US shale 'boom' boosts manufacturing, not energy independence: FitchRatings
Pittsburgh (Platts)--10Jan2013/349 pm EST/2049 GMT
The ongoing shale "boom" brings with it a huge boost to manufacturing,
but energy independence isn't among them, according to a FitchRatings report
"The primary impact of shale gas will be lower costs for US industry and
consumers and expanded capacity and profits for petrochemical companies and
energy-intensive material producers [like] steel and other metals, cement,
pulp and fertilizer," according to "Shale Boom: A Boost to Manufacturing but
not to Energy Independence," produced by five FitchRatings analysts.
"Net oil imports have decreased and will continue to decrease, but the
US will not achieve energy independence [defined as zero net imports] over
the near to medium term," FitchRatings said.
Article continues below...
Request a free trial of: Gas Daily
Gas Daily offers the most detailed coverage of natural gas prices at interstate and intrastate pipeline and pooling points in major U.S. markets. Gas Daily keeps you informed about complex state and federal regulations that affect competition in the gas industry.
Net oil imports fell to 8.5 million b/d in 2011, from 12.5 million b/d
in 2005, FitchRatings said.
The FitchRatings report said that if shale gas and oil production is
allowed to expand, the volumes will add to other comparative advantages for
the US economy, including labor costs, demographics, supply chain security
and transportation costs.
"Low natural gas prices provide an additional competitive advantage to
US producers in many industries, including chemicals, steel, copper,
aluminum, cement, and other energy-intensive industries," FitchRatings states.
However, "the return of more sophisticated levels of manufacturing will
be driven more by economic fundamentals and technology than low energy
The FitchRatings report said the contribution of reducing consumption
often is overlooked, but "in the long run should be more important that the
increase in [oil] production because the changes in technology [such as
higher mileage] are permanent."
Shale gas' impact on the electricity industry is mixed, FitchRatings
said: beneficial in the long run, but disruptive in the short run.
"In the long run, cheap natural gas will help satisfy the growing demand
for electricity at relatively low environmental as well as economic cost,"
the report said.
"In the short run, low gas prices translate into low wholesale prices.
This makes many coal-fired plants uncompetitive," and has already led to
defaults of coal-fired electricity producers.
--Rick Stouffer, firstname.lastname@example.org
--Edited by Jason Lindquist, email@example.com