Fracking Natural Gas Leading to Manufacturing Boom in the United States

There is an often quoted line in the 1960s film “The Graduate” in which Dustin Hoffman’s young character is advised that the future is in plastics. Thanks to the fracking boom, that is even more true today than it was fifty years ago.

Bloomberg notes that a company called Formosa Plastics Group, based in Taiwan and Asia’s largest chemical producer, is seeking environmental permits for a $2 billion expansion of its Texas operations. The reason is that Texas is one of the centers of the natural gas fracking boom and natural gas is a feedstock for a variety of products, including plastics.

Harvard Magazine notes that natural gas, besides being an energy source, “is used as an industrial energy source in manufacturing products ranging from steel and glass to paper and clothing. It is the raw material for fertilizer, paints, plastics, antifreeze, dyes, photographic film, medicines, and explosives.”

Cheap natural gas, besides lowering peoples’ utility bills, will attract those sorts of industries to the United States, creating jobs and buttressing economic growth. Ethane is a product isolated from natural gas and is used to create ethylene which in turn is used to create all sorts of products. Motherboard quotes MIT’s Technology Review which noted that the cost of making ethylene in the United States is roughly one third of what it was a few years ago. The cost is almost one sixth that of making ethylene in Asia.

All of those plants that make things from plastic bags to fertilizer will be located next to natural gas refineries to cut down on transportation costs. That means those states that permit fracking, such as Texas and North Dakota, are likely to gain a secondary benefit of increased manufacturing jobs with the attended economic growth. Those states which continue to balk out of environmental concerns, will not benefit as much.