“Amid the gloom there are unexpected signs of boom, especially in energy,” begins a tentatively hopeful report in the Economist on America’s economy. Those signs of boom begin with all that newly available oil and gas being pumped out of shale formations across the country, but they extend widely into other sectors that work with such resources, like chemicals and steel.
[T]he biggest impact of the shale-gas boom will be felt downstream. It is a primary feedstock for ethylene, the building block of countless other products, such as plastics and tyres. . . .
The American Chemistry Council has counted $30 billion-worth of new investments that will boost ethylene capacity by a third. It reckons this could generate, at a conservative estimate, 17,000 permanent jobs directly and many more indirectly. Such jobs pay well: Ms [Laura] Ambrose [of Dow Chemical] reckons her new hires will start at around $50,000 and, with overtime, could earn up to $100,000.
Petrochemicals are only the start. Industries as diverse as glass, fertiliser and plastic bags could all benefit from cheap, plentiful natural gas. Nucor, a steelmaker, is building a plant to make iron from natural gas and iron-ore pellets in Louisiana. . . .
Assuming, however, that oil prices do not continue to rise so rapidly, energy is likely to exercise less and less drag on America. Last year, for the first time in decades, America became a net exporter of refined products such as petrol. By early next decade, according to projections by the Energy Information Administration, it will be a net exporter of natural gas. BCA Research, a financial-analysis firm, reckons these factors could slash America’s trade deficit by $100 billion by 2020, and boost total economic output by 0.2%-0.3%.
These are promising forecasts, but the predicted benefits lie years down the road. The U.S. economy is still struggling, but at least the horizon is brightening.