There has been a lot of discussion in the U.S. recently about the benefits of natural gas. We’ve got a pretty comprehensive list and have posted several blog entries that extoll the value of this natural resource. So it’s really not surprising to read that natural gas plays an important role in American manufacturing. The National Economic Council recently released a report titled “Revitalizing American Manufacturing: The Obama Administration’s Progress in Establishing a Foundation for Manufacturing Leadership” that offers some pretty interesting insight into the impact that the use of natural gas can have on the manufacturing sector.
One point made by the report is that the use of natural gas strengthens American competitiveness:
“Over the last eight years the Administration has taken a number of steps that make the U.S. more competitive for manufacturing investment, like making permanent the research and experimentation tax credit which largely benefits manufacturing firms, enabling small business to expense capital investment to strengthen our supply chains, investing in clean energy to capture this growing opportunity, and facilitating safe and responsible natural gas production to reinvigorate energy-intensive industries.”
One element of this point is the low price of energy:
“First, U.S. direct manufacturing production costs compare favorably to other advanced economies, particularly due to the high productivity of American workers and the low energy costs as a result of abundant natural gas. According to The Boston Consulting Group, the U.S. relative costs of production in 2014 were within 5 percent of those of China and substantially less than countries like Japan, Canada, Brazil, France, and Germany. In addition, companies increasingly recognize the need to take a ‘total cost’ approach when evaluating manufacturing location decisions.”
And that’s not all:
“First, for the roughly one-fifth of U.S. manufacturing that is energy-intensive, low-cost reliable energy is important to continued competitiveness. U.S.-based manufacturers currently enjoy a competitive advantage from affordable natural gas. Once poised to be a major natural gas importer, the United States is now the number one natural gas producer in the world. The surge in American natural gas production has lowered energy costs for manufacturers and driven job growth, with U.S. natural gas costs one-half that of Europe and one-third that of Asia. Recent analysis estimates that industrial sector consumers of natural gas were better off by about $22 billion between 2007 and 2013 due to abundant, inexpensive shale gas.”
So, as you venture out to the stores to begin your holiday shopping, keep in mind that the lower prices you’re enjoying are in part thanks to ample and affordable natural gas!