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 this 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.