Don't Count on Shale Gas to Revive Manufacturing
Posted at 11:50 a.m. on May 21, 2012
A new PricewaterhouseCoopers LLP report finds that with a high recovery of shale gas and low prices of natural gas, “US manufacturing companies could employ approximately one million more workers by 2025.” But not everyone is so sure.
Michael Levi: “Most U.S. manufacturing is not energy intensive. Joe Aldy and Billy Pizer reported in a 2009 paper that only one tenth of U.S. manufacturing involved energy costs exceeding five percent of the total value of shipments. These industries – the most prominent of which are iron and steel, primary aluminum, bulk cement, chemicals, paper, and glass – are what we are talking about when we discuss the potential for an energy-driven manufacturing boom. The size of these sectors would need to grow enormously to have revolutionary consequences for the fate of the U.S. manufacturing sector.”
“All the talk of oil and gas fueled manufacturing has muddled something essential: it’s production, not consumption, that’s mostly driving gains so far. This, not cheaper energy, is the main reason that you’re seeing steel plants stay open or expand – they are supplying drillers.”
