By Mike Mikus, Director, Mid-Atlantic Chapter, Consumer Energy Alliance
With Americans perhaps more divided than ever, imagine a rare source of bipartisan acclaim that would spawn more “Made in the USA” labels and fewer that read “Made in China.”
That is precisely what could happen if the shale-gas boom continues to thrive and catapult America’s flagging manufacturing sector into a long-overdue renaissance.
Domestic manufacturing has taken a nosedive in the past few decades, as a tour of some of the most economically depressed areas in the Rust Belt attests.
By most accounts, public opinion on the overall state of U.S. energy is similarly bleak. About 71% of those surveyed in a recent CNN/ORC poll say high gasoline prices have caused financial hardship.
However, it’s not all bad news on the energy front. Thanks to an innovative production technology called hydraulic fracturing, energy producers are able to extract previously inaccessible deposits of shale gas; and domestic manufacturers that purchase this fuel now have a cost advantage with one of shale’s byproducts, polyethylene.
The most common form of plastic, polyethylene is used in countless finished goods, primarily in containers and other packaging. Considering that in 2010 the United States imported $264 million worth of plastic goods from China, any cost advantage American manufacturers can gain with plastic is a good one.
Shale gas production similarly can spur construction of plants that buy natural gas for fuel or as raw material to make chemicals, plastics, fertilizer, steel and other products. A report by PricewaterhouseCoopers LLC estimated that such investments could create 1.0 million U.S. manufacturing jobs over the next 15 years.
PricewaterhouseCoopers also predicted that shale-gas development could add approximately 1.0 million jobs by 2025, encourage greater investments in U.S. plants and reduce U.S. manufacturers’ natural gas expenses by as much as $11.6 billion annually through 2025.
With announcements of new manufacturing plants opening up across Pennsylvania, Shell’s decision to build the first petrochemical plant in the Philadelphia region and a Charlotte, N.C.-based steelmaker’s construction of a $750 million plant to produce iron from natural gas and iron-ore pellets in Louisiana, it is no wonder that many people see the responsible development of shale gas resources as a “game changer,” boosting economic output and creating high-wage, high-skilled jobs throughout North America.
Unfortunately, the energy manufacturing industry is facing a bevy of increased regulations and punitive taxes that could upend this progress. In fact, the Pennsylvania Department of Labor and Industry estimates that 36,618 jobs could be in jeopardy because of looming closures of the ConocoPhillips’ Trainer and Sunoco’s Marcus Hook refineries, plus the region’s largest, soon-to-be-closed Sunoco Philadelphia refinery.
Given that these three refineries represent 50% of the Northeast’s refining capacity, these closures could bring about even higher prices at the gas pump.
One example of ill-devised regulation that is driving gas prices higher and refiners out of business is the Environmental Protection Agency’s fuel-blend mandate that charges refiners $6.8 million in penalties for not using enough cellulosic biofuel in gasoline — even though the technology doesn’t exist on the commercial market.
A strong record of job growth is a surefire way toward re-election. What some lawmakers fail to understand, however, is that their rush to “respond” to energy crises can erase much of the progress borne from American ingenuity in the private sector.
Regulators need to stand clear and let our energy manufacturing sector realize its renaissance.
Editor’s Note: Mike Mikus is director of the Consumer Energy Alliance’s Mid-Atlantic Chapter based in Bridgeville, Pa. For information, visit the alliance’s website.
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