The fracking revolution that has resurrected energy drilling in the U.S. is having broader effects on reviving American industry, according to The Wall Street Journal.
“That boom in drilling has expanded the output of oil and gas in the U.S. more than 57 percent in the past decade,” the newspaper reported. The re-birth of U.S. drilling is driving down the cost of raw materials for plastics companies like Dow Chemical, which is putting $8 billion into petrochemical facilities along the Gulf of Mexico.
“The scale of the sector’s investment is staggering: $185 billion in new U.S. petrochemical projects are in construction or planning, according to the American Chemistry Council,” the WSJ reported. “Last year, expenditures on chemical plants alone accounted for half of all capital investment in U.S. manufacturing, up from less than 20% in 2009, according to the Census Bureau.”
Companies are starting new U.S. petrochemical projects — 310 in all according to the Chemistry Council — because the demand for energy may peak with the advent of electric cars and ride sharing, while the need for plastics is expected to rise for decades to come.
“The new investment will establish the U.S. as a major exporter of plastic and reduce its trade deficit, economists say,” according to the WSJ. “The American Chemistry Council predicts it will add $294 billion to U.S. economic output and 462,000 direct and indirect jobs by 2025, though analysts say direct employment at plants will be limited due to automation.”
The boom in U.S. petrochemicals is reversing a decade of declines as chemical companies invested in big projects in the Middle East and Asia, where manufacturing was booming. More than a dozen facilities on the U.S. Gulf were closed in 2008 and 2009 as the global economy suffered its steepest decline since the Great Depression. Dow, Chevron Phillips Chemical and LyondellBasell closed plants and fired workers in droves.
The Gulf Coast region isn’t the only area with growing investment in petrochemicals.
The American Chemistry Council said Appalachia could be developed to compete for a top spot in domestic petrochemicals, according to a report at OilPrice.com.
The council presented a proposal on Capitol Hill in May to utilize low-cost natural gas production in Appalachia to produce chemicals.
“If greenlighted, ACC estimates that their development project would create 100,000 permanent jobs by 2025 and $2.9 billion annually in federal and local tax revenue,” OilPrice.com reported.
One of the biggest risks to the petrochemical industry is backlash from plastics pollution, especially in oceans.
“There are about 150 million tons of plastics pollution in the ocean today, and if the trend continues, by 2025 oceans would contain one ton of plastic for every three tons of fish,” OilPrice.com reported, citing a 2016 study by the Ellen Macarthur Foundation. “By 2050, fish would be outnumbered by plastic waste.”
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