The distribution of energy-intensive sectors in the USA

I study the influence of energy endowments on the location of energy-intensive industries. I combine data on 86 four-digit manufacturing sectors in 50 US states from 2001 until 2009 with detailed information on state endowments of coal, natural gas, oil and hydropower. Even though energy is a tradable commodity, the effect of energy endowments on industry location is statistically and economically significant. A one standard deviation increase in coal or natural gas endowments per capita increases value added in industries that are more energy intensive than average by more than 20%. Coal abundance primarily affects industry location through lower electricity prices; natural gas, hydro and oil endowments also have a direct effect when I control for energy prices.