Thursday, April 12, 2012

The Jobs and Economic Future of the US Are Tied Up In the Energy Boom

The US economy has been kept afloat -- despite the best efforts of the Obama administration to sink it -- by the oil & gas boom. Obama's EPA continues to try to find ways to shut down the shale energy boom -- just as it has shut down coal plants, offshore drilling, and stonewalled clean new advanced nuclear reactor designs.

But given the central role of the shale oil & gas boom in preventing an all out US economic recession, it is inconceivable that Obama would publicly try to shut it down -- at least, not until after the November elections.
... the oil and gas boom could make America a major player again in the world energy market and help spur the entire U.S. economy. Already, both Texas and Louisiana have unemployment rates significantly below the national average, and according to the Bureau of Labor Statistics, the West South Central region -- which includes Arkansas, Louisiana, Oklahoma, and Texas -- has the second-lowest overall unemployment rate in the country, at 7.1%. The lowest? West North Central, which includes North Dakota (with a 3% unemployment rate), where gas producers in the supergiant Bakken formation can't find enough workers to fill their shifts...

...On the East Coast, abundant natural gas flowing from the Marcellus Shale formation, which runs through New York, Pennsylvania, and Ohio, is enriching farmers who lease their lands to production companies and is estimated to have created 60,000 jobs in the region, with another 200,000 possible by 2015.

Cheap domestic energy is also good news for the manufacturing sector. "The discovery and development of North America's shale resources has the potential to be the most remarkable source of economic growth and prosperity that any of us are likely to encounter in our lifetimes," U.S. Steel CEO John Surma told the Congressional Steel Caucus in a late March hearing. It's a virtuous cycle: More drilling requires more steel, and lower energy costs give U.S. steel producers a cost edge. This at a time when the Department of Energy reports that the energy intensity of U.S. steel companies is now among the lowest in the world.

In St. James Parish near Baton Rouge, ground was broken last year for a $3.4 billion steel plant being built by Nucor Steel (NUE), the first major facility built in the U.S. in decades. U.S. Steel is investing in a new facility in Lorain, Ohio, and V&M Star Steel (the North American subsidiary of the French pipemaker Vallourec) plans to spend $650 million on a small-diameter rolling mill in Youngstown, Ohio.

It's not just Big Steel that will benefit. Feedstock made from cheap natural gas is a boon for the petrochemical industry. Citing "the improved outlook for U.S. natural-gas supply from shale," Dow Chemical (DOW) says it will build an ethylene plant in Louisiana for startup in 2017. (Ethylene is used to make things like plastic bottles and toys.) Dow will also restart its ethylene plant near Hahnville, La. Shell, which is building a new petrochemical refinery in Pennsylvania, is also considering a $10 billion Louisiana plant to convert natural gas to diesel. "Low-cost natural gas is the elixir, the sweetness, the juice, the Viagra," says Don Logan, president of the Louisiana Oil and Gas Association. "What it's doing is changing the U.S. back into the industrial power of the day."

...Companies that built import terminals to bring in LNG in the early 2000s are now spending billions to remake them into export facilities. Cheniere Energy plans to break ground on the first new LNG processing unit at its Sabine Pass Terminal on the Louisiana coast this year and be exporting natural gas by 2015. Cheniere has signed contracts with four overseas customers including Spanish utility Gas Natural Fenosa. Besides Sabine Pass, at least three other LNG terminals, built as intake ports, have applied for export licenses. Essentially the infrastructure of the Gulf Coast oil and gas industry is being spun around to serve the new realities of the great petro-revival. _Fortune.cnn
Something Barack Obama and Vladimir Putin have in common: They are both afraid of the success of North American shale gas & oil. Perhaps now President Putin could slip green dieoff.orgy activists a bit more funding under the table?

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