New Study: Shale Revolution Helps U.S. Manufacturing

New Study: Shale Revolution Helps U.S. Manufacturing

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By Stephen D. Eule

For some time now, we’re been touting the competitive advantage affordable energy gives U.S. industry, especially energy-intensive manufacturing. With industries in American paying two to four times less for coal, electricity, and natural gas than industries in places like Europe, we’re beginning to see U.S. manufacturing revitalize.

 Well, amid all the presidential election and transition hubbub, we missed an important study issued in November 2016 by the London School of Economics Centre for Economic Perfomance. The acdemic study, titled On the Comparative Advantage of U.S. Manufacturing: Evidence from the Shale Gas Revolution, confirms what we always knew—the shale reovlution has been good for U.S. business.

 When you cut through the academic lingo, the study draws two broad conclusions:

  1. The first is that the boom in shale gas and the associated price drop caused energy-intensive industry to expand in the United States, which has led to more jobs and invesment being allocated to this sector.
  2. The second is that since 2006, when the shale revolution caused the U.S. natural gas price advantage to widen vis-à-vis its developed-country comptetitors, exports of U.S. manufacturing have grown by about 10 percent.

 Even better, the study concludes on an optimistic note: “The price differential between the U.S. compared to Asia and Europe is thus likely to persist in turn helping to lift U.S. manufacturing.”

 We’re confident that the Trump Administration understands that an energy policy that frees energy producers to do what they do best can help ensure America’s industrial renaissance continues well into the future.