The shale gas boom has been very helpful to US manufacturing

7 Nov 2012 by Jim Fickett.

Although US natural gas reserves, future high production, and future low prices have all been exaggerated, the shale gas revolution really has improved the outlook for cheaper and more abundant (than pre-shale-boom) natural gas in the US for at least, say, the next 30 years. And this, in turn, has increased investment in manufacturing facilities in the US. This has German manufacturers worried. From the Financial Times:

Europe’s ability to compete against the US as a manufacturing centre is being damaged by rising energy costs as North America benefits from cheap natural shale gas, Germany’s biggest companies have warned.

The energy cost advantage for US companies is rising and is expected to persist until at least 2020, according to the BDI, the German industry lobby group. …

Some executives fear a growing divide between European and US energy costs could see energy-intensive manufacturers divert investments that might have gone into Europe to the US instead.

Harald Schwager, the member of BASF’s executive board responsible for Europe, told the Financial Times: “We Europeans are currently paying up to four or five times more for natural gas than the Americans … Of course that means increased competition for all the European manufacturing sites.” …

Compounding German industry’s fears is chancellor Angela Merkel’s plan to phase out nuclear power by 2022 and replace it with renewable energy sources, which companies say could drive a bigger transatlantic divergence in electricity prices.