Recent discoveries of natural gas reserves are growing the American economy and are projected to continue driving growth.
Policymakers have a once-in-a-generation opportunity to grow America’s vital manufacturing sector through a sensible, all-encompassing energy policy that carefully considers the potential negative effects of exporting liquefied natural gas without limits.
The shale boom has made American factories more competitive and sparked a domestic manufacturing renaissance, leading to capital investment, new high-wage manufacturing jobs, and an increase in U.S. exports of value-added products.
The U.S. is the world’s largest manufacturing economy, and growth in domestic manufacturing has a multiplier effect on the broader state of the economy.
- First, manufacturing creates more jobs outside its own sector than any other industry. Every single American manufacturing job is supported by five additional domestic jobs, from support industries and materials-supply to transportation, sales, and food service.
- Second, manufacturing creates value-added products for export, rather than simple raw materials. Every dollar invested in domestic manufacturing creates $8 in finished products.
- Third, manufacturing drives innovation. Companies are increasingly realizing that it is more efficient to conduct research and development near or on their factory floors. Thus, those countries that invest in their manufacturing sectors also get a head start in developing the next generation of products.
Manufacturing is very sensitive to the price of natural gas, which powers many of its operations and supplies the raw components of thousands of essential products. When prices are high and volatile, manufacturing suffers, jeopardizing those high-wage manufacturing jobs. Companies are more likely to build their manufacturing facilities in countries where natural gas prices are affordable and steady. That’s exactly what America can offer if we enact a policy of caution in exporting our vast natural gas resources.