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Europe risks losing 30 million jobs due to US shale

07.17.2014  | 

Manufacturers of petrochemicals, aluminum, fertilizers and plastics are leaving Europe to take advantage of booming US production of natural gas from shale rock formations, the IEA says.



The US shale-gas boom is placing 30 million jobs at risk in Europe as companies with greater reliance on energy contend with higher fuel prices than their American counterparts, the International Energy Agency said.

Manufacturers of petrochemicals, aluminum, fertilizers and plastics are leaving Europe to take advantage of booming US production of natural gas from shale rock formations, Fatih Birol, chief economist for the International Energy Agency, a Paris-based adviser to 29 nations, said at a conference in London.

“Many petrochemicals companies in central Europe are moving out,” Birol said. “Thirty million jobs are in danger.”

The US has become the world’s largest producer of oil and gas as hydraulic fracturing and horizontal drilling help producers extract resources from shale rock. The country’s refineries processed a record volume of crude last week as plants took advantage of cheaper domestic crudes. 

Chemical makers from Germany’s BASF to Brazil’s Braskem plan to invest as much as $72 billion in US plants to take advantage of low-cost natural gas feedstock.

West Texas Intermediate crude traded at a discount of $5.85/bbl to European benchmark Brent at 5:43 p.m. on the ICE Futures Europe exchange in London. US August natural gas futures traded for $3.96/MMBtu on the New York Mercantile Exchange, compared with $6.49/MMBtu for the equivalent UK contract on ICE in London.

US refineries are competing for market share and benefiting from margins that exceed those of European competitors by as much as $10/bbl because of cheaper crude, Hermes Commodities said in a report.

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As Mark Twain said, "...the report of my death was an exageration". Forty-five years in the energy business tell me things will change. The increasing legislation in the US limiting and banning fracking may seriouly limit the ability of global firms to take advantage of the cheap production from US gas. In turn, this will have a very detrimental impact on a struggling US economy. If the industry doesn't proactively address and resolve the issues. Uninformed hype and hysteria may pave the way to complete bans. It has happened too often to ignore. I pray we have learned from our past mistakes.


This report is nothing shy of a BS poster - Yes WTI traded at a discount of $5.85 to Brent, but this discount has been much deeper in the past so why is that even news? As for 30 million jobs being at risk I also call BS - any major change in manufacturing - especially involving the use of hydrocarbons - is going to encounter significant regulatory red tape in the US. Perhaps if the politicians got out of the market this article could hold a small glimmer of truth, but 30 million? Please

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