Energy & the Economy

Energy and Manufacturing Sector Workforce Awareness

Energy in Mississippi is a sector that “punches above its weight” for Mississippi.

  • Jobs in energy and energy-related subsectors of the Mississippi economy paid an average salary of $63,456 in 2010, a figure 89.3% higher than the average private sector wage of $33,524.
  • The energy sector accounted for 22,035 direct private sector jobs in Mississippi, or 2.6% of the private sector workforce.
  • 74% of the state’s energy work force is in electric power transmission and distribution and in resource development and extraction.
  • While national energy sector employment has declined 4% from 2001-2012, Mississippi’s energy workforce has grown by 3%, with most of the growth attributed to jobs related to power transmission and distribution and oil extraction and refining.
  • Total private sector employment experienced a -5.8% change from 2001-2010, while the total energy cluster experienced a 2.9% increase during the same time period in Mississippi.
  • Topping the list of highest average Mississippi wages in 2010 was refineries with $100,870, followed by power generation with $91,962, Management of Companies and Enterprises with $70,636 and Extraction/Resource Development with $67,337.

Mississippi Silicon Plant Opens in North Mississippi

The first silicon metal production plant built in the U.S. in nearly four decades is open for business in Burnesville, MS. The silicon metal produced will be used in thousands of products ranging from computer chips to automotive manufacturing to chemicals used in industrial, commercial and consumer applications. Read more here.

EPA’s 111(d) Proposal: What Does It Mean for Mississippi?

MS Energy Institute Cost Impact Analysis of EPA 111(d) Proposal

  • EPA recently proposed to require that states enact programs to reduce carbon dioxide emissions from existing power plants.
  • Mississippi Energy Institute (MEI) estimates minimum incremental capital costs associated with the proposal at $14.2 billion for Mississippi.  In other words, Mississippi electric ratepayers would spend an extra $14 billion to construct facilities not likely to be built unless compelled by federal mandate.
  • With the regulated period running 2020-2030, plans would necessarily be completed within 3 years, and associated construction would start by 2017 or 2018 in order to begin compliance by 2020.
  • Of the $14.2 billion, over 98% of the costs will go to build electric power generating facilities to meet new generation mix “goals”, and since natural gas generation is high in each case, virtually all of the added costs are due to meeting aggressive renewable energy production targets as existing coal plants are prematurely retired.
  • In this analysis, MEI did not include normal generation or infrastructure costs likely to be incurred with or without the EPA rule.  Within the regulatory period, a certain amount of capital will be required to maintain, update, and expand Mississippi’s electric power infrastructure.  These costs to ratepayers are unknown but expected.  Examples include the Kemper County generation facility, transmission/distribution maintenance and expansion, the installation of pollution control equipment required by other EPA rules, MPSC energy efficiency program costs, the closure of old and inefficient power plants, and the addition of new power plants to meet new power demands with a growing population and economy.
  • EPA proposes Mississippi reach the “goals” in a combination of ways, including; electric power use reductions through energy efficiency programs, the closure of all existing coal power plants, and the addition of renewable generation sources.
  • To comply with the EPA proposal, total capacity in Mississippi will be about 2000 MW higher than the base case due to the requirement of installing large amounts of intermittent generation sources, like wind and solar (3000 MW solar and 800 MW wind to meet renewable target set by EPA).
  • Land requirements for 3000MW of solar capacity = 21,000 acres; 800MW of wind capacity = 48,000 acres.
  • Summary of Analysis:
2012 2030 Base Case (Without Rule) 2030 with EPA Proposal
Generation Mix (Output) 71% Natural Gas,13% Coal,

13% Nuclear,

3% Wood

63% Natural Gas,20% Coal,

15% Nuclear,

2% Wood

68% Natural Gas,13% Nuclear,

8% Solar,

6% Coal,

4% Wood,

3% Wind

Total Capacity (MW) 15,404 16,078 18,127
Total Output (MWh) 54,584,276 65,759,060 59,328,552 (includes 6.6 million MWh in demand reduction as required by EPA rule)
Cost of New Generation NA $1.9 billion $16.1 billion
Emissions (lbs CO2/MWh) 1132 1080 698

 

Energy & Manufacturing Jobs Offer Greatest Economic Impact

Fact:  Mississippi’s energy and advanced manufacturing sectors need more skilled workers to accommodate future growth, and aggressive economic growth goals require more robust, sector-specific workforce development.   These sectors need a variety of skilled tradesmen such as welders, industrial technicians, machinists, electrical engineering technicians, linemen, utility technicians, and engineers.  For a significant portion of high-demand skills, educational requirements may be a high school diploma and on the job training, and most of these positions pay well above private sector jobs.

The Bureau of Labor Statistics confirms and quantifies these exact needs.  In 2013, Mississippi Energy Institute interviewed a number of energy and manufacturing executives in Mississippi.  The table and figures below detail some of the specific positions identified by Mississippi employers, with a majority of the positions requiring only a technical-level education. Many interesting comparisons can be made between the energy and statewide job markets.  For example, of the 3,140 net new jobs added between 2012 and 2013, 2,400 (or 76.4%) of them involved one of the above-listed energy-based segments.  The numbers clearly show the importance of the energy sector to job creation in Mississippi.

In addition to the greater number of jobs, the energy sector also boasts a significant increase in sustainable income for its employees.  Shown below, the average income for these technical careers in the energy sector of $46,810 is 33% greater than the average income for the total MS job market of $35,310.  Indeed, if Mississippi workers capitalize upon the substantial opportunities available, the state could see a significant boom in energy-based economic development and an increase in household incomes.

Table 1

Job Title

# Jobs in MS (2012)

 Average Wage

 # Jobs in MS (2013)

% Growth

Chemical Equipment Operator

670

 $45,060

 860

28%

Chemical Technician

340

 $39,980

 400

18%

Electrical Engineering Technician

1,140

 $53,680

 1,340

18%

Gas Plant Operator

120

 $58,660

 50

-58%

Industrial Engineering Technician

310

 $46,730

 330

6%

Industrial Machinery Mechanics

2,710

 $48,550

 3,240

20%

Machinists

1,680

 $38,290

 1,980

18%

Plant and System Operators, Chemical

180

 $45,400

 480

167%

Plant and System Operators, Other

40

 $52,290

 40

0%

Welders

5,870

 $39,460

 6,740

15%

Total Sector

13,060

 $46,810

 15,460

23%

Total MS Employment

1,080,420

 $35,310

 1,083,560

0.29%

Figure 1

NewJobsBreakdown

Figure 2

AverageWagesEnergySector

Sources Cited

Bureau of Labor Statistics, U.S. Department of Labor, May 2012 State Occupational Employment and Wage Estimates, Mississippi, on the Internet at http://www.bls.gov/oes/2012/may/oes_ms.htm (visited April 11, 2014).

 

Bureau of Labor Statistics, U.S. Department of Labor, May 2013 State Occupational Employment and Wage Estimates, Mississippi, on the Internet at http://www.bls.gov/oes/current/oes_ms.htm (visited April 11, 2014).

 

Internal MEI documents

Strategy Crucial to the Future of Energy

Anyone who hasn’t been living in cave in the last two months knows of the civil and political unrest in Ukraine.  Russia has recently upped the ante by manipulating Ukraine’s weak economy and dependency on natural gas.  In Brazil, over reliance on hydroelectric power in the midst of a multi-year drought is generating concerns about capacity, particularly in light of hosting the upcoming World Cup.  The moral of the story: poor planning in energy can have life-threatening economic consequences.

Fact is, the energy sector does not change overnight.  It is a slow, grueling, and expensive process to build new plants and update old ones.  Innovation is slow and production is complex, never mind complicating political aspects.

In theory we should be able to predict what will happen in 10 or even 20 years in the energy field because, in many cases, that’s how long it takes to see these plans come to fruition.  For example, the Obama Administration is rather transparently striving to push us out of coal and petroleum and into natural gas and renewables.  When taking into account that a majority of old coal plants will be offline by 2036 without major renovations, Americans can expect to see a drastic shift in fuel source percentages that follows the administration’s goal.

Alone, that may not sound so terrible. Innovation happens all the time, and if you can please everyone by “going green”, then why not?  The answer here is two-fold:

1)      Global energy demand is expected to increase about 35% over the next 25 years.[i]  Picture it this way: in 2010, China surpassed the US as the largest global consumer of energy.[ii]  While some of the expected increase in consumption will be accredited to the US, we are incredibly efficient by comparison to others in the way that we use our energy.  The same cannot be said of rapidly developing nations: Brazil, India, Japan, etc.  The effect will essentially be the addition of three more US-sized consumers in the world market by 2040—ones who don’t care about clean energy.  The scale of this demand surge will certainly require maximum Btu’s from each and every energy source.  As freshmen economics taught us, an increase in demand without a corresponding increase in supply results in higher prices.

2)      Energy density mostly explains the differences in cost and scalability between coal/petroleum and renewables.  Current innovation and technology simply does not equate the two.  There is simply much more energy packed into a volume measure of coal, oil or natural gas and especially nuclear than into the same measure of sunshine.  By discriminating against the two primary sources of energy, not only do you have the problem of reducing diversity, but you also effectively reduce the total amount of energy supply available to consumers at a time when demand is at an all-time high and climbing.  Simple supply-and-demand economics states that prices for all forms of energy will sky-rocket, slowing innovation and straining the economies of developed nations heavily relying on energy to function on a daily basis.

The point is this: planning is crucial, and with global energy demand rising evermore, scalability of energy sources is central to energy planning.  We simply cannot neglect primary forms of energy (oil, natural gas, coal, nuclear, hydro) and innovation that allows for even greater energy density and scalability when we are certain that consumption isn’t slowing but growing.  A push to be better stewards of our resources is a noble and necessary cause but, if lacking strategy and realism, counterproductive when we all end up reading this on paper because you can no longer afford to power your laptop.

GlobalConsumption ConsumptionByCountry


[i] http://www.eia.gov/forecasts/ieo/world.cfm

[ii] http://www.eia.gov/cfapps/ipdbproject/iedindex3.cfm?tid=44&pid=44&aid=2&cid=CH,US,&syid=2011&eyid=2012&unit=QBTU

U.S. Carbon Emissions at Lowest Level in Over Two Decades

The Energy Information Agency recently issued a report stating that the U.S. energy sector’s carbon dioxide emissions fell last year to their lowest level since 1994. During that same 28-year period, real U.S. gross domestic product rose 56 percent.

carbon emissions

When it comes to deciding who deserves credit for such an accomplishment, many point to the U.S. oil and natural gas industry.

“They invest more in zero- and low-emissions technologies than the federal government and nearly as much as all other industries combined,” said Howard Feldman, American Petroleum Institute’s director of regulatory and scientific affairs. “Innovations in hydraulic fracturing and horizontal drilling have helped make the U.S. the biggest developer of natural gas in the world, and these technologies are a great example of how we can grow the economy, create jobs and clean the air.”

EIA also stated that after 1990, only the recession year of 2009 saw a larger percentage emissions decrease than 2012. But unlike those recession-stricken years, last year saw GDP rise by 2.8 percent — while energy consumption fell 2.4 percent — and the EIA says this can be credited to a 5.1 percent decline in energy use per dollar of GDP.

Over the longer term, the amount of carbon dioxide emitted for each unit of GDP has been on a downward trend since records began in 1949, but the 6.5 percent drop in 2012 was the largest reported drop. Only two other years — 1952 and 1981 — had declines greater than 5 percent, according to the EIA.

When adjusted for economic growth and inflation, the United States has cut its energy needs by more than 50 percent since 1973, and the trend shows no signs of slowing.

Leveraging MS Energy Assets for Manufacturing

Expert economists at top tier energy consulting firms, Boston Consulting Group and IHS, recently released reports predicting significant growth in U.S. manufacturing. One of the main reasons for this is the U.S. energy supply advantage.

For Mississippi, home to an extensive network of natural gas pipelines and diversity in electric power generation, what does this mean? The Mississippi Energy Institute recently began an analysis to answer this question. To help educate policymakers, economic developers, and the interested public, the Institute is working with Acadian Consulting Group of Baton Rouge to identify specific areas of opportunity to leverage in-state energy supply assets to attract energy-intensive manufacturing.

We think Mississippi may be well-positioned for the manufacturing of natural gas-derived chemicals and other electric power and natural gas intensive manufacturing like heavy metals and food processing. Through the years and growing with recent announcements, a large share of the energy-intensive industry has been, and will remain, in Louisiana and Texas, but those areas may be facing constraint making Mississippi an attractive option.

As the Boston Consulting Group and IHS have noted, the rapidly changed U.S. energy industry is having a dramatic effect on global manufacturing dynamics. For Mississippi’s economic sake, it’s important we try to understand how Mississippi can fit into this energy and manufacturing growth era over the next 5-10 years.

See the IHS report here and the BCG report here.

Plentiful Natural Gas Prompting U.S. Chemical Industry Resurgence

Bloomberg reports that cheap and bountiful natural gas is luring chemical industry operations back to the United States after they initially left for better access to cheaper materials and Asian markets. With proximity to Louisiana and Texas production and a myriad of natural gas pipelines, Mississippi should target these opportunities.

Energy Sector Could Enhance Miss. Job Growth

The Clarion Ledger ran an article today detailing the pace of job growth in the state- we’re the tortoise as compared to the hare. Employment is slow and steady, but our own Patrick Sullivan believes the energy sector could significantly impact circumstances. Read more here http://www.clarionledger.com/apps/pbcs.dll/article?AID=2013306160001