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Fracking spurs next industrial revolution

Daily Ticker

There’s an industrial boom underway in Louisiana, thanks, in part, to a rise in fracking. A massive new plant under construction in Lake Charles is expected to create 7,000 jobs at the peak of construction, according to a new report in the Wall Street Journal. South African state-oil company Sasol is pumping $21 billion into the 3,034-acre complex in what could be the largest foreign investment in U.S. history, according to the Journal.

The project could also be a boon for the local economy – and a model of the next industrial revolution for other areas to follow. The boom in hydraulic fracture has been widely reported, mostly due to the controversial process used to extract natural gas. What so far has not been widely discussed is the potential impact the investment in fracking could have in spurring a new industrial age, even beyond natural gas.

Yahoo Finance’s Lauren Lyster says we understand that fracking has lowered the price of natural gas. But “what we haven’t seen yet is the industrialization that has come as a result of these low prices.”

There are a series of other plants planned in the area of the Sasol plant, including ammonia plants, paper facilities and fertilizer plants. In all, the Lake Charles area will see an influx of $90 billion worth of new investment in the next five years, according to the Wall Street Journal – a huge boost to a state with a $250 billion economy.

Louisiana’s location, infrastructure and accessible waterways make it a no-brainer for companies looking to tap energy resources, build plants and ship products across the globe.

The downside risk

Of course, there remain serious questions about the impact of the industrialization on the environment. The Sasol plant reportedly will emit 85 times the state’s threshold rate of benzene each year. “That is a huge unknown and concern - the amount of all kinds of chemicals that are going to be released into the air and other environmental damage that could be done in the Bayou,” says Yahoo Finance Editor-in-Chief Aaron Task.

“That is the big question mark that we’re going to have to be answering as more of these industrial projects get underway,” says Lyster. “That’s the bad side. The flip side is jobs, capex spending, a new source of industrial growth.”

Wanted: skilled labor

The other big question mark is where the skilled labor will come from. The new plants will increase demand for workers trained in fracking and other areas. “Those are high-skilled, high-paying jobs,” says Task. “Do we have this kind of skilled labor force? This is another issue in this country where, yes, we have a huge unemployment problem, but there’s also a problem that there are jobs that go unfilled because we don’t have people with the right skill.”

Lyster suggests training programs that target the specific skills needed have had success in other cities in training the local workforce for the jobs that are available. “Those programs can be powerful ... at the community college level where [students] were trained for the jobs that were specifically available in that region."

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