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Benefits Of Fracking On U.S. Manufacturing

07/10/12

Source: King and Spalding’s Trade and Manufacturing Alert
Related Topics: International Trade

Shannon Doyle

The United States became the world’s largest producer of natural gas in 2011, according to BP’s Statistical Review of World Energy 2012. Natural gas production in the United States grew by 7.7 percent between 2010 and 2011, the largest volumetric increase in the world. Much of this production growth can be attributed to hydraulic fracturing, which has allowed the United States to tap natural gas reserves in shale deposits that previously were unavailable. Hydraulic fracturing, commonly known as “fracking,” uses pressurized fluids to create fractures in layers of rock. The fractures release natural gas, petroleum, or other substances into wells built to capture it. As of 2009, Pennsylvania had the most active wells in the country, but natural gas has also been produced through fracking in North Dakota, Arkansas, Texas, California, Colorado, Ohio, West Virginia, and New Mexico.

Fracking has been a controversial practice, with many expressing concerns over the environmental impact. The natural gas boom, however, has the potential to make a major economic impact. For example, Bloomberg recently highlighted the benefits in Ohio as the oil and gas industry expands in Ohio’s Utica Shale. Researchers estimate that $4.9 billion could be added to Ohio’s economy in 2014 as a result. Studies put the number of jobs that could be created, directly or indirectly, in Ohio alone between 20,000 and 204,000 by 2015. The situation in Ohio has the potential to be replicated across the country. Members of the industry estimate that shale gas supports 600,000 jobs across the country, with 270,000 additional jobs expected to be added by 2015.

The natural gas boom also has a wider economic impact. Delinquency rates on commercial mortgages in Ohio have dropped considerably, and other industries in the area have seen their revenues increase as the shale gas boom brings more businesses and people to the area. Because the increases in supply have decreased the prices of natural gas, CNBC reports that other industries stand to benefit greatly from the natural gas boom. More affordable energy will help the cost structure of manufacturers, particularly those in energy-intensive industries such as glass, paper, and cement. Chemical companies manufacturing natural gas treatment products expect their industry to grow, with some estimates indicating the possibility of an increase in production of up to $32.8 billion. The Consumer Energy Alliance-Florida notes that lower natural gas prices benefit agricultural producers and manufacturers, as well as the fertilizer industry. As natural gas production continues to increase in the United States, the economic benefits could be even more widely felt.







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