Swamp Stomp
Happy New Year!!!
Volume 17, Issue 1
According to the findings of two recent economic reports done, the United States economy is being strengthened and U.S. manufacturing is becoming more competitive due to the increase in development of American natural gas. The first report was done by researchers from the prestigious London School of Economics. At the conclusion of their report, they found that natural gas development “has made U.S. manufacturing more competitive” and helped advance American manufacturing exports to the world. These economic experts concluded “that the cost advantage due to the shale gas boom may have helped the US economy recover significantly faster than it would otherwise have done after the financial crisis of 2007/08.”
To make the report easier to read and understand, here are the key takeaways from the London School of Economics’ report:
- The report finds an increase to manufacturing competitiveness: “Firms that manufacture energy-intensive products experienced a much more substantial cut in production costs and, hence, a boost to their competitiveness.”
- It is cheaper to have domestic natural gas: “For every dollar increase in the price gap of natural gas between the United States and Europe, output in chemical manufacturing increased by 1.6%. In the face of nearly a $10 gap by the end of our sample period, this baseline result is large. … The shale gas boom provided energy intensive industries with a cost advantage over their international competitors.”
- There has been an increase in manufacturing jobs: “Total manufacturing sector employment increased by around 356,000 jobs up to 2012. A comparison with previous research suggests that, for every two jobs created in direct relation to fracking, this indirect effect adds more than one additional job elsewhere in the economy.”
- Boosts American manufacturing exports: “Given that the price gap widened to $10 by 2012, we find that average manufacturing exports have expanded by roughly 10% due to the shale gas boom. This amounts to roughly 4.4% of the overall value of exports of goods and services from the United States in 2012.”
A second study was published by the National Bureau of Economic Research, experts with the University of Pennsylvania. These experts found that natural gas development has been the direct cause of a net increase of 4.6 million new American jobs.
The import facts from the National Bureau of Economic Research study:
- Creates jobs: “In the aggregate, we estimate that during the shale oil period 4,600,000 (net) new jobs are linked with the development of shale oil technology. This represents a 4.2% increase in the number of jobs across the industries in our study, compared to the aggregate number of jobs at the beginning of the shale oil period.” (p. 4)
- Can drive the economy long-term: “We find that…shale oil is an important contributor to the future U.S. economic growth.” (p. 48)
“Both economic reports further underscore the key message that MSC’s Dave Spigelmyer told Fox News late last week: The continued growth of natural gas development – and the safe modernization of infrastructure to move gas to market – presents tremendous opportunity for the Commonwealth’s economy and environment” (Shale…).
What do you think about the findings of these reports? Should the U.S. invest more in natural gas development? What are your concerns about natural gas development?
Source: “Shale Makes U.S. Manufacturers, Economy More Competitive.” Marcellus Shale Coalition. Marcellus Shale Coalition, 21 Dec. 2016. Web. 21 Dec. 2016.