Fracking Gives U.S. Manufacturers an Advantage

The average cost to manufacture goods in the U.S. is now only 5% higher than in China and is actually 10% to 20% lower than in major European economies, a new Boston Consulting Group (BCG) study estimates.Further, BCG projects that by 2018, it will be 2% to 3% cheaper to manufacture in America than in China.BCG believes part of the reason for the narrowing gap is that wages have been rising in China, while American companies have been boosting productivity faster than many of their international competitors.But BCG states that perhaps the single largest factor in narrowing the wage gap is hydraulic fracturing, fracking, which has helped dramatically drive down the price of oil and gas that’s being used in energy intensive industries such as steel, aluminum, paper and petrochemicals.BCG calculates U.S. industrial electricity prices are now 30% to 50% lower than those of other major exporters.“America’s new energy abundance can not only help restore U.S. competitiveness, but can a
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