies.”
When asked about the mystery behind the statistics, Gov. Maggie Hassan’s office released a statement via spokesman William Hinkle stating, “All exports that move through New Hampshire demonstrate the state’s critical position as an economic hub and represent meaningful economic activity, as reflected by the federal formula for export growth that is the same for every state.” When asked whether the state may change its trade policy or tactics in light of this new information regarding NH’s supposed export growth, Hinkle continued to say there was a significant amount of export growth in a variety of sectors, including manufacturing of electric machinery, surgical instruments and defense-related parts, as well as in the food and beverage industry.
While those exports showed growth, sometimes even triple-digit growth, it was nowhere near the 44,053 percent hike for crude oil. Among NH’s top 20 exports in 2013, none other than crude oil grew more than 72 percent.
This entire issue could also create political problems in Gov. Hassan’s reelection bid, given that she cited export data to support a controversial trade mission to Turkey, ending a press release about the mission with this line: “The bipartisan budget that Governor Hassan signed last year increased international trade assistance and restored funding for trade missions to help businesses market and sell their products around the globe. These efforts to strengthen international trade helped make New Hampshire the fastest-growing state for exports in 2013 when business exports rose 22 percent.”
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