The natural gas boom is akin to a mild positive supply shock with spillovers to the rest of the US economy. US manufacturers consume approximately 1/3 of all US energy produced. According to the Westpac Strategy Team, “The abundance of cheap natural gas will provide a handy boost to manufacturing – in the last several years manufacturers and utilities have dramatically cut their use of pricier coal in favor of natural gas.”
Presently, the share of natural gas in total US power generation has almost doubled, from 16% a mere 8 years ago to more than 30% today. There are many anecdotes that the shale gas boom is already driving greater activity in US manufacturing.
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