Appalachian Basin

Economists Note Manufacturing Comeback Thanks to Affordable Energy

Those involved in the oil and gas industry have been touting America’s “manufacturing renaissance” thanks to affordable natural gas for the last couple years.  Now, the theory is garnering broad support from business leaders and economists across the country.  National Public Radio ran a story this week about the increase in manufacturing resulting from the incredible technology which provides cheap domestic natural gas.

Hydraulic fracturing has helped guarantee factories and plants with the ability to obtain affordable and reliable energy.  Industrial production has grown at a five percent annualized rate since the Great Recession ended, which is more than twice as fast as the economy as a whole.  According to IHS Global Insight, an estimated $95 billion worth of plants are being built by companies in the chemical manufacturing industry.

Former president of the National Association of Manufacturers, Jerry Jasinowski, probably knows more about the manufacturing than most. Now an economist, Jasinowski touted the incredible growth the nation is seeing:

We are entering a new era—Jerry Jasinowski (Cheap Natural Gas Pumping New Life Into U.S. Factories, 3/28/13)

Since 2010, around 500,000 manufacturing jobs have been created, making a total of 12 million.  While that is significantly less than the 15 million the U.S. enjoyed a decade ago, it still proves we’re moving in the right direction.  When transportation costs fall as trains and trucks move to compressed natural gas as their fuel source, the manufacturing industry will cut even more costs and create even more jobs.

Jobs won’t only come from direct manufacturing work.  Peter Cella, CEO of Chevron Phillips Chemical Co. in Texas explained indirect jobs will be very important to the industry:

For every one direct chemical job in one of our plants, there are six additional indirect or induced jobs to serve that job—Peter Cella (Cheap Natural Gas Pumping New Life Into U.S. Factories, 3/28/13)

Chevron Phillips Chemical Co. has seen the benefits of this “manufacturing renaissance”, they are investing in a $5 billion expansion of its Cedar Bayou Chemical Complex.  Also in Texas, Dow Chemical Co. is making billions of dollars of expansions to their facilities. They plan to add 600 new direct jobs, which doesn’t include the plethora of induced work.  Earl Shipp who runs Dow’s operations in Texas told NPR how low-cost energy has changed the industry:

We have low-cost, affordable feed stocks again in North America. It’s the start of what some of us in the industry call a renewal of our industry in the United States—Earl Shipp (Cheap Natural Gas Pumping New Life Into U.S. Factories, 3/28/13)

Here in Ohio, we have seen the resurgence of the steel industry and a move away from the “Rust Belt” stigma.  As production continues to ramp up in Ohio and more natural gas becomes available to factories across the country, we will see more Ohioans and Americans find jobs they thought would never return.

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