Access to vast, new supplies of natural gas from previously untapped shale deposits is one of the most exciting domestic energy developments of the past 50 years. After years of high, volatile natural gas prices, the new economics of shale gas are a “game changer,” creating a competitive advantage for US manufacturers, leading to greater investment and industry growth.
American manufacturers use natural gas to fuel and power a wide variety of processes to produce a wide variety of manufactured goods. Growth in domestic shale gas production is helping to reduce US natural gas prices and create a more stable supply of natural gas for fuel and power. It is also leading to more affordable supplies of ethane, a natural gas liquid and key raw material used in the chemical industry. As economic theory teaches and history shows, a reduction in the cost of a factor input such as natural gas leads to enhanced competitiveness and a positive supply response. This, in turn, leads to new private sector investment in the United States, which fosters job creation.
This report is the second in a series of analyses examining the potential economic and employment benefits of natural gas development from shale. In March 2011, the American Chemistry Council (ACC) analyzed the potential economic effects of increased petrochemicals production to the US economy. That analysis -- Shale Gas and New Petrochemicals Investment: Benefits for the Economy, Jobs, and US Manufacturing – analyzed the impact of a 25 percent increase in ethane supply on growth in US petrochemicals. It found that the increase would generate new capital investment and production in the chemical industry; job growth in the chemical industry and its supplier sectors; expanded economic output; and increased federal, state and local tax revenue. This new report extends the analysis to consider the impact of lower natural gas prices on a wider segment of the US manufacturing base.
In this new report, Shale Gas, Competitiveness and New Investment: Benefits for the Economy, Jobs, and US Manufacturing, ACC analyzed the effects of renewed competitiveness and the supply response among eight key manufacturing industries: paper, chemicals, plastic & rubber products, glass, iron & steel, aluminum, foundries, and fabricated metal products industries.