12 December 2012 16:34 [Source: ICIS news]
WASHINGTON (ICIS)--Newly abundant supplies of natural gas from shale formations will revive the slumbering US manufacturing sector, boosting exports and spurring more domestic investment, growth and employment, the American Chemistry Council (ACC) said on Wednesday.
In its year-end situation and outlook report, the council said those shale gas supplies also will help accelerate the thus far mediocre US economic recovery, with the chemicals sector perhaps benefitting the most.
US petrochemicals producers and downstream chemical makers are heavily dependent on natural gas as both a feedstock and power fuel. Chemicals producers outside of North America typically rely on oil-based naphtha for feedstock.
With domestic US natural gas prices low and crude oil high, US chemicals manufacturers are now enjoying a major cost advantage that has not been seen for more than a decade.
ACC chief economist Kevin Swift noted that a period of high and volatile natural gas prices in 2001-2008 “destroyed industrial demand and led to the closure of many gas-intensive manufacturers”.
But the advent of shale gas “offers a new era of American competitiveness that will lead to greater investment, industry growth and employment”, he said.
“Aided by a favourable oil-to-gas ratio, chemical exports grew 1.8% to $191bn [€147bn] in 2012, helping to turn a trade deficit into a modest surplus,” he said.
Swift said the ACC is projecting chemicals exports to grow by 4.7% next year and then by 6.2% to reach $209bn in 2014.
Overall US chemical shipments, which declined by 1.5% last year, are expected to advance by nearly 9% over the next two years to reach $833bn in 2014, Swift said.
But the impact of shale gas will be felt well beyond the chemicals sector, he added.
“Other natural gas and energy intensive manufacturing industries also will realise renewed competitiveness and increased output, potentially creating 662,000 direct and related jobs and generating $342bn in economic expansion,” the report said.
($1 = €0.77)
Paul Hodges studies key influences shaping the chemical industry in Chemicals and the Economy
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