America is enjoying a remarkably positive new phenomenon: businesses, many of which were once thought lost for good, are returning their operations to U.S. soil. Manufacturers are expanding their operations and businesses of all sizes and types are hiring new workers. Factory payrolls have grown for four consecutive years, the longest such streak in a quarter century.
These recent trends are not a coincidence. They are being driven by a boom in domestic natural gas production, the positives of which are rippling through every sector of the economy. According to the U.S. Energy Information Administration, between 2005 and 2013, natural gas production increased 35 percent. This has been accompanied by a 57 percent drop in the average Henry Hub natural gas spot price over the same period.
Thanks to advances in drilling and fracturing technologies, access to vast natural gas reserves newly recoverable from shale gives United States suppliers a huge competitive advantage: gas prices in this country running roughly one-half to one-third of prices in Europe and Asia. This large disparity gives U.S. producers incentive to serve markets abroad while continuing to fuel business here at home. Selling natural gas abroad won't benefit only the oil and gas producers - it will drive new business and employment up and down the natural gas supply chain. These are the companies and people who build the facilities and supply equipment, products and services to natural gas producers. They range from equipment, component and supplies manufacturers and distributors, to construction companies, to trucking, rail and pipeline companies, all the way to service industries and workers supporting natural gas operations in the field.
Our analysis of authoritative published reports indicates that by 2015, projected U.S. natural gas production from shale of more than 44 billion cubic feet per day (bcf/d), accompanied by the annual upstream capital expenditures of more than $66 billion required to maintain this increase in production, will have created more than 515,000 supply chain jobs. Even before considering new exports, projected further production growth to almost 60 bcf/d by 2020 will be accompanied by an additional $34 billion of annual capital expenditures.
This expansion is forecast to be accompanied by another 150,000 new supply chain jobs, or a ratio of approximately 10,000 jobs for each new billion cubic feet per day of production. Thus, the construction of the new LNG export terminals envisioned by pending applications will cause increased production that will create many more tens of thousands of new American jobs in the energy supply chain - from construction workers to truck drivers to manufacturing plant workers and beyond.
Under current trade law, special permits are required to export natural gas to countries with which the United States does not share a free trade agreement. In recent months, the Department of Energy has approved seven such licenses, although only one has been fully approved to begin construction. Twenty-six are still pending approval. Timely action on them will break a red tape logjam that is keeping American producers from capitalizing on their global advantage, while at the same time bringing stability and confidence to overseas natural gas markets currently threatened by disruptions in Middle East supplies and by Russian use of their gas supplies as a political weapon.
Congress should pass and President Obama should sign legislation currently before both the House and Senate to expedite review and action on applications for these important projects. Natural gas exports are a gateway to countless well-paying, permanent American jobs throughout the energy supply chain, which will bolster every level of the economy.
Mack is president of the Energy Equipment and Infrastructure Alliance.