- State News
- Gas Industry
Thanks to Natural Gas, American Manufacturing is Coming Roaring Back
January 9, 2013
Affordable, safely-produced domestic natural gas is not only luring manufacturers back to the U.S., but these abundant, clean-burning resources are also providing a much-needed competitive edge to manufacturers operating in America. This week, once again, several reports underscore these positive impacts, and the compounding industrial opportunities brought to the U.S. through the responsible development of natural gas.
An MIT Technology Review analysis released today, titled “Shale Gas Will Fuel a U.S. Manufacturing Boom,” focuses on how American shale gas development is breathing life back into the U.S. manufacturing and industrial sectors. Here are key experts from that report:
Natural gas, which can be used to make a vast number of products, including tires, carpet, antifreeze, lubricants, cloth, and many types of plastic, is luring key industries to the United States. Just five years ago, natural gas prices were so high that some chemicals manufacturers were shutting down operations here. … Over the last 18 months, low U.S. gas prices have prompted plans for the construction of new chemical plants for the production of ethylene, ammonia for fertilizer, and diesel fuels.
The impact of the resurgence is being felt most strongly in the $148 billion market for ethylene, the world’s most high-volume chemical, and the foundation for many other industries. It’s used to make bottles, toys, clothes, windows, pipes, carpet, tires, and many other products. … In the U.S., it currently costs $300 to make a ton of ethylene, down steeply from $1,000 a few years ago.
The impact of cheap natural gas on manufacturing could extend beyond the production of various chemicals. Using natural gas as an energy source, rather than a chemical feedstock, could significantly lower costs for manufacturers who use a lot of energy, such as steel makers. (The steel industry is booming already for another natural gas-related reason—it’s supplying gas producers with pipes.)
Some companies are switching to trucks that burn natural gas directly. … Overall, cheaper chemicals, cheaper steel, and cheaper transportation could make the U.S. a far more attractive place for a wide range of industries.
And today the Council on Foreign Relations, in its Foreign Affairs publication, highlights how responsible shale gas development is creating a “New Power Map” globally. This from the article:
Hydraulic fracturing has been used widely for only about the past five years. But the result — a staggering glut of natural gas in the United States — is already clear. The price of natural gas in the country has plunged to a quarter of what it was in 2008. The low price has prompted changes throughout the U.S. economy, including the projected retirement of one-sixth of U.S. coal power generation capacity by 2020, the conversion of hundreds of thousands of vehicles from gasoline to compressed gas, and the construction and repatriation from China of chemical, plastic, and fertilizer factories that use natural gas as both raw material and fuel. By 2025, the professional services firm PricewaterhouseCoopers predicts, energy-intensive industries will create a million new U.S. jobs.
“Don’t count America out,” reports the Financial Post’s Barry Critchley today in an article under the headline “Why natural gas will lead the U.S. to continued strong growth.” Key experts from today’s Financial Post article:
Joseph Carson, a senior vice-president and director of global economic research at Alliance Bernstein, believes that the U.S.’s abundant supply of natural gas and the breakthrough technology it has developed to harness it, will be a major contributing factor to continued strong growth. “To achieve 3% growth, developments in the natural gas revolution will trigger an investment cycle that we haven’t seen for many years,” said Carson.
A rebound in the U.S. manufacturing sector given that U.S. industry “is natural-gas based.” Carson argues a rebound is already happening with a number of U.S. companies including Caterpillar, Ford, and Apple bringing production back to the U.S. As well European and Japanese companies have shifted some of their production facilities to the U.S. “It’s cheaper from an energy standpoint and from a currency standpoint,” especially for the Japanese.
Carson argues that through natural gas developments, the U.S. will be the low-cost producer. It will also “create the potential on which to form a number of businesses. When production is brought back home, you require considerable materials, supplies, distribution and an export framework. The manufacturing part of the economy has huge multiplier possibilities.”
The safe, job-creating development of American shale gas is resuscitating the U.S. manufacturing sector, and helping to create thousands of family-supporting jobs. Indeed, this historic manufacturing rebirth — driven by natural gas — is Firing up an Old-Fashioned American Industrial Revival, bringing New Hope to the Rust Belt, and Powering an American Renaissance.