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 released Thursday.

"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.

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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 prices."

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, richard_stouffer@platts.com
--Edited by Jason Lindquist, jason_lindquist@platts.com

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