U.S. news is filled with coverage of the sluggish recovery, lack of jobs and the loss of competitiveness. In particular, U.S. manufacturing has been hit hard. In the ‘50’s, U.S. manufacturing represented 28 percent of GDP; today it is around 12 percent. History shows that manufacturing has always searched for an advantage, be it labor cost, natural resources or productivity. Relatively high U.S. labor costs and emerging market growth are behind the current trend. What can we do about it? Two words—natural gas.
We have a game-changing opportunity to foster growth, give U.S. manufacturing a competitive advantage, trim or even reverse the trade deficit, provide abundant jobs and improve the environment. We need an all-out effort to produce more natural gas and convert more energy generation to it. Today, oil has a cost of over $15 per million BTU. U.S. gas has a cost under $5. Moreover, the U.S. cost is low relative to other countries. The United States has proven gas reserves that would keep us going for 100 years. Think about the potential impact of this advantage.
First is the obvious job creation from gas drilling, production and distribution. Owners, operators, contractors, and automation suppliers will all need people. Getting the gas is only the beginning.
Today, about half of U.S. electricity comes from coal. A switch to abundant, relatively cheap natural gas would mean much lower electricity rates. That would ripple through all industrial, commercial, and residential users of electricity. In effect, it would pass the cost advantage on to everyone. The shift to natural gas would serve as the cornerstone of a meaningful and lasting competitive advantage for U.S. manufacturers. People would want to build things here.
The next big impact is the chemical industry. Natural gas has a double positive here. First, it would benefit from the lower cost of energy. Even more importantly, inexpensive natural gas would give the industry a strong feedstock advantage. We’ve watched the shutdown of many U.S. chemical plants in the last couple of decades. Abundant natural gas would lead to resurgence.
Reduce trade deficit
Transportation is a huge user of energy, particularly oil. Imported oil is the biggest reason for the U.S. trade deficit—even bigger than the trade deficit with China. Natural gas can impact here in two ways.
First, there is the generation of more electricity which can be used to charge electric vehicles (EVs) and hybrids. We also can build vehicles that run directly on natural gas.
Ryder Transportation Services, a company in the truck leasing business, has a program in Southern California with over 200 natural gas powered vehicles. Ryder has invested to build 3 dispensing stations and is supplying the trucks to its lease customers. The goal is to save 1.5 million gallons of diesel annually, while reducing over 9 million pounds of green house gas emissions.
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Right now, these efforts are limited because there is no cross-country fueling infrastructure. If we put effort here, we could lower transport costs and achieve North American energy independence.
What does this mean for automation? First, as individuals we need to get behind this with our voices and votes. Second, we need to develop the hardware and software for a natural gas infrastructure. Drilling and production sites require better measurements and analyzers, including sensors that work downhole. Wireless is ideal for these sites. Control systems need to be scalable, starting with something small that works on the back of a truck. Natural gas is truly our chance to change the game. Let’s all put our foot on the gas!
John Berra, [email protected], is the retired Chairman of Emerson Process Management, and member of the Board of Directors of Ryder Systems Inc.
