Tuesday, March 27, 2012

Shale Gas and the Double Boom

The Wall Street Journal had an article today about the double benefit shale gas is bringing to steel manufacturers in the Northeast.  Companies like US Steel are seeing lots of new business for tubular steel pipes for the new wells in the Marcellus Shale, and plants that are switching from coal to natural gas are seeing significant cost savings.  New revenue and reduced operating costs:  got to love it!

US Steel is one of many companies seeing the benefits of shale gas.  Low and stable gas prices are luring back manufacturing and chemical industries to the U.S., especially to areas like Louisiana, Texas and Pennsylvania with ready access to large supplies of natural gas.  While natural gas prices aren't likely to stay this low going forward (after 2014), they will remain much lower than in other countries and likely will be considerably more stable and predictable than in the past.

Much is made of shale gas as a game changer for the U.S.'s energy picture, but I think the more immediate and visible impact will be in jobs and economic development from companies involved in the supply chain as well as from industries that have left the U.S. because of high energy costs.  Don't be surprised if an "onshoring" industrial trend is one of the legacies of shale gas.

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