A few years ago our company, the Dow Chemical Co., set about establishing a multibillion-dollar manufacturing plant in Texas. As we prepared to invest, an enormous run-up in the price of natural gas, a key input for factories, took place. That left us no choice but to locate it abroad, along with the thousands of jobs that went with it.

Since 1990, the U.S. has lost 3 million manufacturing jobs, or more than 15 percent of that core of America's work force. With these jobs went industry leadership in many sectors, new research and in some cases entire communities. These losses made America far more vulnerable to the current deep recession than the countries that won those critical manufacturing jobs.

America did not lose these jobs because it lacked capable employees, nor was it as simple as the reason most immediately believe, wages. A principal reason for the loss of jobs was the high and extremely volatile cost of energy. Manufacturing depends heavily on energy, and volatility in energy costs has been driving production and the high-paying jobs that support it away from our shores and to competing countries.

To world manufacturers weighing major investments, the U.S. remains worrisome because the supply of natural gas has yet to be seen as dependable. Overseas, advantaged natural gas for these industries abounds. Competing countries price it to attract manufacturing jobs — and ultimately research and development jobs, which can anchor an economy to growth industries, thereby securing their future.

This issue affects the outlook for all manufacturing sectors, especially traditional manufacturing, ranging from fertilizers, pulp and paper and chemicals to automobiles and electronics. Gas price gyrations on our shore will continue to send manufacturing, and the R&D and services that rise from it and perpetuate its growth, offshore. Not addressing this issue is more than a mistake — it will have a fatal impact on the long-term prospects for our economy.

A recent breakthrough has recently provided us all a new opportunity to get this right. Shale gas — and the cost-effective and reasonably clean technology for extracting it — seems well within reach and has factored into a new supply bounty that has kept natural gas prices substantially lower than oil prices. At Dow, we have experienced a recent competitive advantage in the global marketplace because of our use of gas in the U.S.

Sustained low energy prices achievable today through this newfound gas position can reignite manufacturing in America. But this recent advantage can be easily squandered given the absence of U.S. energy policy shaped around attracting and holding manufacturing, the related R&D and those long-term, meaningful jobs in the U.S.

“Sustained” remains the key word here. Natural gas producers have suggested that this newfound gas be used preferentially as a transportation fuel and to displace coal in electricity generation. Some even propose government policy to lock in the increased demand that would come from these new sectors.

But we have seen this movie before, and it ends with wild swings in prices and the loss of well-paying manufacturing jobs. Government's tendency to legislate demand and limit access to supply looks and feels like a sane energy policy, but it is a job-killing one we must avoid.

Only with effective energy policy in place can manufacturers assume predictable gas prices as a premise in their investment decisions for the U.S. The bane of new manufacturing investment remains uncertainty. You simply can't calculate whether an investment should be made when one of your key inputs fluctuates massively in cost, as U.S. petroleum and natural gas prices have over the last few decades. Even if energy prices are low, the volatility in price foils the calculation of return, so those investments — and the jobs they would create — flock elsewhere, despite our urgent need for them here.

Other forward-looking countries have in place energy policies to support manufacturing, especially of value-added exports and, in turn, job creation. Manufacturing feeds into R&D, and from there the quality of jobs we would like to see for our future generations.

Companies large and small, old and new, weigh energy cost as an input. That a growing manufacturing economy needs abundant and competitively priced energy should be consecrated as a core tenet of modern political economy.

A sound energy policy that helps direct natural gas to be utilized in manufacturing, versus being legislated into less efficient uses or in uses where there are alternatives, will help stabilize U.S. industry and lead to a resurgence of American manufacturing. Consistent and affordable sources of energy are needed or U.S. manufacturing will continue to shed jobs. We need to take steps to ensure that all American consumers, from homeowners to manufacturers, have access to stable, affordable sources of energy, especially natural gas. The right policy will create new manufacturing jobs while lowering the stress on our environment. There are many ways to do this wrong. We must collaborate to get it right. We must not lose this golden opportunity that has been provided to us by the recent commercialization of shale gas in the U.S. Millions more manufacturing jobs are at stake if we get it wrong.

Liveris is president, chief executive officer and chairman of the board of the Dow Chemical

http://www.chron.com/disp/story.mpl/editorial/outlook/6985354.html