PwC report points to manufacturing renaissance led by American chemistry

Natural gas from shale could cut manufacturing costs for American industry by as much as $11.6 billion a year by 2025, while encouraging manufacturers to return home and start building and expanding factories, according to a new report by PricewaterhouseCoopers (PwC).

Natural gas from shale has rightly been described as a “game-changer” for the chemical industry, one that is spawning massive investments in the manufacturing sector.

And PwC’s report, “Shale Gas, Reshaping the US chemicals industry,” looks beyond the fanfare and finds indeed that abundant and affordable shale gas will help position the United States as a “major, global, low-cost provider of energy and feedstock to the chemical industry.”

Impact on chemistry

As the chemical industry goes, so goes the U.S. manufacturing base, with the benefits reaped by chemistry sending a ripple effect across the economy, says Anthony J. Scamuffa, the U.S. Chemicals leader for PwC:

As the U.S. chemical industry expands (natural gas liquids) conversion into a higher volume of downstream products, the positive impact could flow through the value chain into other manufacturing sectors, particularly given that chemicals are used in 90 percent of all manufactured products. Not only could the abundance of (natural gas liquids) help drive reduced pricing for derivative products, it could also potentially drive domestic re-shoring activity and possibly bring about a favorable shift in the U.S. balance of trade as the ethylene capacity comes on line.

Shale boom echos across U.S.

The low cost of natural gas and chemicals gives U.S. manufacturers a huge competitive edge over companies around the world that rely on more expensive, oil-based feedstocks. America’s chemistry industry is thinking long-term, according to ACC president and CEO Cal Dooley:

We are already seeing a significant increase in capital investment by chemical and other manufacturing industries in the Appalachian region and along the Gulf Coast. Thanks to these new supplies of affordable, abundant natural gas, we expect that as many as 30 chemical projects could be developed in the United States over the next five years. This means a more competitive manufacturing sector, more jobs and a growing economy.

According to an ACC report released last year, a modest increase in natural gas from shale could create more than 400,000 American jobs, generate more than $132 billion in U.S. economic output and produce $4.4 billion in state and local tax revenues.

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