The U.S. Department of Energy has delayed the finalization and release of its review of the U.S. shale gas industry until after the Presidential campaign. As a result, decisions on licenses to build at least a dozen liquefied natural gas (LNG) production facilities necessary for the export of Marcellus Shale gas to Europe and Asia have been delayed.

That hiatus has not stopped petrochemical companies, such as Dow Chemical Company and others, that could use shale gas and gas liquids as low-cost feed stocks for the manufacturing of plastics and other downstream products and as energy sources from voicing their opposition to the export of natural gas. They oppose on the grounds that allowing widespread exports would deprive participants in what pundits have recently dubbed “the American Manufacturing Renaissance” of their huge cost advantage over foreign competitors.

To be sure, the Boston Consulting Group released an analysis in September showing that the low cost of shale gas has resulted in lower manufacturing costs in the U.S. than in Germany, France, Italy, the U.K., and Japan. In fact, abundant supplies created by the Marcellus Shale gas boom are even challenging the competitive advantage of the hydrocarbon-rich Gulf where only five years ago, it appeared that global petrochemical production would be increasingly concentrated.

Moreover, the growing gap in energy costs caused by the direct use of cheap gas and by low-cost, gas-generated electricity is being felt acutely in Europe where industries see it as “dangerous for all industries based in the European Union, because energy costs do not only influence energy intensive industries … but the entire industrial value chain.” The U.S. cost advantage over European manufacturers is on the order of “nearly twice as much for electricity and nearly three times as high for gas.”

Some American companies, especially those in the petrochemical industry, fear that increased exports of shale gas from the U.S. will drive up the price of that essential raw material and power source domestically and erode their cost advantage. This could thereby render them less competitive on the world stage and slow or halt America’s Manufacturing Renaissance.

However, energy expert Daniel Yergin, the author of “The Quest” observes the U.S. market “is limited by demand, and not by supply.” Marcellus Shale drilling activity has declined in the past year, due to uneconomically low prices and the unavailability of infrastructure and pipelines to bring shale gas to market. Yergin has concluded U.S. exports would not be so great as to dramatically increase domestic prices. Meanwhile shale gas production is poised to increase elsewhere in the world, so the present time is a golden opportunity for Marcellus Shale producers to lock up foreign gas purchasers while price disparities between the U.S., Europe, and Asia are at their highest. To yield to the fears of the domestic industry would do nothing to keep prices low, because an export ban or controls would discourage or slow further Marcellus development. Only further development will keep domestic prices low relative to world prices.

The benefit to American manufacturers of export controls on shale gas would also be short-lived, because the massive cost advantage occasioned by low gas and energy prices would simply lure foreign competitors to the U.S. In fact, low gas prices have already caused foreign manufacturers to consider the Marcellus Shale region as a location for new manufacturing facilities.

In what, at first glance, could only be considered a case of “carrying coal to Newcastle,” the Financial Times has recently reported that the Saudi Basic Industries Corporation (SABIC), the world’s largest petrochemical company, is evaluating opportunities to invest in or build out downstream petrochemical operations in the U.S. Mohamed Al-Mady, SABIC’s CEO, recently stated “We’d like to start with one plant, just to get ourselves in the region.” Mady stated, “Shale gas is a game changer, especially in North America … The impact in other regions is not clear yet. In the U.S., it’s becoming a reality.” It is certainly a vote of confidence in the economics of investing in the Marcellus Shale region when a Saudi petrochemical company sees the wisdom of investing here!