The impact of natural gas extraction on steel mills

An article in the Wall Street Journal (March 26, 2012) describes the doubling of steel tubes, pipes etc in the last two years – thanks to the demand from natural gas extraction facilities across the US. But the abundant supply of natural gas has, in turn, dropped prices for gas by 35 %, thus making it an alternate to coal as a source, and dropping steel production costs. This makes the US steel production competitive and drives demand. At the same time, lower gas prices drives other industrial expansion, from chemical to fertilizer, and can potentially increase steel demand. Given that natural gas competitiveness decreases the incentive for further investments in even less environmental impact sources, should taxes for natural gas be increased ? Should regulations for natural gas extraction be eased knowing that the gas will replace coal and thus generate an overall supply chain benefit ?

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About aviyer2010

Professor
This entry was posted in Global Contexts, Operations Management, Supply Chain Issues, Sustainability and tagged , , , , , , , , , . Bookmark the permalink.

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