Shale boom spurs chemical industry expansion

The U.S. chemical industry is expanding at a healthy clip thanks to a domestic drilling renaissance that has flooded the world with cheap oil and gas.

The industry grew by 2 percent this year and is expected to swell further next year as advances in drilling and completion technologies unlock vast new supplies of hydrocarbons that chemical companies rely on to make products and fuel their plants, according to the American Chemistry Council’s annual year-end review of the industry.

“The wind is back in our sails,” Kevin Swift, chief economist for the trade group, said in a statement. “During the second half of the decade, U.S. chemistry growth is expected to expand at a pace of more than 4 percent per year on average, exceeding that of the overall U.S. economy.”

The surge in domestic oil production has ignited a building spree in the petrochemical industry. In recent years, more than 215 new production projects worth $135 billion have been announced as companies scramble to take advantage of the cheap U.S. shale gas that gives them a cost advantage over their foreign competitors. Production, which grew in all regions this year, will accelerate as these projects start to come online in 2017, with the Gulf Coast seeing the biggest surge, the council said.

“We’re in the midst of a historic expansion and the U.S. remains the most attractive place in the world to invest in chemical manufacturing,” council CEO Cal Dooley said in a statement.

Falling oil prices will only add to the economic boon. As crude plummets to its lowest level in five years, manufacturers will spend less to produce products while cheaper gasoline pumps money back into consumer’s pocketbooks, spurring more disposable spending, the council said.

Lower Oil Prices; Recovery of End Use Markets Puts Wind Back in the Sails of American Chemistry
http://www.americanchemistry.com/Media/PressReleasesTranscripts/ACC-news-releases/Lower-Oil-Prices-Recovery-of-End-Use-Markets-Puts-Wind-Back-in-the-Sails-of-American-Chemistry.html

Despite facing global headwinds, American chemistry expanded at a healthy 2.0 percent growth rate in 2014, and is expected to reach a 3.7 percent gain in output in 2015, before hitting 3.9 percent in 2016, according to the Year End 2014 Chemical Industry Situation and Outlook, published today by the American Chemistry Council (ACC). The report’s consensus is that U.S. chemical output will continue to expand well into the second half of the decade, exceeding that of the overall U.S. economy.

“The appreciation of the dollar, coupled with increased domestic supply of unconventional oil and gas is helping to drive oil prices down,” said Dr. Kevin Swift, chief economist at the American Chemistry Council. “In turn, manufacturing costs are reduced, production is stimulated, inflation restrained, and consumer confidence, along with purchasing power and spending, is boosted,” he added.

That boost in spending power has contributed to gains in key end-use markets including light vehicle sales ($3,500 of chemistry per unit) and housing ($15,000 of chemistry per start). Light vehicle sales saw an increase of nearly 5.2 percent over 2013, and production continues to improve, with sales expected to rise further in 2015 as pent-up demand, improving employment prospects, and increased availability of credit foster growth. Though the housing outlook remains cautious, inventories and interest rates remain low. Job growth, a major long-term driver for housing is improving, as seen in the 7.5 percent increase in housing starts between 2013 and 2014. Though activity will remain well below the previous peak of 2.07 million units in 2005, by the second half of the decade, activity will approach the long-term underlying demand of 1.5 million units per year.

Too bad we have to STOP all fracking in the US. We must.

One of the stories that pops up at yahoo mail for the last week is “The Dark Side of Your Low Gas Prices” It is an absolutely insane, bullshit piece about an explosion of oil carrying rail cars in Canada last year, and how American rail is under-regulated, and WE ARE ALL GOING TO DIE IN FIERY OIL EXPLOSIONS, because we have cheap gas and the Feds are simply not regulating enough.
No mention, by the way, of “Hey, let’s build the pipeline, so there is less oil moving on rail.”
I tell ya, I am absolutely paralyzed with horror at the prospect of dying in an oil fire!!!! I say we ditch cheap gas, and go with safer Saudi Oil!!!!

Then there was the yahoo finance story yesterday about our energy production crippling African economies!!! WE CAN’T HAVE THAT!!!!

The spot market price is dropping enough to make us a little nervous. We are starting a large expansion for ethane/propane production.

http://www.barchart.com/charts/futures/PNY00

Residential seems to be holding steady. Stocks are up.

http://www.eia.gov/petroleum/weekly/propane.cfm

meanwhile in Jubail, Dow Chemical and Saudi Aramco have teamed up to build the Sadara project that is one of the largest projects of it’s kind in the world.

The project is bringing many jobs to America for the special equipment and materials required

http://www.chemicals-technology.com/projects/sadara-complex/

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