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The Energy Boom and Manufacturing in the US
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The Energy Boom and Manufacturing in the US

William R. Melick
Federal Reserve Board, 2014
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Editorial Rating

8

Qualities

  • Innovative

Recommendation

Economic shocks can be both good and bad. While negative jolts usually get most of the attention, positive shocks can be just as critical to an economy. Since 2006, the United States’ positive shock has been the rocketing supply of natural gas and its plummeting cost. Economics professor William R. Melick has gleaned data to address the questions of how the economy of “Saudi America” is adjusting to lower energy costs and whether cheap natural gas is paving the way for another golden age of US manufacturing. getAbstract recommends his study of the broad economic effects of low energy prices on American investment, jobs, imports and exports particularly to manufacturing executives and energy specialists.

Take-Aways

  • Since 2006, US natural gas prices have dropped to one-third of European levels.
  • Due to lower energy costs, data show that US manufacturers have seen increases in employment of 2%, in capital expenditures of 10% and in production of 3%.
  • Energy-intensive industries, however, have had jobs growth of 30% and output increases of 40%, with capital expenditures tripling.

About the Author

William R. Melick is a professor of economics at Kenyon College in Ohio.

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