Cheap Natural Gas is Good for Profits, but not for Jobs

Wednesday, April 03, 2013
Natural gas generating station in California (photo: Rich Pedroncelli, AP)

It’s been called an economic game-changer that could lead a jobs renaissance, but so far the abundance of natural gas in the United States has not produced the employment opportunities promised by industry.


In lobbying the government to get behind controversial methods like hydraulic fracturing, drillers and other companies have claimed the coming years will witness millions of new factory jobs stemming from cheaper natural gas.


PricewaterhouseCoopers and the National Association of Manufacturers predicted in a 2011 report (pdf) that fracking could help add one million manufacturing American jobs by 2025.


These gains have not materialized yet, and in some cases, businesses that use natural gas are continuing to lay off workers.


For example, the glassmaker Libbey benefited financially from lower gas prices, but decided to cut its work force and relocate some operations to Mexico.


Since the end of the recession, the manufacturing sector has added 500,000 jobs. Overall, though, there are two million fewer manufacturing workers today than in 2007, according to The New York Times.


Stephen T. Maurer, who heads the manufacturing practice at the consulting firm AlixPartners, told the newspaper that the job boom is “not going to happen as fast as a lot of people think and it will be selective,” adding that “it’s going to be a long, slow climb back.”


In the meantime, the U.S.’s lower natural gas prices are catching the interest of European manufacturers—particularly in the chemical and steel industries—who are increasingly expanding their operations into the U.S. due to their nations’ own lagging energy production. European workers view the trend as a threat to their own employment.


“Normally these would be good times right now,” Robert Oswald, union chief of the German chemical firm BASF told The Washington Post. “But we look into the future, and the prognosis is not so positive. If the energy prices remain so much lower in the United States than here, of course that will endanger jobs.”


A sharp increase in natural gas exports is under consideration by the Obama administration. If that comes to pass, it could raise prices in the U.S. and lower them in Europe.

-Noel Brinkerhoff, Danny Biederman


To Learn More:

Rumors of a Cheap-Energy Jobs Boom Remain Just That (by Nelson D. Schwartz, New York Times)

European Industry Flocks to U.S. to Take Advantage of Cheaper Gas (by By Michael Birnbaum, Washington Post)

Dow Chemical Co. Shows Enthusiasm for Low-Cost US Natural Gas (by Stuart Burns, MetalMiner)

As Renewable Energy Spreads in Europe, U.S. Resists Growth (by David Wallechinsky, AllGov)  

Mexico Accuses U.S. Companies of Buying Stolen Natural Gas Products from Drug Cartels (by David Wallechinsky and Noel Brinkerhoff, AllGov)   

Halliburton Pays Nigeria $250 Million to Drop Charges against Dick Cheney (by Noel Brinkerhoff, AllGov) 


Ron Wagner 11 years ago
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