Will Natural Gas Reinvigorate American Industry’s Exports?

Natural gas has become the increasing economic focus of eager observers who see in this burgeoning resource a major shot in the arm to both cheaper and cleaner input for a large portion of America’s industrial sector. It is also an incredibly important addition for the nation’s booming export sector that could evolve into a multi-billion dollar support base to help offset both the current trillion dollar annual deficit; as well as topping out a $16 trillion debt that threatens the very viability of the world’s leading economy.

But an additional factor that has not been well publicized is that natural gas could also become the powering resource for such energy-intensive manufacturing giants as the already converting utilities sector, oil refining, petrochemical production, and even in helping reverse the decades long domination of the once mighty U.S. steel industry.

With natural gas replacing oil and coal for power generation, its replacement for metallurgical coal used in the production of steel could lower production costs, adding new life to this once dominant U.S. subsector. Coal’s replacement by natural gas is a rare case where the Environmental Protection Agency has eagerly facilitated such a move.

Barclays Capital has identified more than 80 actual and prospective industrial projects over the next decade that could take advantage of low natural gas prices. It’s estimated that there is a potential of another one-third increase in the present use of natural gas volume by 2020. But even the Bank’s optimistic partisans of natural gas expect only half of that goal to be achieved under realistic conditions. This is supported by the Department of Energy, which believes that the more universal use of natural gas by American industry would make it increasingly competitive, but is also conservative about the major cost advantage accruing to a wide range of America’s industry.

But this energy policymaking agency favors a full-blown export effort to gain the most advantage from the shale hydraulic fracturing that is bringing forth a more voluminous natural gas release with each passing week and month. Already widely known is the anticipated receptivity of America’s liquid natural gas by the U.K., Japan and Central Europe. These are paying three to four times as much as what the natural gas costs are for both U.S. retail consumers and industry users alike.

While the major current concern of natural gas production from shale seems to be the Environmental Protection Agency, a roaring demand growth is being opposed from business lobbies, who find their clients benefitting from the dirt cheap prices of natural gas currently available for their clients. They fear that a “runaway” surge of overseas shipping of liquid natural gas could bring domestic costs up too fast, preventing the manufacturing cost advantage available at this time.

What is certain is that natural gas is the one major economic factor adding unanticipated stimulus and cost effectiveness to both America’s domestic production, as well as the eventual receptivity of consumers around the world. They are welcoming a stable, price competitive, and readily available resource from reliable world producer U.S.A.

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