Favorable oil-to-gas price ratios driven by the production
of natural gas from shale will drive a renewed US
competitiveness that will boost exports and fuel greater
domestic investment, economic growth and job creation within
the business of chemistry.
This is according to the Year End 2012 Situation and
Outlook, published Friday by the American Chemistry
Council (ACC) trade group.
After three years
recovering from the recent recession, the global economy
stumbled in 2012. The euro area entered a recession again, and
a pronounced slowdown in China helped spread economic
uncertainty around the world, the ACC said.
In the US, although GDP surpassed its pre-recession peak,
growth is slow and a typical business cycle expansion has yet to
Despite this, the business of American chemistry remains a
Though rising uncertainty over the fiscal cliff, debt
ceiling negotiations and tax reform have hindered business
confidence, the most important domestic energy development in
the last 50 years is poised to reshape American
Access to vast, new supplies of natural
gas from shale deposits creates a competitive advantage for
US petrochemical manufacturers. Ethane,
gas liquid derived from shale gas, is used as a feedstock by American chemical
companies, giving them an advantage over foreign competitors
that rely on a more expensive oil-based feedstock.
Following a decade of high and volatile natural gas
prices that destroyed industrial demand and lead to the closure
of many gas-intensive manufacturers, shale gas offers a new era
of American competitiveness that will lead to greater
investment, industry growth, and employment, said Kevin
Swift, ACCs chief economist and lead author of the
The business of chemistry is a $760 billion enterprise and
one of Americas most significant manufacturing
industries, with more than 96% of all manufactured goods
touched by products of chemistry.
For the business of chemistry in the US, the softening of
the manufacturing recovery has dampened domestic chemical
demand and weakness in Europe and elsewhere has affected export
sales. But exports remain a bright spot for the industry.
Aided by a favorable oil-to-gas ratio, chemical exports
grew 1.8% to $191 billion dollars in 2012, helping to turn a
trade deficit into a modest surplus, Swift said.
Well see exports continue to grow 4.7% in 2013 and
another 6.2% to $209 billion in 2014."
While overall shipments in the business of chemistry slipped
1.5% in 2012, they are expected to increase nearly 9% over the
next two years, to $794 billion in 2013 and $833 billion in
According to Swift, it is not only the chemical industry
that stands to benefit from increased access to natural gas
from shale. Other natural
gas and energy intensive manufacturing industries will also
realize renewed competitiveness and increased output,
potentially creating 662,000 direct and related jobs and
generating $342 billion in economic expansion.
Within the business of chemistry, several end-use markets
have already shown signs of growth. At nearly $3,650 of
chemistry per vehicle, light vehicles represent an important
market for the industry and production continues to
US light vehicle sales are expected to rise in 2013 and 2014 as
pent-up demand, improved employment and greater availability of
credit foster demand. The slowly recovering US housing market
(more than $15,000 of chemistry per start) is also likely to