Shale Gas and Chemical Industry Interconnected

Yet more evidence of the importance, and the interconnectedness, of the shale gas industry and the plastics industry in the U.S. comes from none other than the American Chemistry Council. The ACC says that shale gas,

…will yield so much ethylene — the basic building block of plastics — that the United States will become the world’s lowest-cost source of feedstock in the world outside of the Persian Gulf.(1)

Dow Chemical now needs extra capacity to ship raw materials they manufacture from shale gas:

Dow Chemical Co. is among customers calling on vessels [barges on the Mississippi River] and vehicles [long haul truckers] to haul their gas-derived products to railways, ports and other facilities as they expand production in the U.S., where the fuel costs less than half what it does in Europe or Asia.

Even as U.S. economic growth cools to the slowest pace since the recession ended in 2009…companies are moving more chemicals, like ethylene and benzene, made from natural gas. Demand for the household goods containing these products, which include water bottles, mouthwash and diapers, tend to “hold up pretty well in a slow-growth environment.”

Railcar loadings of chemical products, a proxy for demand, have risen an average 4.4 percent year-over-year into the week ended Sept. 10, Association of American Railroads data show.

Overseas demand for petrochemicals has also held up. Exports to Brazil, Europe and Asia have gained “appreciably” this year, and overall shipments to other countries are up about 10 percent to 15 percent year-over-year, said Kevin Swift, the American Chemistry Council’s Washington-based chief economist.(2)

(1) Charleston Daily Mail (Sep 21, 2011) – W.Va. must provide regulatory certainty

(2) Bloomberg Business Week (Sep 21, 2011) – Cheapest Gas Buoys Kirby Shipping Dow Chemicals: Freight Markets