Report: Cheap gas will fuel US manufacturing job surge through 2020

HOUSTON — An ample supply of cheap natural gas has ignited a U.S. manufacturing surge projected to expand plant payrolls and drive demand for chemicals, machinery and steel through the end of the decade, according to a report released Thursday.

Sinking natural gas prices have stung U.S. energy producers, but they are linked to more than 196,000 new manufacturing jobs in major metropolitan areas and a $124 billion boost to sales for energy-intensive products like fabricated metals and plastics, according to a U.S. Conference of Mayors report on the nation’s industrial growth.

The fossil fuel is a central feedstock used in chemical manufacturing plants and steel mills, and since 2007, U.S. oil and gas producers have made it much more accessible by cracking open shale rock that had trapped it for millennia.

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Subsequently, industrial sectors have pushed the national economy further in its recovery from the recession that began in 2007, and will probably underpin economic growth through 2020, according to the report, which was prepared by IHS Global Insight.

Through the end of the decade, manufacturing employment could jump 1 percent each year in the United States, led by fabricated metals, machinery and iron and steel manufacturing, which each grew about 10 percent between 2010 and 2012, the report said.

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The study says that from 2012 to 2020, Houston is slated to see:

  • In machinery manufacturing, a 30 percent employment boost to more than 69,500 and a 40 percent increase in sales to more than $28 billion
  • In chemical manufacturing, a 2.6 percent increase in jobs to 20,700 and a 36 percent jolt in income to $57.8 billion
  • In fabricated metals, an 18 percent climb in payroll to more than 60,000 and a 29 percent rise in sales to $17.6 billion

Though a recent rise in natural gas prices has swayed some energy companies, like Chesapeake Energy, the second-largest natural gas producer in the U.S., to reinvest in less popular gas plays, most analysts believe gas prices will hover between a relatively low $3.50 and $4.50 per million British thermal units over the 20 years.

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