Shale gas boom will drive U.S. economy, concludes report
U.S. manufacturing will continue to take full advantage of the boom in shale gas production, in the opinion of the American Chemistry Council (ACC).
With political leaders still locked in negotiations over the fiscal cliff and companies appearing to favor lean enterprise principles, the annual report by the ACC is another indication that the manufacturing industry can continue to grow. The availability of cheap energy is seen as one of the reasons why U.S. manufacturing has been able to fight back against the perceived dominance of the Asia-Pacific market.
According to The Financial Times, this domestic energy boom will be economically beneficial on a national basis. U.S. manufacturers have said that they will invest over $90 billion in businesses that use cheaper natural gas, with steel production and petrochemicals expected to benefit.
"This revolution is creating great opportunities to increase manufacturing capability, and has tremendous potential for economic impact and job creation," said Greg Garland, chief executive of Phillips 66, in an interview with the FT.
This would fit in with the manufacturing future predicted by the ACC report, which believes that shale gas production is the most significant development in domestic energy in the last 50 years. American chemical manufacturers provide $760 billion to the U.S. economy and are considered to be one of the most important elements of the manufacturing industry with over 96 percent of all manufactured goods requiring some kind of chemical element.
"Following a decade of high and volatile natural gas prices that destroyed industrial demand and lead to the closure of many gas-intensive manufacturers, shale gas offers a new era of American competitiveness that will lead to greater investment, industry growth, and employment," said Kevin Swift, lead author of the report and the chief economist at the ACC.
This economic expansion is likely to see more manufacturers bring jobs back to the U.S., as increased demand for quality management in manufacturing dovetails with the reputation of companies for providing competitive pricing in the global marketplace.
While the domestic opportunities for growth have been considered essential to the growth of the economy, the ACC report also sees an increase in exports, with the authors estimating that chemical manufacturing revenue could increase by 9 percent over the next two years to $833 billion by 2014.
"Other natural gas and energy intensive manufacturing industries will also realize renewed competitiveness and increased output, potentially creating 662,000 direct and related jobs and generating $342 billion in economic expansion," concludes Swift.