Report: US Ag Dependent on Natural Gas

OMAHA (DTN) -- A new report by the American Gas Association (AGA) on natural gas usage by U.S. agriculture shows how important this product is to the industry. This is especially true for several Midwestern states with economies dependent upon agriculture and the various subsectors.

The report (https://www.aga.org/…) analyzed the natural gas consumption and economic impacts of U.S. crops, livestock, food processors and agrochemical sectors of the U.S. economy. The findings in this analysis are based on data from the U.S. Energy Information Administration and federal economic data embedded in the IMPLAN economic model.

Here are some of the more important figures from the report:

-- The U.S. agriculture sector is a major part of the economy. It provides 5 million direct jobs. In addition, agriculture contributes $437 billion to the U.S. gross domestic product (GDP).

-- Accounting for indirect suppliers and induced expenditures, the U.S. agriculture sector supports 17.2 million jobs and approximately $1.75 trillion in U.S. GDP. States with the largest share of their economies supported by the U.S. agricultural sector include Nebraska, Iowa, South Dakota, North Dakota, Idaho, Kansas, Arkansas, Kentucky, Wisconsin, Montana and Missouri.

-- Just five of the many agricultural subsectors combined consumed 2.06 trillion cubic feet (Tcf) of natural gas in 2021, nearly the equivalent to the total consumption of California, which is the second-largest natural gas-consuming state. The five subsectors are food processing, beef and dairy cattle production, grains production, fertilizer and other agrochemicals and soybeans and other oilseeds production.

-- The U.S. agrochemical sector produces fertilizers and other agricultural chemicals for use on farms. In 2021, U.S. production of nitrogen fertilizer and other agrochemicals required the consumption of nearly 95 billion cubic feet (Bcf) of natural gas. States with the largest consumption of natural gas related to the production or the supply chain of agrochemicals include Texas, Louisiana, Iowa, California, Ohio, Indiana, Alabama, Illinois, Oklahoma, Wisconsin and Mississippi.

-- U.S. agriculture is one of the largest consumers of natural gas. When including direct use and use throughout the industrial supply chain, the U.S. agriculture sector consumes roughly 1.7 Tcf of natural gas. This would be the equivalent to almost 15% of all U.S. commercial and industrial consumption of natural gas, based on 2021 data.

-- Losing secure access to ample natural gas supplies would put the U.S. agrochemical sector in a precarious position relative to competitors. If the industry were to become suddenly uncompetitive relative to foreign producers, then the U.S. would need to import more of its ammonia feedstock and finished fertilizer products.

-- The U.S. agrochemical sector also has a significant impact on the U.S. economy, as it supports 344,000 U.S. jobs and $51 billion in U.S. GDP. The states of California, Florida, New York and Texas have the largest number of jobs supported by the agrochemical manufacturing sector. Other notable state jobs include 13,800 in Illinois; 12,400 in Pennsylvania; 7,200 in Wisconsin and 5,900 in Colorado.

Russ Quinn can be reached at Russ.Quinn@dtn.com

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