In a report released Wednesday to accompany President Barack Obama’s focus on renewed investment in the U.S. economy, the White House credits the natural gas boom for fueling economic expansion. Here is an excerpt from the report:
America’s Natural Resource Boom
Only a few years ago, fears of a looming natural gas shortage led to significant investments in the rapid
construction of liquefied natural gas (LNG) port facilities that could enable the United States to import
vast quantities of natural gas. Projections from the Energy Information Administration (EIA) as recently
as 2005 suggested expanding natural gas imports for decades. Just several years ago, leaders of the
domestic organic chemical industry predicted that shortages in natural gas would dramatically raise the
domestic price of natural gas, one of their key inputs. Without the prospect for adequate domestic
supplies of natural gas at reasonable prices, companies increasingly pointed to overseas operations
where they could access large quantities of low‐cost natural gas.
Since the mid‐2000s, however, the discovery of new natural gas reserves, such as the Marcellus Shale,
and the development of hydraulic fracturing techniques to extract natural gas from these reserves has
led to rapidly growing domestic production and relatively low domestic prices for households and
downstream industrial users. Appropriate care must to be taken to ensure that America’s natural
resources are extracted in a safe and environmentally responsible manner with the safeguards in place
to protect public health and safety. Provided these precautions are taken, the potential benefits to the
U.S. economy are substantial.
Of the major fossil fuels, natural gas is the cleanest and least carbon‐intensive for electric power
generation. By keeping domestic energy costs relatively low, this resource also supports energy
intensive manufacturing in the United States. In fact, companies like Dow Chemical and Westlake
Chemical have announced intentions to make major investments in new facilities over the next several
years. In addition, firms that provide equipment for shale gas production have announced major
investments in the U.S., including Vallourec’s $650 million plant for steel pipes in Ohio.
An abundant local supply will translate into relatively low costs for the industries that use natural gas as an input. Expansion in these industries, including industrial chemicals and fertilizers, will boost
investment and exports in the coming years, generating new jobs. In the longer run, the scale of
America’s natural gas endowment appears to be sufficiently large that exports of natural gas to other
major markets could be economically viable.
The full report is available here.investing_in_america_report_final