A number of European steel, chemical, and manufacturing companies are increasing their investments in the United States, driven in large part by a steep decline in U.S. natural gas prices.
According to The Washington Post
, German chemical giant BASF has announced wide-ranging expansion plans for the United States, thanks to natural gas prices that are much lower than European levels. In addition, a lack of energy exploration in Europe has led manufacturers there to warn that more of their investment dollars may be transferred to the United States.
Since 2009, BASF has invested more than $5.7 billion in North America, including a formic acid plant under construction in Louisiana that will manufacture a chemical used to de-ice runways, tan leather, and preserve animal feed. Company officials say that unless Europe becomes more aggressive in its approach to energy production, including warming to hydraulic fracturing, even more jobs will likely end up in the United States.
The same warnings have been issued from companies in Asia, where gas prices are even higher than in Europe. As a result, Asian investments in the United States are up.
The shale gas boom gets most of the credit for foreign companies opting to move or expand operations in the United States. According to the International Energy Agency, by 2015 the United States will overtake Russia as the world’s top natural gas supplier, the Post reported Tuesday.
There’s no way to say how long U.S. natural gas prices will remain low, as demand continues to increase. According to the Post, President Barack Obama is also considering allowing U.S. companies to sharply increase natural gas exports, which could also level the price gap with Europe and Asia. But at least for now, the United States is continuing to benefit from the lower prices.
Among those taking advantage of lower energy prices is Austrian steelmaker Voestalpine. The company announced plans last month to build an iron ore processing plant in Texas at an estimated $715 million. The plant is expected to create 150 jobs. According to the Post, the company also plans to double production by 2020, largely through its U.S. operations, and has mostly abandoned new major investments in Europe.
In addition, Royal Dutch Shell last month said it will build a multibillion-dollar petrochemical plant in Pennsylvania that will bring several hundred permanent jobs and as many as 10,000 additional jobs during construction.
The new American investments are not only costing jobs in Europe, but also have politicians examining whether environmentally friendly policies throughout the continent have helped raise the cost of natural gas.
“We are suffering from high energy prices. There are German companies that are deciding in favor of other locations,” German Economy Minister Philipp Roesler told a Munich conference earlier this year. “The challenge is to promote and expand renewable energies without jeopardizing competitiveness.”
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