U.S. chemical and plastics industry investments linked to plentiful and affordable domestic supplies of natural gas and NGLs from shale formations have surpassed $200 billion, according to the American Chemistry Council (ACC).
Since 2010, 333 chemical industry projects cumulatively valued at $202.4 billion have been announced, with 53 percent of the investment completed or under construction and 41 percent in the planning phase. Project types include new facilities and capacity expansions.
“This is an exciting milestone for American chemistry and further evidence that shale gas is a powerful engine of manufacturing growth,” said Cal Dooley, ACC president and CEO. “The U.S. remains the most attractive place in the world to invest in chemical manufacturing. We look forward to continuing to transform energy into a stronger economy and new jobs.”
ACC analysis shows that $202.4 billion in capital spending could lead to $292 billion per year in new chemical and plastics industry output and support up to 786,000 jobs across the economy by 2025. These include 79,000 chemical industry jobs, 352,000 jobs in supplier industries and 355,000 jobs in communities where workers spend their wages. Additionally, during the capital investment phase, temporary jobs are created.
Robust supplies of NGLs, especially ethane, are key to the U.S. chemical industry’s competitiveness. NGLs are the main feed-stock for basic petrochemicals and plastics in the U.S., while companies overseas mostly use naphtha, which is oil-based. Since feed-stock comprises about 75 percent of the cost of ethylene production, lower prices favor U.S. chemical makers in global markets.
Since 2010, 333 chemical industry projects cumulatively valued at $202.4 billion have been announced.
U.S. manufacturers often rely on inputs that are not available or made in the U.S. to create products that cost less, yet perform at the high level downstream customers have come to expect. Protectionist trade policies such as tariffs and quotas unnecessarily raise the costs of those inputs, deter innovation and economic growth, and could ultimately weaken the country’s competitive advantage.
ACC’s findings also provide an update to its first report, “Shale Gas, Competitiveness, and New U.S. Chemical Industry Investment — An Analysis of Announced Projects.” Released in May 2013, the report analyzed 97 chemical and plastics industry projects totaling $72 billion in potential investment that had been announced as of March 2013. As new projects are announced, the ACC updates its tally of announced projects and cumulative investment.
ACC analysis employs the IMPLAN input-output methodology, an economic model that quantifies interdependencies among industries or economic sectors. IMPLAN is used by government agencies including the Army Corp of Engineers, U.S. Department of Defense, U.S. Environmental Protection Agency, and over 20 others, and by over 250 colleges and universities, local governments, nonprofits, consulting companies and other private sector companies.
For more information, visit www.americanchemistry.com or call (202) 249-7000.