Natural Gas and It’s Ripple Effect on Domestic Manufacturing

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Natural Gas and It’s Ripple Effect on Domestic Manufacturing

natural-gas-steel

Natural Gas and Steel Industries benefit each other

The steel and natural gas industries have a symbiotic relationship, and the outlook for both is very positive. This in turn will have a ripple effect on domestic manufacturing.

Steel requires energy for it’s production, and natural gas, being cheaper than coal, is good for steel. In turn, natural gas requires steel for pipelines and casing.

According to John Surma, U.S. Steel Chief executive, natural gas can account for a $6 to $7 savings per ton of steel. When you consider the 23 million tons of steel produced annually, that adds up considerably.

Also, when you consider the average cost to produce a ton of steel, the U.S. comes in right in the middle with Japan and Korea as being the most expensive. Russia is the least. Each and every dollar of cost counts in the global economy.

Because natural gas reduces the production costs, steel manufacturers will make the move from traditional production methods using coal-based blast furnace plants, to those fueled by natural gas. Therefore, construction in natural gas plants will increase in the coming decades.

When steel wins, the overall economy wins. A report released by energy economist Professor Timothy Considine at University of Wyoming, indicates the steel industry accounts for more than one million U.S. jobs and one job in the steel industry creates seven more in other sectors.

How Natural Gas and Steel affect other Industries

Domestic manufacturers can reduce their raw material and production costs with cheaper natural gas as a fuel. This in turn keeps the cost of finished goods down and means U.S. manufacturers can now compete with Chinese manufacturers. In 2010, the U.S. imported $264 million of plastic goods from China. Imagine turning those into Made in USA labels instead, and what that will do for the economy.

“A report by PricewaterhouseCoopers LLC estimated that such investments could create one million U.S. manufacturing jobs over the next 15 years.” The report went on to predict the increased use of natural gas will add another one million jobs by 2025, stimulate investment in plant construction as noted earlier, and reduce raw material costs for manufacturers by up to $11.6 billion per year in the next decade.
– Source The Times-Tribune

Many feel Natural Gas can not only help reduce our dependency on foreign oil, it also allows the U.S. to be more competitive in global commerce, and could create more jobs domestically, being a key component to reinvigorating the economy.