Monday, March 24, 2014

Cheap Natural Gas

Today, in the second section, page 2, of the Wall Street Journal (WSJ) an article appeared about what cheap natural gas means to the U.S. economy. For some time I’ve thought that the abundant gas in the United States would result in greater manufacturing coming here. I had not considered the impact of construction from this change. The WSJ reported that the chemical industry alone is accounting for more than $100 billion of new construction in the gulf coast states, with another $125 billion anticipated. This business investment is by the U.S., Germany, Canada, and other countries. “From 2010 to 2012, energy-intensive manufacturing sectors added more than 196,000 U.S. jobs and increased real sales by $124 billion.”  This new growth is not just in the manufacturing plants moving here and being built, but in the construction, steel and other fabrication industries related to construction. Increasing construction costs, from the pressure on a limited supply of labor and materials in the Gulf Coast, may bode well for other parts of the country with less expensive construction costs. This should have a positive long-term impact for U.S. construction and job formation.
Ed Mallon