Report: Shale Transforming American Economy
A new IHS CERA report released this week shows that responsible shale development is supporting a healthy American economy by supporting millions of jobs, increasing investments in new manufacturing plants, and slashing household energy bills. The report is but one more indicator of the tremendous economic opportunity shale development is creating directly, and indirectly, across the nation.
While 90 percent of shale development is happening on state or private lands, this development is having huge implications for the whole U.S. economy. In 2012, the shale value chain supported 2.1 million jobs, $75 billion in federal and state tax revenues, and added $283 billion to the U.S. gross domestic product (GDP). By 2020, these numbers will rise to 3.3 million jobs, over $125 billion in federal and state tax revenue, and more than $468 billion in annual GDP contributions. As for our trade deficit, IHS finds shale development – and the ripple effect it is having across the country – will reduce our trade deficit by more than $164 billion in 2020, which is equivalent to one-third of the current deficit.
In the industrial sector, the abundance of natural gas liquids and clean-burning natural gas is providing affordable raw materials and fuel for American manufacturers, especially chemicals and plastics. According to the report, the United States is now “one of the world’s lowest-cost petrochemical producers” – a fact buoyed by the number of chemical projects moving back to American soil. This development will support 460,000 combined manufacturing jobs in 2020, and up to 515,000 jobs – 4.2 percent of all manufacturing jobs — by 2025. This will also spur $346 billion in investments throughout a variety of value chains between 2012 and 2025. This includes:
- $100 billion invested in new chemical, plastics and related derivative manufacturing facilities, and
- $216 billion towards new or modified pipeline natural gas processing facilities, infrastructure, natural gas liquids (NGL) fractionation facilities, and natural gas liquefaction projects.
Meanwhile, this affordable fuel supply brought on my American energy production is not just benefitting manufacturers, but is also providing tangible savings for households across the nation. IHS CERA found the lower energy costs created by shale development provided an average of $1,200 in savings per U.S. household in 2012. Projections show savings could grow to $2,000 in 2015 and up to $3,500 in 2025.
As Daniel Yergin stated with the report’s release:
“The unconventional oil and gas revolution is not only an energy story, it is also a very big economic story that flows throughout the U.S. economy in a way that is only now becoming apparent.”
More jobs, more savings for American families, more tax revenue for vital public services, and stronger American businesses – onshore natural gas development is stimulating America’s economy from the well pad to the steel mill, and everywhere in between. Shale development is having a transformational impact throughout the American economy, and clearly will for many years to come.