NEW YORK Low domestic energy prices due to the shale exploration boom are already spurring manufacturing in the United States.
"There has been a lot of talk about economic growth from the shale boom in parts of North Dakota, Ohio, Pennsylvania and Texas, where new energy production is taking place, but some of the greatest benefits are filtering down to conventional factories across America, like mine," according to Drew Greenblatt, president of Baltimore-based Marlin Steel Wire Products LCC, who is also a board and executive committee member of the National Association of Manufacturers (NAM).
Greenblatt made his comments during testimony before a joint hearing of the House Energy and Power subcommittee and the House Commerce, Manufacturing and Trade subcommittee.
"When I bought Marlin Steel Wire Products in 1998, we had about $800,000 in sales and 18 workers. Last year was our most successful one as a business, with more than $5 million in sales. One of the primary factors for our recent achievements has been the dramatic increase in domestic energy production and lower energy prices," Greenblatt said.
Lower energy prices are also helping other manufacturers compete globally, increasing opportunities for companies like Baltimore-based Marlin Steel.
"Manufacturers across the country are expanding production and winning contracts that, even a few years ago, they had little chance of competing for as foreign companies produced goods at lower costs. Now, it is U.S. manufacturers who find themselves able to produce more for less, and it is our competitors who are scrambling to keep up," Greenblatt said.
It costs "less than $400 a ton to produce ethylene in the U.S. That compares to more than $1,000 a ton in Europe and even more in Japan" due to low energy prices, meaning "dozens of companies are making plans to invest in new U.S.-based chemicals production capacity," Dean Cordle, president and chief executive officer of chemical maker AC&S Inc., Nitro, W.Va., said.
Finally, manufacturers are benefitting from the boom in direct sales to the oil and gas industry.
"We are also selling material-handling solutions from steel wire and sheet metal to clients directly involved in developing and extracting these sources of energy," Greenblatt said, citing such companies such as Schlumberger Ltd., Halliburton Co., Timken Co. and Caterpillar Inc.
Paul Cicio, president of the Industrial Energy Consumers of America (IECA), sounded a cautious note during the hearing on the export of liquefied natural gas (LNG) and its potential to raise energy prices.
The U.S. Energy Department failed to perform due diligence when it gave Freeport LNG Development LP conditional approval to export LNG to non-free-trade agreement countries from its Quintana Island, Texas, terminal, Cicio said. While IECA isnt opposed to LNG exports, the group is concerned that the agency moved too quickly and didnt consider that a rapid jump in exports could raise domestic energy prices and hurt growth in the U.S. manufacturing sector, he added.