Shale Gas Will Fuel a U.S. Manufacturing Boom

[joshcryer]

Shale Gas Will Fuel a U.S. Manufacturing Boom
People predicting a manufacturing renaissance in the United States usually imagine whirring robots or advanced factories turning out wind turbines and solar panels. The real American edge might be in something entirely more mundane: cheap starting materials for plastic bottles and plastic bags.

The plummeting price of natural gas, which can be used to make a vast number of products, including tires, carpet, antifreeze, lubricants, cloth, and many types of plastic, is luring key industries to the United States. Just five years ago, natural gas prices were so high that some chemicals manufacturers were shutting down operations here. Now the ability to access natural gas trapped in shale rock formations, using technologies such as hydraulic fracturing and horizontal drilling, has led to a surge in natural gas supplies that have lowered American gas prices to a fraction of prices in other countries.

Over the last 18 months, low U.S. gas prices have prompted plans for the construction of new chemical plants for the production of ethylene, ammonia for fertilizer, and diesel fuels. Dow Chemical, for example, plans to spend $4 billion to expand its U.S. chemicals production, including a new plant, due to open in 2017, in Freeport, Texas. The plant will make ethylene from the ethane found in many sources of natural gas. (The last such plant to be built in the U.S. was completed in 2001).

The long view is not mitigation of climate change folks. I keep saying it. I hope people are listening. 'cause you're going to live in a world where food prices skyrocket and civil disruption is the norm.

[Prometheus_unbound]

1. Apart from the worries about climate change, which I more than agree with

This article (part of a long stream of similarly optimistic articles on the subject, not necessarily appearing on DU) smacks of propaganda.

If that gas can be freely sold abroad, there is no reason why it would benefit US manufacturing. If enough gas is exported, it may even hurt other exporting sectors by making them comparatively un-competitive.
There is a serious economic argument that an abundance of natural resources available for world export actually hurts the long term perspectives of industrial development by pricing national industrial goods out of the market and creating an economy based on raw materials, as has been the case for most OPEC countries. "Resource curse" may be exaggerated, but it is nonetheless a real problem.

Meanwhile, nothing in the shale gas boom will do anything to resurrect what really helps manufacturing, that is a cluster of related industries, suppliers and skilled workers. The American machine-tool industry, which is supremely important in this sense, has been largely wiped out by foreign competition in the 1980s, and that was even before the emergence of China as an important producer of industrial machinery. Industry is not coming back - not for several decades.

[joshcryer]

2. The article talks of a proposed 2017 chemical plant.

One thing about natural gas is that it's not easy to export economically in ships or any other type of container. You need massive natural gas ships and there are only a few in the world and the demand for them is small.

LNG is not like oil and I am unconvinced the article is propagandistic. It also happens to come from the MIT Technology Review which recently admonished Obama over climate change, so I'd take their word for it until contrary evidence is presented. No doubt as more ports go up we'll export more but as it stands now I think the article is accurate.

[FBaggins]

3. Except that natural gas isn't freely available for export.

There are severe limitations in our export capacity. There are rapid efforts under way to significantly expand that capacity, but nothing will change the fact that the costs involved in that export will always mean that the gas sold here will be much cheaper than the same gas shipped overseas