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There has been a lot of discussion lately about a manufacturing renaissance in the United States. There’s also been an interesting related discussion about U.S. energy intensity.
Years of offshoring and plummeting employment have given way to a small rebound in domestic industry. Behind the scenes, more companies are relocating their manufacturing facilities back on American soil, citing increasing domestic labor productivity and rising wages in China. Adding to the debate, the recent shale gas boom may or may not play a leading role in sparking this renaissance by providing cheap fuel and feedstock to key industries.
The manufacturing sector is also notoriously energy-intensive, taking in massive amounts of energy for both fuel (electricity) and feedstock. However, this may be changing, according to recent analysis from the Energy Information Agency, which indicates that the energy intensity of manufacturing has actually been steadily declining since 2002. The new Manufacturing Energy Consumption Survey shows that, while total manufacturing output has declined by 3 percent, total manufacturing energy consumption has declined by a dramatic 17 percent. This means it has taken less energy overall to create each unit of output.
Some aren’t convinced that the energy intensity metric is the most appropriate measure of economic efficiency. But the data do show the manufacturing sector reduced energy consumption faster than it reduced output. So would a major increase in U.S. manufacturing undo these gains?