The price of energy – from the electricity needed to run a factory to the gas powering the delivery truck – impacts the final cost of every item you purchase. Some things require more energy than others. In the steel industry, energy can account for 20 to 40 percent of the cost to make materials for things like stainless steel appliances or railroad tracks. So when manufacturers have access to less expensive energy, their overall production costs decrease as well.
For decades, Americans saw their jobs move overseas where the labor, and thus cost of doing business, was cheaper. But a shift since 2010, according to the Bureau of Labor Statistics, shows that the number of manufacturing employees continues grow. Why? Innovative technologies like hydraulic fracturing and horizontal drilling now provide access to abundant supplies of natural gas. This energy source’s increased availability caused its prices to drop and companies have utilized the savings in many ways, which includes hiring more workers.
This is especially true for U.S. energy-intensive manufacturers, who now have an advantage over many foreign competitors, and that means more investment and jobs. For example, access and proximity to this plentiful energy resource has made the U.S. the place to be for petrochemical and plastics manufacturers. According to the American Chemistry Council, our abundant supply of natural gas has attracted nearly $200 billion in new manufacturing investment which will create 468,000 new jobs by 2025.
The need for this plentiful, affordable energy source is not slowing down. According to the National Association of Manufacturers, total natural gas demand is expected to increase by 40 percent over the next decade, with the manufacturing and power generation sectors driving that need.
Natural gas is in manufactured products.
From parts in the cars we drive to the toys we buy our children, natural gas products serve as a building block for thousands of consumer goods. It’s one of the primary feedstocks for chemical compounds know as petrochemicals. Scientists classify these compounds into one of three categories – olefins, aromatics and synthesis gas. Natural gas liquids produce around 90% of U.S. olefins, which is a class of chemicals that includes ethylene, propylene, and butadiene. These three petrochemicals are required to manufacture a wide range of items that support the leisure and fundamental comforts of modern life.
Vehicles, no matter the power source or size, are lighter, sleeker and faster because of the natural-gas based plastics, fibers, compounds and adhesives used to make and maintain them. They’re also safer thanks to the seat belts and air bags made from polyester, a strong, durable and flexible fiber.
Products made with natural gas also save lives – acrylic lenses sharpen the vision of those suffering from cataracts; sterile products, like intravenous lines and bags, gloves, masks and catheters, prevent the spread of disease; and medications are able to last longer with refrigeration.
The Renaissance of petrochemical manufacturing.
Just a decade ago, the U.S. petrochemical industry was in decline. However, greater access to low-cost natural gas feedstocks, and an increased need for goods manufactured with them, has shifted the tide. According to the International Energy Agency, global economic growth is lifting people in developing countries into the middle class. Higher incomes give these individuals more money to buy items made with petrochemicals like kitchen appliances, toys, credit cards and furniture.
This demand has resulted in multimillion-dollar investments to expand or build new petrochemical manufacturing facilities. In fact, jobs at energy-related chemicals companies are projected to rise from 53,000 in 2012 to nearly 319,000 by the end of 2025. Not only will job growth increase, but so will wages. Labor income in the energy-related chemicals industry will likely increase nearly $3.8 billion in 2012 to just over $26 billion in 2025.
And though the industry has a long history along the Gulf Coast, this boon has the potential to create a secondary hub in Appalachia. Two advantages of this area are its proximity to abundant natural gas liquids in the Marcellus and Utica shale formations and to major manufacturing markets in the Midwest and East Coast. According to the American Chemistry Council, this growth could result in over 100,000 new jobs for residents throughout the mountain region, thanks in part to natural gas.
The shale revolution has meant so much more than just lower electricity prices for end consumers. Increased natural gas production has resurrected manufacturing, and brought along with it more jobs, higher wages and the potential for new business in new regions.