>> tomorrow helen hunt. and john hawk are going to talk to us. >> plus legendary franky valle. >> see you at "scandalous." industry. that's the heat that forged america's backbone. that's the fire of american steel. reignited by the flurry of energy and development in pennsylvania and ohio. tonight "mad money" is in the heart of steel country to show you how the biggest oil and gas discoveries in a decade are putting a fire back under an industry left for dead. it's all heating up and we're reinvesting in america now! ♪ hey, i'm cramer. welcome to "mad money." welcome to the timken faircrest steel plant in the heart of steel and nat gas and oil country.

other people want to make friends. i'm just trying to make you some money. my job is not just to entertain you but to educate you. did you ever think an ohio steel mill could be so cozy? i know i never did. but on a day when internet wonder boy google reported disappointing earnings, causing the entire stock market to tumble, the dow giving up eight points, s&p .24%, but the nasdaq nose-diving 1.01%, i've got to tell you, i feel pretty darn comfortable being surrounded by people who make physical goods rather than just create websites. you've got to love the irony, frankly. the moment that google issued its release prematurely i was basking in the glow of a blast furnace, making high-tech timken steel. this kind of technology, the technology you see behind us, sure feels more certain and more tangible than google's technology after today's brutal shortfall. and you know what? that's the main reason why we

came out to the industrial heartland today, to examine firsthand the manufacturing belt that used to be rusty, but that rust has been washed off by good new american know-how and yes, a hefty dose of cheap american power brought to you by the oil and gas shale that lies beneath thousands of feet below the ground. and actually just a few miles from where i stand. we're examining a renaissance you probably haven't even heard about. we had to come to this small corner of northeast ohio to believe it ourselves. because it is that magical. you'll see tonight how bearings made at this timken factory behind me help chesapeake drill for oil and gas in the utica shale that is then shipped via spectra, the pipeline company, to reach homes all over the country, including those serviced by our country's largest utility, american electric power. we're going to talk to the executives at each of these companies who have used amazing american technology and smart hard-working american labor to take back america's mantle as the best and lowest-cost producer of goods and energy in the whole world. and after a day like today isn't

that a little reassuring, to see physical assets being made and processed and delivered? that's because once again we have found ourselves confused, befuddled, some would say betrayed, by two other forms of technology that are beyond our ken and baffle us as we try our best to invest wisely and profitably. the first is the technology from the internet which doesn't that seem to smack us in the face every time we profit from it? remember when we tried to make money with the facebook deal only to discover it wasn't doing nearly as well as we thought? turns out that google's struggling on the web too. the profitability of those that try to harness the internet by creating advertising opportunities seems to be diminishing rather rapidly. certainly faster than even a champ like google realized. of course, google's always been closed-mouthed and unpredictable. but today's hammering shows you that the hazards of owning stocks where we just don't know enough and have to do a lot of guesswork, i fall prey to it myself. i'm not saying google's finished. far from it. i'm saying this transition from desktops to mobile phones has played havoc throughout the tech

food chain to the point where even the companies we thought were going to be big winners, especially google, can't make nearly as much money as we thought, as we expected, as we anticipated. of course the pain was exacerbated by the mickey mouse way the earnings were disclosed. prematurely, intraday, without an ounce of explanation. it was then followed by a preposterous three-hour trading halt not long after, again, totally unexplained. and i might add inexplicable. you'd think that the savviest of all tech communicators would know how to communicate its earnings. but it's pretty clear that we've now seen one more soft spot in the underbelly of investing. we can't even issue earnings right. i'm sure many investors will conclude that owning stocks, maybe it's become one big joke. that said, we can protect ourselves from these surprises. i'm not saying -- i'm not going to say we can avoid them altogether. that would be glib. and by the way, maybe when the smoke clears google might be cheap enough to own again. but what you can do is stay, yes, diversified. tonight's entire show is about

diversifying yourself through examining the burgeoning energy boom in the northeast corner of ohio, from oil and gas, wildcatting to precision steel to rock-solid pipelines and power generation that give you a good yield, better than you're ever going to get in cds. here's the bottom line. you were fooled not once but twice in technology today. first the slowdown in google that i think should have been flagged by the company. and second a release that was revealed prematurely because the machines have once again betrayed us. unlike these kinds of machines. you sit back and listen to what you hear tonight. maybe you'll get a little more comfortable investing in good new-fashioned american know-how that might very well be in your back yard. you just may not know it until you're finished watching tonight's special show. stay with cramer. "mad money" will be right back. >> announcer: still ahead on a special invest in america editions of "mad money," steely resolve? timken has been creating steel in america for over 100 years.

from the first roller bearing on mule carts to the mars rover in outer space. now with an energy boom reigniting manufacturing in the heartland, cramer's checking in with the ceo, next. and later -- >> chesapeake energy has been blazing a trail here in ohio's utica shale, staking their claim in this new frontier for america's energy independence. but after some very public missteps the stock took a fall. is it all in the past? i've got the exclusive with aubrey mcclendon to find out. >> announcer: don't miss a second of "mad money." follow @jimcramer on twitter. have a question? tweet cramer. #madtweets. send jim an e-mail to madmoney@cnbc.com or give us a call at 1-800-743-cnbc. miss something? head to madmoney.cnbc.com.

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believe it or not, the united states of america is perhaps the strongest big economy on earth right now. europe's struggling to stay afloat. china's slowing down. but despite all the gloom and doom you hear endlessly from politicians on both sides of the aisle, the u.s. is actually coming back and we're coming back stronger than you think. that's one of the reasons why we came out here to youngstown, ohio, which is not just sitting on top of a gigantic natural gas deposit, it's also the industrial hub of the largest

state in the rust belt. that's why we're in canton. but you know what? maybe the rust belt isn't quite so rusty anymore. everybody acts like all the good manufacturing jobs have gone to china, yet the best manufacturers on earth are still right here in america. take timken, tkr, an ohio-based company that was founded more than a century ago, when they made roller bearings for mule-drawn carts. these days timken makes the bearings for precision tasks like the mars rover and the wheels on your jet aircraft. the industrial renaissance is happening right here in ohio. that's why i'm thrilled to be able to talk to james griffith, timken's president and ceo. take a tour of their local steel plant. mr. griffin, welcome to "mad money." have a seat, jim. >> thank you, jim. >> thank you so much. we had kind of a strange thing today, a bit of a fiasco. we've got all this new tech that everybody's excited about, the internet. and we've got a company that we all thought was doing pretty well. maybe not doing so well. maybe a slowdown. we also had a fiasco where a release was -- because of

technology run amok -- done midday. it was terrible. but there's another kind of technology. it's the kind of technology you've exposed me here today to, timken. could you talk about the technology that is not the personal computer and is not the internet but is something that's putting people to work and you're having great success with? >> jim, timken's a technology company. as you said, we're 100 years old. we were founded by a guy who invented the tapered bearing. for 100 years that's basically all we made. in the last decade we've transformed ourselves and the transformation started when we recognized it's what we know, not what we sell that's important. once -- >> what's here. >> it's what's in our heads. it's what we know. it's value created for customers. we transformed the company by shifting from a product strategy to a market strategy, and that led to an explosion of diversified markets and an explosion of products all the way from you talked about the mars rover bearing. there's the mars rover bearing. that's in a pump on the -- literally one just like this on

the surface of mars right now. all the way to we make the entire transmission for an apache helicopter. >> you guys make it. okay. now, this was obviously gut-wrenching. a lot of people don't know it's happening. i've seen steel company after steel company that went under in my lifetime. your company has not only succeeded in developing products like what you just showed me for the mars rover but it's also going right to china. some people say taking it to the chinese. but made it so that they have to use our product because it's the best. >> people talk a lot about china as being an enemy. we think of china as an opportunity. we've invested in china. we build factories in china. and as a result of that the timken company exports $700 million worth of products a year to china. china and the rest of the world. generating 3500 jobs here in the united states. >> and these are high-paying jobs, the kind the president says we need to have. these are not low-paying jobs where there's safety issues, either, right?

>> timken is one of the safest companies in the world. that's first point. secondly, our people deal with high technology in every aspect that they do. in the steel mill that we went through today everyone deals with computers, has to understand the technology in it. these are high school graduate, plus most of them have the equivalent of a tech school degree. >> let's talk about the technology and what it does. we went to look at an oil rig. we're trying to get at oil in this country. and the utica shale right near here, 18,000 feet. we've got to go way down and then to the left. this was oil and gas that was too expensive to get to until we had the technology to do it. you're part of that technology. >> this oil and gas boom is an opportunity for timken to develop new products. and in fact one of the products that drives that sideways drilling is made right here in this plant. it's called a piece of a mud motor, a stater tube. and it's timken technology that's so unique that we ship them to china.

>> and i presume that when i see these giants rigs it's not the pipe, right? you don't make the pipe. you make a certain high-tech precision gear that makes it so the pipe can go in the right direction. >> we make the components that make it go sideways. we make the steel that goes into the -- into the drill bit. and particularly when they're going straight down and they're down 35,000 feet and it's caustic and it's 500 degrees fahrenheit, you can guarantee it's timken in the bottom of the hole. >> we had a disappointment in technology today. we often talk about banks that are too big to fail because we don't like them. we use timken when there's a project that can't fail. >> one of the examples you use is jet airplanes. when a jet lands, the tire comes down, it's sitting still, it hits the tarmac, it goes instantly to 150 miles an hour. 100 times -- 100,000 times a day timken bearings turn those wheels. failure's not an option.

>> if we didn't have those bearings, what would happen? >> the airplane crashes. >> one last question. industrial renaissance. too broad a term? too high-minded given the fact that it isn't talked about anywhere other than ohio? >> in ohio there are a series of companies that have faced the reality and created a globally competitive footprint here. they've transformed themselves to take on the world. and our economy is growing because of that. >> all right. well, jim, i want to thank you and thank your unbelievable team for hosting us. this incredible fair press steel plant. that's james griffith, president and ceo of tkr, the timken company. stay with cramer. >> announcer: still ahead on a special "invest in america" edition of "mad money," erratic energy? chesapeake made headlines for all the wrong reasons in 2012. >> drama over at chesapeake the ceo reportedly taking out more than a billion dollars in unreported loans.

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♪ who would have thought there

were billions of barrels of oil in ohio? this guy did. take a look at my talk with chesapeake energy co-founder and ceo aubrey mcclendon at the peak 70 rig about an hour outside of canton, ohio. >> aubrey, on january 1st, 2008, a bit of a visionary. i don't know if utica even existed then in your eye. you said i was in washington this week, having conversations with congressional leaders about energy policy, basically talking about how we can begin to move our transportation network away from expensive dirty imported oil to clean, affordable, abundant natural gas, and if we do we can bring $2 gasoline back to the american people, we can strengthen the dollar, enhance national security, and create jobs at home. what's our scorecard in the last four years? >> it was all true then. how much of it's come true since then is not much. >> you did not know when you said this statement, january 1st, 2008, that where we are sitting had this reservoir that we could tap. >> we did not know that. nor do i think anyone else knew that in terms of it being

potentially commercially developable. so i think we've laid the foundation for what's about to occur, jim, which is a rejuvenation of the manufacturing side of america. we have the opportunity if we make good decisions to lower the price of energy for all americans. and we have the ability to continue to improve the environment and i think also take a fresh look at our foreign policy as well. >> these are so commonsensical. we've spoken about this sometimes. that it's rather remkable that neither candidate seems to have an understanding of the broad implications of natural gas. there was a moment where romney mentioned to obama, look, when you came in, oil was down here. now people are paying $4. and of course we know even more in california. are you telling me that what is underneath here can actually make natural gas bring down the price of fuel? >> sure, it can. and it's going to happen a couple different ways. we're going to transition away from burning diesel and gasoline to natural gas.

and we're going to be more efficient in our existing engines that consume gasoline, diesel. so right now our oil consumption in the country is already the lowest it's been in five years. and my view is that it can continue to decrease. >> we're in the middle of nowhere, and i know in the middle of nowhere there were not a lot of jobs not long ago. but when you take an area that's had tremendous unemployment and you come here, and you did discover utica, this is the house that you built, what is the economic impact on everybody from the land owners to the people who run hotels, the people who run mcdonald's? >> we are midway basically between pittsburgh and cleveland. those two cities serve as the bookends of what was the anchor, foundational birthplace of american industry. and now, though, for the past 30 or 40 years this area's been known as the rust belt. the discovery of the utica is going to be a liberating experience not only for this part of ohio but for all of america's manufacturing base.

>> what's missing here? three years ago literally right now at oklahoma university you said there would be a million jobs created. it didn't happen. >> i actually do believe our industry has created a million direct and indirect jobs since that time. in fact, i saw something the other day that the last 2.7 million jobs created in america, about a million come out of the energy industry. so this is a labor-intensive business. we pay well. these are jobs where we hire ph.d.s down to high school dropouts. blue-collar work that pays $75,000 to $100,000, $150,000 a year. >> let's talk about chesapeake's role. >> sure. >> we know chesapeake is a first mover. we know chesapeake is a company that was primarily and is a great natural gas company at a time when natural gas sells for what would be an absurdly low price versus a couple years ago. and you have had to scramble to become an oil producer. an oil producer of great magnitude.

how's that going? >> we are well on our way to making that transformation, jim. two years ago we were a top 30 oil producer in the country. today we're number 12. and i think it's a natural outcome of our strategy to be the fifth or sixth largest producer in another two or three years. so starting about three years ago we determined that oil was likely to be globally short. natural gas was likely to be continentally long, if you will. so we knew we needed to transform our base. it's not been as elegant as i would have liked. we've had to spend a lot of money to make that transition. and we've had to do it while natural gas prices have been falling for four years. and we had to do it after the warmest winter in 100 years. so you know, this has been a tumultuous year for us, but we're coming out of it in great shape and i'm looking forward to our company being one of the best performers in the energy industry for many years to come. >> okay. in a recent presentation your manager of research and i.r.

person, industrial relations person, said that chesapeake is the most -- this is a quote. "the most shorted large cap stock in america." i want to know why that is. >> i presume it's a bet against natural gas. and if you look at that short position, much of it was established in the first part of the year. about 14% of our stock has been sold short. and so if you consider that there are people out there with agendas that would like our stock price to go down, that helps explain some of the background stories about us. but you know, i'd prefer to think about that as a lot of pent-up buying power. if those guys are short our stock because we're not going to make the transition successfully to oil or we're not going to improve our balance sheet, where natural gas is going to be a low price, as low as it has been in 2012 forever, or that we're going to have winters as warm as last winter, those are all wrong bets, and at some point people who are short our stock will need to buy it and we'll welcome them on the other side of the fence.

>> i've been somewhat critical of the company by saying listen, you're a swashbuckling oil man, you are a wildcatter, and it's time for chesapeake to be a little less wildcatting and a little more like what we see from a lot of other more conservative companies. but i've always felt that it was your company, you kind of did what you want with it. what's changed? >> well, it was not true i could do what i wanted with it. and also i'd remind you that before you were critical of us you loved us. >> the stock was going up. >> and it will go up again. as we transition to a business strategy that has moved from capture to harvest. and now it's time, though, to focus the operations and go harvest that and bring it to our shareholders, drilling your best wells next. it's selling off things that are non-core. think about this. we're going to end up selling 17, 18 billion dollars of assets in 2012 and 2013, more than our market cap, and we're still going to grow 20% during those two years.

it's just a reminder of the huge amount of asset value that we have. so we're going to have higher returns on capital. we're going to have a better balance sheet. we're going to have a tighter operational focus. better governance. and all those things are going to combine togetheto i think unlock that huge latent value you've talked about. >> you brought up corporate governance. >> sure. >> how much of the story of chesapeake is muddled perhaps -- in other words, corporate governance issues that would not be what i would bet archie dunham, who's your new chairman, formerly of conoco, would be happy with. >> i think you have to look at all of what's been written. and i don't know why a lot of it's been written. i can't explain where some of it came from. but what i can do is look at the future and say that from going forward we do have a chairman, separate chairman and ceo. and i think that's been a very positive change for me and for the company and our shareholders. brought new members of the board on with a fresh perspective.

tightened the governance. i'd like to think about ourselves as a great story in how you can be considered a laggard in corporate governance and within six months be a leader. that's something i'm proud of and i think it's something that investors over time will continue to embrace. >> it was a year where you got margined out of a huge amount of stock, came on the show, felt terrible about it, said you were never going to use margin again because you watch "mad money" and know it's bad. but you did that. are those days over? is what the journal says now, is chesapeake now restrained? is there a new chesapeake? >> absolutely, yes. we have a completely new board, have a chairman. and my compensation over the last few years has been well inside of where my peers are, about 80% to 85% of it's been in the form of stock. >> is the company restrained enough for the new board members, many of whom, by the way, are people who -- very traditional backgrounds and may not like the old wildcatting

ways of your company. >> they certainly like the asset base that the old wildcatting ways gave us. exactly. look, i don't think you would have joined this board in june of 2012 if you weren't interested in what the company was doing, if you didn't like the asset base, and if you didn't have some confidence in the management team at the end of the day. you probably wanted to participate in ways to tighten up corporate governance. we've done that. >> is that all done? am i going to read more about that issue? >> i don't think good governance is a static concept. i mean, i think it's always improving and will continue to improve, just like everything you see today here is going to consistently and constantly improve as well. >> we'll be back with more from aubrey mcclendon, the co-founder and ceo of chesapeake energy, from the heart of ohio's utica shale, right after this. >> announcer: still ahead on a special "invest in america" edition of "mad money" -- >> what if we could say we could be opec free in ten years? what freedom would that give us

to think about our position in the world?

you talked about this year being -- going from capture to harvest. and yet when i look at next year there you are again, cash flow going to be exceeded by 5 billion, 4 or 5 billion in drilling. i mean, why not just -- why not make it so that they're matched, so you don't feel like you have to keep selling assets in order to be able to fulfill the drilling program? >> well, jim, you can't make a transition from natural gas to

oil if your natural gas assets create no cash flow. so you have to be active in how you manage your company's asset base. and we've actively managed it over from natural gas to oil. we're paying down 25% of our debt. we've not issued any stock. and to have achieved that transformation while also achieving probably the most dramatic corporate governance transformation and to do it all in two years and do it with gas prices that have declined by 80% from 2008 i think's a pretty remarkable series of achievements. i'm proud of it and view that our shareholders today are going to be very well rewarded in the years to come. >> is utica the spur of the industrial manufacturing revolution? is that too bold a claim? >> i don't think so. i think it's along with the marcellus and all the other shale plays -- i think what makes utica so important, though, from telling the story is, again, where it's located. this is ohio. at one point ohio had more millionaires than any other state in the nation.

why was that? it's because of the early advent of manufacturing led to wealth creation. and as you now move back into this manufacturing renaissance, we can once again talk about wealth creation. we can talk about higher tax receipts. we can talk about growth. we can talk about young people wanting to go to school, be educated, and come get these jobs, which we offer at one level as technologically sophisticated as anything you can find in the country or the world. on the other hand, if you want to work outside with your hands and you know, move some metal around, you can do that here in a way that your compensation is higher than anywhere else in the world. >> why doesn't the federal government demand that all postal trucks run on diesel? or how about the military? why is this not resonating around the country? >> the d.o.d., department of defense, is the largest consumer of oil in america. and think about -- we think that the military will -- there are

already organizations out there that have identified not only the savings that military transition to natural gas can have but also can we look differently at our foreign policy? what if we say we're going to be opec-free in ten years? what freedom would that give us to think about our position in the world differently than we think about it today? natural gas, affordable, abundant american natural gas gives you a clean sheet of paper to think about foreign policy, think about environmentalism, to think about industrial policy, and to think about how you reverse this hollowing out of the blue-collar middle class that helped make this country so distinctive in the world. and people wring their hands over it. the way to do it is to get to work, to take this 5 to 10 billion barrels of oil that lies underneath this ground, to take this 100 trillion cubic feet of natural gas, to bring it up and let's use it.

>> aubrey, while you're here, i'd like to get a good look at the rig. >> i was hoping you would ask. >> where the heck are we? >> jim, this is the epicenter of the utica shale play, one of america's best and newest treasures of american oil and gas. and here we are drilling a well that's going to go down about 8,000 feet in the ground. so basically a mile and a half. and then we're going to go a mile out horizontally. this is a rig that cost about $20 million. and virtually every piece of equipment here was manufactured in america. >> this is obviously not your land three, four years ago. how does it work? how did you accumulate this land? >> we went out and bought basically $2 billion worth of oil and gas leases. about 1.3 million acres in the utica shale. today about 1.3 billion of that 2 billion that we spent to acquire oil and gas rights have gone right in the pockets of local land owners in this area. and then you get a royalty. and the royalty is anywhere from 1/8 to 3/16 generally of all the

oil and gas that we produce from here for the rest of time. >> i see movies telling me no, the story here is dirty fracking, the story is how unhappy residents are, that they get the money but then you destroy them, you destroy their land. that's the story i read about. what's the matter with that story? it resonates. i see it. big box office success telling that story. >> other than it's 100% wrong. natural gas is the reason why america has led the world in carbon reduction in the last four years. you read those crazy, you know, stories, but the reality is, jim, that we've been fracking wells in this country since 1949 and our company has drilled 16,000 wells and used hydraulic fracturing on all of them. >> let's see your body of work. show us around. >> great. >> jim, what we're standing on top of today are -- is a drilling fluid system. i do want you to look around and notice the gentlemen that are working on location.

these guys work exceptionally hard. they are the best in the business. but these are the kind of jobs that we should be especially proud of creating these days. the u.s. is -- you think about what industries do we still lead the world in? energy exploration, development we're still number one in. and people may not know who watch your show that america's the number one producer of natural gas in the world. >> you have been talking about how there's a tremendous, 40% decline in rigs because there's too much of this stuff. is it because there's too much of this stuff or because we haven't figured out how to use it all? >> that's the key right there, jim. you can't have a gas demand revolution until you've had a gas supply revolution. i mean, how do i convince you or anybody else to consume more natural gas if i can't prove to you that it's out there at a reasonable price? when you think about natural gas at 4 to 6, think about oil of 24

to $36 a barrel. that's 1/4 to 1/3 what oil costs. that's what's going to provide america with this competitive advantage that china, japan, korea, europe, the rest of the world won't have. this is a $250,000 piece of equipment called an iron roughneck. and it's called that because it takes a roughneck's job, and a roughneck is the industry terminology for a worker who works on the rig, and takes what was previously a dangerous and dirty job and makes it safer and makes it easier. and so we're constantly investing in machinery like this. it doesn't replace people but makes them more efficient. we have wells that john d. rockefeller drilled that are over 100 years old. they're still producing natural gas from shale today. so just to be conservative we

say we think these wells will produce for 50 years. but they'll likely be here for 100 years. >> jim, here we are. we're stepping up to look at the driller's console. you are looking at a digital world brought to a drilling rig. ten years ago wouldn't have had this. probably five years ago wouldn't have quite looked like this as well. this is all the information that's coming to you from the rig. and think about what your environment is here. you've got a great view of what's happening on the floor. you've got four other guys out there working. you are now protected from the elements. you've got digital controls rather than mechanical controls. >> let me give them a boo-yah. welcome to cramerica. >> announcer: still ahead on a special "invest in america" edition of "mad money," green delivery? getting energy out of the ground is just the beginning. one company that helps get it where it needs to go is spectra energy. can its 19,000 miles of pipeline be your path to profits?

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we're here in canton, ohio sitting on top of the utica shale, one of the largest yet least talked about natural gas formations in this country. why? in the last four years we've found so much oil and gas in this country it has the capacity to completely rejuvenate the american economy. but first we have to find out how to get this newfound cheap fuel where it's needed and that's where spectra energy comes in. they operate the infrastructure needed to gather the natural gas, process it, and transmit it. spectra's also got a juicy 3.7%

yield and it's a key part of our natural gas future. that's why we're thrilled to be talking to greg ebel, the president and ceo of spectra energy. mr. ebel, welcome back to "mad money" and our "invest in america" tour. >> this is great. this is what it's all about. we make stuff in this country. >> and do we use it? >> we use it. we use it in pipelines. and as you know that's the business we're in. we ship 12% to 15% of the gas that moves here and companies like timken and a lot of other steel plants here in canton, ohio and throughout ohio. that an amazing change that we've seen. pretty exciting. >> it's not the cheapest pipe in the world. >> not the cheapest but the best. we often look at other places to buy pipe. and you know what? the best pipe is here in america. we buy it. we're building a pipeline just south of canton down to clarington, ohio, with aep as they refire their plants to gas. and we're building a pipeline just north of here called nexus that's going to go west to toledo and actually move gas into canada. imagine that. we used to import from canada. >> because there's so much natural gas here. >> so much natural gas here. it's amazing.

>> you also are building a pipeline that ends in greenwich, village, new york. >> we are. >> how expensive is it to build the last 15 miles there? >> that's right. 15 miles costs about $1.2 billion. and i wouldn't even say that's a problem because the people in new york city and new jersey, they're going to benefit to the tune of about $400 million a year in energy costs just from getting cheaper access to natural gas. the challenge is it takes four years to get regulatory approval. >> someone, one of my staff got handed a pamphlet in advance of coming here, the marcellus shale formation contains a higher than normal level of radioactive radon gas. they want to block your pipeline. >> yeah, people are trying to do that all the time. you know, we're not in the enp business. we're the ups, if you will, of the natural gas business, shipping this stuff. but we look at these issues and look at them seriously. the epa and the department of energy has said there is no health risk related to radon gas and natural gas. but we went and got a third party to look at that, looking at marcellus gas. same findings as the epa and u.s. department of energy.

>> let's talk about the advantages of owning spectra. you have had a very good record of dividend growth. >> right. >> that's one of the reasons why we like stocks like spectra. >> right. >> can you continue to deliver that? even though you do have some commodity exposure and we know that some of the natural gas pricing has been tough for you. >> yeah, about 20% of the business is commodity exposed so that will make earnings move up and down. but we generate a lot of cash and we've said we'll grow the dividend at least 8 cents a year for the foreseeable future. you never know, maybe we can do a little better than that but we'll keep working that. the way pipeline business works is you build projects over two, three years, so earnings grow, then you may flatten a little bit, they plateau and then you grow, but you keep generating that cash, which allows you to give investors a return through dividends and/or eps growth. >> we're investing in america, which means we're investing in american people who have jobs. $8 million in capital expenditures. what does that mean in terms of putting people to work? >> well, the good thing is throughout the entire recession we never laid off a single

person. look at things like new york city project. 15 miles of pipe. about 4,000 jobs. unionized, non-unionized jobs. we're looking at building an $8 billion pipeline in western canada. that will be another 4,000 or 5,000 jobs. so it means a lot. the average pipeline worker in america makes about $65,000 a year. average worker makes 44 thousand a year. when these jobs are here, they don't go overseas. you can't run a pipeline from overseas. >> i don't need a graduate degree to work, right? >> no. in fact, we want welders. pipefitters, steam-fitters. all those types of things are important in our business. no, you don't need to be an mba. all you need is to want a good job and work hard. >> you guys have been tremendously transparent. the fastest-growing area in our country is northeast, philadelphia and new york, boston. >> yeah. >> how come? >> what a dramatic change. first of all, we use about 80 million barrels a year of oil, foreign oil that comes in. it's very expensive relative to gas.

so you're seeing a lot of changeover. they say in the northeast about 50,000 homes a year could change over to natural gas. so it's not hard. citizens say look, that saves me about $1,000 a year in disposable income if i switch to gas. so you're seeing that real growth happen in the northeast. the challenge is it's also the most congested place in the country, so getting project approval is challenging. but pretty exciting. >> you've done a great job at it, delivered consistent numbers and been able to raise the dividend, which is i think what we need in a time of low fixed income to be able to get what people really need, particularly conservative people. >> let's just make sure they don't tax the dividend any more than they already do. your plan says get rid of it. >> yes, it does. thank you to greg ebel, president and ceo of spectra energy corp. more from "mad money" in a moment. folks who save hundreds of dollars switching to geico sure are happy.

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well, we're here in canton, ohio talking about the state's natural gas renaissance courtesy of the utica shale with its cheaper, cleaner fuel as the fuel of choice for many utilities. we've got to find out the bigger picture of how you can profit from it. like much of industrial america, a gigantic energy user and needs the lowest-cost power to stay competitive in a globalized world. that's why i wanted to talk to an ohio-based utility, american electric power, aep, the largest electrical transmission system in the country. about this natural gas boom and what it means to you and how you can profit from it. that's why i'm thrilled to introduce nick akins, president

and ceo of american electric power, hear more about his business, the state of play between coal and natural gas, and what this industrial heartland renaissance means for the country. good to see you. >> hi, jim. >> thank you so much for coming on the show. >> great to see you again. >> we're in the timken plant here. and i have to believe after what i saw at this blast furnace that this place is a gigantic user of energy. >> absolutely. >> is this the kind of company that spurs the -- your kinds of numbers that you've been given us consistently? >> oh, yeah. we love this topic. this is a huge consumer of power and energy. but also, it reverberates through the rest of the economy that we serve, the commercial customers, the residential customers. so these kinds of facilities are the backbone of our service territory. >> now, you're caught at a little bit of a crossbar. you want to deliver the cheapest power to timkens and others because you don't want them leaving. it's a globalized world. >> that's right. >> at the same time you're a heavily regulated industry. you've got to be able to appease the regulators, state and federal. you certainly want to help the shareholders.

and then you've got to keep the rates down so that companies don't leave. the balance is harder than ever right now, isn't it? >> yes, the balance is harder than ever because obviously you have an economy that we really need to move forward to increase that denominator that we spread all of our costs over. so the more the economy comes back, the more we're able to make investments and be able to grow the economy on a continuous basis. >> have you been able to harness at all the utica shale? we run a rig. timken's been able to use it. spectra energy. what does it mean for you? >> yes. as a matter of fact, in our eastern footprint ten years ago, like ohio didn't even have natural gas. today we've bought about 3,500 megawatts of natural gas capacity, which is huge. our gas consumption is going up 150% for this year versus last year. so it's that kind of renaissance that's occurring in the energy industry that we haven't seen before. and it's definitely an opportunity for this service territory in ohio to take advantage of.

>> now, there's a lot of talk, some of it gloomy, about how the u.s. economy's doing. unemployment's obviously too high. but there's also we've got great housing starts the other day. it looks to be that some industrial production numbers in the last two times have been good, last two months. retail sales a little bit better. you've got the biggest panoply of everybody. what's the state of industrial america in your region? and how's the consumer doing from what you can tell? >> i think industrial america's tenuous right now. >> tenuous? >> tenuous. because certainly you want to see, you know, tax reform, the things that change with the economy that we need to be able to focus on, consumption needs to go up on a continual basis, and it's important for us to make sure that there is a regulatory policy that's put in place and a tax policy that supports continued expansion of business. right now it's tenuous. waiting till after the election. >> okay. understood. now, when the president and the governor were debating, i was tweeting @jimcramer, and i said, look, when you hear about this debate about who can really

impact what businesses the president of the united states staffs the epa. the epa is your regulator. it should be just the states, but it's also the federal government. a romney epa versus obama epa, how stark for you? >> i think certainly we need an epa that's responsive to the business needs and has a rational policy moving forward no matter who is president. now, governor romney has talked about reining in the epa and really moving forward with a progressive approach from a business standpoint, maintaining coal-related jobs, continuing to improve natural gas. these are the kinds of things we're looking for regardless of who's president. so if president obama's re-elected, we would certainly like to see a change from what we've experienced the last few years. >> but nick, what happens if the epa -- let's say the house goes democrat, the senate is democrat, the president feels he's got a mandate. what happens if the epa says to you, look, we have a lot of natural gas.

we want all your coal plants shut in the next two years or spend 5 to 8 billion immediately or else we're going to come in and make your life very difficult. >> yeah, that's just not possible. we've been very early demonstrating that it can't be done from a reliability standpoint and from a cost standpoint. as a matter of fact, this kind of business we're involved with today would experience a 10% to 30% increase in rates overnight as a result of these types of activities. that's not good for anybody. >> these guys leave. >> that's right. these guys leave. then you have a cascading effect through the economy. and that's not something that's palatable for us. >> it's pretty stark from a company that's been a consistent dividend increaser and is a terrific power distributor. thank you so much, sir. that is nick akins, the president and ceo of american electric power. 5-hour energy supports the avon foundation for women breast cancer crusade. so i can get the energized feeling i need and support a great cause?

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