Cheapnatural gas has helped fuel a manufacturing renaissance in the United States,according to a recent report from the White House's National Economic Council.
Thereport said the U.S. has added 800,000 new jobs in the manufacturing sectorsince early 2010. In addition, manufacturing has grown at nearly twice the paceof the economy overall during that time span, representing the longest periodwhere manufacturing has outpaced U.S. economic output in a half-century.
Accordingto the report, U.S.-based manufacturers now enjoy "a competitive advantage"due to cheap natural gas prices compared to other direct competitors. Thoseprices, the council noted, are well below those of Europe and Asia's.
"Oncepoised to be a major natural gas importer, the United States is now the numberone natural gas producer in the world," the report said. "The surgein American natural gas production has lowered energy costs for manufacturersand driven job growth, with U.S. natural gas costs one-half that of Europe andone-third that of Asia. Recent analysis estimates that industrial sectorconsumers of natural gas were better off by about $22 billion between 2007 and2013 due to abundant, inexpensive shale gas."
Thecouncil said American direct manufacturing production costs compare favorablyto other advanced economies, particularly due to the high productivity ofAmerican workers and the low price of gas.
"Thestrong foundation for manufacturing expansion and growing optimism frommanufacturing firms about the U.S. as a location for production rests onseveral important factors: the changing cost and supply chain dynamics ofglobal manufacturing production, the increasing convergence of a range ofmanufacturing production technologies, and the increasing policy emphasis onsupporting a robust manufacturing base," the NEC said. "First, U.S.direct manufacturing production costs compare favorably to other advancedeconomies, particularly due to the high productivity of American workers andthe low energy costs as a result of abundant natural gas. According to TheBoston Consulting Group, the U.S. relative costs of production in 2014 werewithin [5%] of those of China and substantially less than countries like Japan,Canada, Brazil, France and Germany. In addition, companies increasinglyrecognize the need to take a 'total cost' approach when evaluatingmanufacturing location decisions."
TheAmerican Petroleum Institute said the manufacturing surge was proof thatAmerican producers were helping the economy as a whole.
"Today'sreport is a significant reminder that our nation's leadership in energyproduction and in clean, abundant natural gas has meant lower prices forAmerican manufacturers and consumers," Executive Director for MarketDevelopment Marty Durbin said. "Not only has the success of natural gassharply reduced electricity prices and delivered huge economic benefits, butthe development of America's natural gas resources is making a significantpositive impact on our nation's environmental and energy sustainability goals."