Unconventional drilling for oil and natural gas, such as that in Ohio’s Utica Shale, could be a major boost to the nation’s manufacturers during the next decade and a half.
Whether the anticipated growth is fully realized in Ohio remains to be seen.
A new report by global research firm IHS predicts a “manufacturing renaissance” through 2025 fueled by the unconventional natural gas and oil industry.
Increased drilling and pipeline construction has spurred demand for products, such as steel, and the growing supply of natural gas, natural gas liquids and oil will lead to cheaper energy and less expensive chemicals, giving American manufacturers an advantage over European and Asian competitors, according to the study, which builds on two earlier IHS reports.
Nationally, the unconventional natural gas and oil industry — from drillers to the producers of energy-related chemicals —last year supported 2.1 million jobs, generated close to $75 billion in tax revenue and contributed $283 billion to the U.S. economy, the study found.
IHS predicts the trend to grow, with the industry accounting for 3.3 million jobs, more than $125 billion in tax revenue and $468 billion in gross domestic product by the end of the decade.
During the next dozen years, $346 billion will be invested in projects across the country, such as pipelines and processing plants, the study concludes.
Those investments, along with increased demand for products and lower costs for energy and chemicals derived from natural gas and oil, will cause industrial production to increase 3.5 percent by the end of the decade, and by 3.9 percent by 2025, with industries such as organic chemicals, resins, agricultural chemicals, petroleum refining, steel and machinery benefiting the most.
Output for the manufacturing sectors is predicted to increase by $258 billion in 2020 and $328 billion in 2025.
Not that every sector connected to the unconventional natural gas and oil industry will see an immediate renaissance.
Christopher Guith, vice president for policy at the U.S. Chamber of Commerce’s Institute for 21st Century Energy, a sponsor of the study, compares the different sectors to dominos.
The first domino is exploration and drilling, also called the upstream sector. That is followed in succession by midstream sector pipelines and processing plants, then the petrochemical industry and finally, traditional manufacturing.
“We see this happening all in sequence,” Guith said. “Right now, we’re full steam in the upstream and starting on the midstream and we’re still a couple of years away from the petrochemical and then maybe five or six years from the beginning of the traditional manufacturing. But by 2020, it really all comes into force, and you see the full breadth of the renaissance.”