Abstract:

Research by Rabah Arezki, Thiemo Fetzer and Frank Pisch shows that the surge in shale gas production – ‘fracking’ – since the early 2000s has not only made the United States the world’s largest producer of natural gas. It has also given a big boost to output, employment, and exports in US manufacturing, particularly in energy-intensive industries. Their study finds that energy prices for US manufacturing firms have plummeted due to fracking, especially relative to Europe. Lower input costs for energy-intensive US industries have made them more globally competitive. What’s more, the shale gas boom helped the US economy to recover faster after the financial crisis.

This article summarises ‘On the Comparative Advantage of US Manufacturing: Evidence from the Shale Gas Revolution’ by Rabah Arezki, Thiemo Fetzer and Frank Pisch, CEP Discussion Paper No. 1454, November 2016.