Changes in fuel prices, especially with the decreasing costs of natural gas, have resulted in natural gas surpassing coal as “the number one source” of electricity in the United States for the second time this year, according to the US Energy Information Administration. The agency also projected significant impacts on the electricity sector as it switches from coal-fired plants to wind, natural gas, and solar.
In recent research, RFF’s Alan Krupnick, Zhongmin Wang, and Yushuang Wang describe how these cheap prices, prompted by the shale gas revolution, not only impact the electricity market, but also have significant effects on the manufacturing sector. They write that while “US manufacturing has been declining in recent decades . . . the reduction in natural gas prices brought about by shale development has stimulated a series of expansion announcements in manufacturing, especially in gas-intensive industries such as petrochemicals and fertilizers. . . . Some big manufacturers are [moving] their production plants back to the United States to take advantage of cheaper natural gas.”
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