WASHINGTON America's reliance on fuel imports has sucked vigor from its economy for decades. Now an oil and natural gas boom holds out the prospect for a new era of stronger U.S. economic growth.
Vast reserves of natural gas and oil unlocked from underground shale deposits have slashed the price of U.S. natural gas to a fraction of costs in Europe and Asia, making it some of the cheapest energy in the world.
That is cutting production costs at U.S. factories, making 'Made in America' a more attractive option and driving investment in everything from foundries to chemical plants.
The shale energy revolution could also turn the United States into a net exporter of many fuels in little more than a decade, transforming energy from the economy's Achilles' heel to a source of strength.
"It certainly gives the U.S. a clear competitive advantage," said Mustafa Mohatarem, chief economist at General Motors, which added two light trucks that can run on natural gas to its Fort Wayne, Indiana, production for 2013 to meet new U.S. demand for cheap energy vehicles.
Higher oil and gas output and fewer imports - along with a burst of investment to take advantage of lower energy costs - have the potential to vault the U.S. economy onto a higher growth plain for years to come, said Eric Lee, a market strategist at Citigroup in New York.
Citigroup, one of the world's largest banks, recently estimated the energy boom could add roughly a half percentage point to annual U.S. GDP for at least the next several years.
That would be a huge gain. If sustained, it could break the country out of a long slump of slowing economic growth and quicken job creation. On average, the economy grew 2.6 percent per year over the last 20 years, down from 3.1 percent in the prior 20 years.
"There's something to look ahead to that really is quite transformative," said Lee.
Philip Verleger, an economist at the Peterson Institute for International Economics and a prominent consultant in the energy industry, is even more bullish.
He thinks America will become energy independent - a net energy exporter - in just over a decade, with the boom adding about a full percentage point to annual economic growth over the next 10 to 15 years.
There are skeptics, and analysts warn that environmental concerns raised by new drilling techniques could lead to regulations that snuff out the boom.
"This is one thing that clearly can move the needle - but moving it enough to raise the level of GDP by a half point is a lot," said Chris Varvares, an economist at Macroeconomic Advisers.
But for now these concerns aren't stopping a range of U.S. companies from charging ahead with new investments.
TRUCKING AND PLASTICS
Natural gas from shale deposits is already reshaping the long-haul trucking industry. Truck stops around the nation are adding tanks of super-cooled natural gas, known as LNG, because it is substantially cheaper than diesel.
"When we call up trucking companies now, it's one of the first things they ask about," said Jimmy Haslam, CEO of Pilot Flying J, one of the country's largest truck stop chains.
Trucking moves roughly three-quarters of American freight, so lower transportation costs will reverberate throughout the economy, attracting investment, freeing up capital for new projects and increasing corporate profits.
Natural gas provider Clean Energy is partnering with Pilot Flying J to add LNG tanks at over 100 truck stops by the end of next year to allow coast-to-coast refueling.
United Parcel Service, the world's largest package delivery company, is expanding its LNG truck routes eastward from Ontario, California. UPS bought 48 LNG-powered big rigs last year and recently opened new routes between Las Vegas and Salt Lake City. Next stop, Denver.
Snack-food maker Frito-Lay says running natural gas powered trucks costs about 40 percent less per mile than diesel. The company, a unit of PepsiCo, plans to replace nearly all its long-haul fleet with natural gas vehicles, said senior fleet manager Christopher Trajkovski.
The petrochemical industry also is booming. A few years ago, the common wisdom was that the U.S. petrochemicals would lose ground to the Middle East, where cheaper natural gas meant lower production costs. Now the American Chemistry Council estimates shale energy is driving $25 billion in planned investments at U.S. petrochemical factories.
Chevron Phillips Chemical Co, for example, plans to build an ethane cracker that converts ethane from natural gas into chemicals used in plastics. The plant will employ 400 people in Baytown, Texas.
Nearby, at a complex of towering white tanks connected by a maze of silver pipe, Eastman Chemical recently hired 15 workers. The Texas City plant makes materials used in garden hoses and other plastic products, and cheap natural gas gives it a price edge for exporting to Europe.
"When you go to invest or add jobs, that competitive position just gives you more comfort you're doing the right thing," said Heidi Barnes, who runs the Eastman unit that oversees the plant.
The United States has been a net importer of fossil fuels since 1958, and the pace accelerated after 2000. That holds back growth because an economy bleeds cash when imports outstrip exports. Dependence on expensive foreign oil has played a role in recessions since 1973.
Last year alone, net energy imports totaled more than $300 billion, a sum even larger than America's vast trade deficit with China.
Since around 2005, breakthroughs in drilling technology have allowed a technique called hydraulic fracturing, commonly known as fracking, to better exploit shale deposits from Pennsylvania to Texas and Wyoming and turbo charge the U.S. energy industry.
Natural gas output surged nearly 8 percent in 2011, the biggest gain ever. And after decades of decline, U.S. crude oil production rose in each of the last three years. The shale fields of North Dakota have suddenly made the state a bigger producer of crude than OPEC member Ecuador.
Citigroup reckons U.S. net imports of many fuels will likely be tiny by 2020. After that, the United States could even become a net exporter of liquids, a category that includes crude oil, gasoline and natural gas liquids.
Already, higher U.S. energy output is reducing the need to import some fuels. The United States plans to export LNG on boats out of the Gulf Coast for the first time by around 2015.
The U.S. government's Energy Information Administration projects an easing of the country's reliance on foreign energy, with oil imports expected to slowly decline over the coming decades. But it is more cautious on the longer term prospects. The EIA thinks the U.S. will still import about twice as much energy as it exports in 2035, leaving it energy dependent.
And over time, the U.S. will likely lose its energy cost advantage from shale as other countries tap their deposits. China and Argentina, for instance, are thought to have vast reserves. But they are far behind in developing their fields, giving the U.S. a clear running start.
"They can eventually do it. It's just going to take some time," said Verleger.
Companies in America now are paying just above $2.50 per million British thermal units for natural gas, roughly a quarter of what is paid in Europe and an even smaller fraction of the cost in Asia. As long as that lasts, the U.S. economy has an edge in benefiting from the energy boom.
"The economics are really compelling," said Eric Tech, president of Navistar International's engine group, which is ramping up production of gas-powered truck engines.