The Economist, Great Britain’s globally-respected analyst of political and economic trends, has given a sterling endorsement of the benefits of natural gas for the U.S economy, especially the chemical industry.
The story’s bottom line: “Gas is the new gold,” and the shale gas and oil bonanza is transforming America’s energy outlook and boosting our country’s economy, starting with American chemistry.
The Economist’s glowing review begins in Pennsylvania where the magazine found once struggling towns, riding a wave of industrial expansion, evidenced by everything from refurbished family farms and new office parks, to crowded restaurants and a revival of the state’s steel industry.
The reason for “this flurry of investment lies a few thousand feet below the ground; the Marcellus shale,” which is America’s biggest natural gas field:
All told, the Marcellus already supports over 10,000 jobs in Pennsylvania, according to an analysis by IHS, a research firm. That figure is expected to rise to over 220,000 in 2020. Shale gas gave the local economy a $14 billion boost last year.
Pennsylvania is hardly the only state benefiting from shale gas. Nor are exploration and production jobs the only ones being created. But the credit goes to the world’s second lowest gas prices for a business boom. “American factories paid a third of the German gas price and quarter of the South Korean one,” The Economist noted.
Cheap gas translates into lower U.S. electricity prices – just a quarter of the price Italian factories pay for power, The Economist reported. Of course, the chemistry industry benefits because it relies on low priced gas, not just for power but also as a feedstock needed to manufacture virtually every product made in America.
As a result, the chemical manufacturers are enjoying a growth spurt, The Economist noted:
Chevron Phillips, Dow Chemical, Formosa Plastics, Occidental Petroleum and Williams are all expanding existing chemical plants or building new ones. A chemical firm called Methanex is dismantling one of its factories in Chile and shipping it to Louisiana to take advantage of low gas prices. CF Industries is expanding its local fertilizer production.
The chemical industry, the foundation of America’s manufacturing might, is creating a ripple effect revitalizing the economy, as The Economist explained:
Last year, the American Chemistry Council forecast that over the next couple of years cheap gas would spur some $72 million in new investment in eight gas-hungry industries alone. That, in turn, would lead to a further $342 billion in new economic activity in 2014-20, along with the creation of 1.2m jobs.
It’s no wonder parties on both sides of the Atlantic see natural gas as sparking an energy revolution and manufacturing rebirth in America.