Shale gas boom could bring manufacturing jobs back to U.S., economists say
The shale gas boom hitting Ohio, Pennsylvania and several other states could provide a major advantage to manufacturers in the United States -- cheap energy that could significantly cut the costs to produce goods here, a group of economists said Thursday.
"By 2025, the manufacturing sector alone could save $11.5 billion in energy costs," Robert McCutcheon, an economist with consulting group PwC, said at a manufacturing summit hosted by the Federal Reserve Bank of Cleveland. McCutcheon's company, formerly called PriceWaterhouseCoopers, released a study late last year predicting that as many as 1 million new U.S. manufacturing jobs could come from lower-cost energy.
"If we save $11.5 billion, that's investment capital that could be redirected elsewhere," McCutcheon added.
Cleveland Fed President and Chief Executive Sandra Pianalto said manufacturing businesses have been leading the economic recovery in the United States for the past two years, but she added that job growth hasn't been as strong as profit and sales growth. To add jobs, the sector needs to attract new manufacturers and bring production back to the United States from other countries.
That's where shale gas and cheap energy could come in.
Pianalto said one steel producer told her recently that energy costs in North America are one-third the cost of European steel plants [reporter's note: an earlier version of this story said U.S. costs were one-tenth of Europe's. Pianalto's office said the Cleveland Fed chief went over her notes and found that one-third was the more accurate figure]. Those costs, coupled with weak demand, has ArcelorMittal expanding in Ohio while it cuts production in Europe. Several other steel plants in the region have also increased production to sell pipeline tubes and other parts to oil and gas companies...MORE