Shale Gas Benefits Industries | Russell T. Rudy Energy LLC
“Rigzone” cites a recently released report by the U. S. Conference of Mayors which maintains that the recent growth in shale energy supplies has resulted in positive rippling effects on all sectors of the economy. This is especially true of those manufacturing industries which are energy intensive that saw an increase of 196,000 jobs from 2010 to 2012. Steel, iron, fabricated metals and machinery producers have all benefited, but petrochemicals most of all.
With an increasing supply of energy, especially natural gas, downward pressure has been placed on prices. Since natural gas is primarily a domestic market, prices have dropped substantially as supply has increased. U. S. manufacturers have for years been at a competitive disadvantage against foreign competitors, especially in Asia, due to our relatively high labor costs. However, these are increasingly being offset by abundant, reliable and cheap natural gas. While the benefit to American consumers and manufacturers has been across the board, the petrochemical industry has been especially fortunate.
Most petrochemical plants use either ethane or naphtha based feedstock. Ethane is derived from natural gas and naphtha from crude oil. Since domestic natural gas is much cheaper than crude oil, U. S. petrochemical producers who use ethane have a major cost advantage over foreign competitors using naphtha.
The implications of this cost difference are not lost on investors. Investment in incremental petrochemical capacity of $50 billion is expected over the next three to four years along the Texas and Louisiana Gulf Coast. This will initially result in construction jobs and ultimately employment for plant operations, maintenance, administrative and engineering personnel. Truly the shale revolution is resulting in a manufacturing renaissance for the U. S.
To read the article in its entirety, please go to www.rigzone.com/news/oil_gas/a/133108/North .
