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Shale gas is making U.S. plastic manufacturing competitive globally

The shale gas revolution is bringing plastic manufacturing back to the United States and making U.S. refiners more competitive globally, reports the American Chemistry Council (ACC). Due largely to plentiful and affordable natural gas and natural gas liquids from shale formations, U.S. jobs related to plastics manufacturing are expected to grow by 462,000 over the next decade – more than 20% – reaching more than 2.7 million.

Cheap and abundant shale gas has breathed new life into the U.S. plastics manufacturing sector, based on a new study titled “The Rising Competitive Advantage of U.S. Plastics.” The study points out, since U.S. producers predominantly use natural gas-based feedstocks, and European and Asian producers generally use oil-based feedstocks, the spread between feedstock prices has made U.S. producers more competitive, even after the recent oil price decline.

Increasing competitiveness is expected to bring more jobs back to the U.S. as new investment expands the industry. ACC’s report found that new investment could create hundreds of thousands of permanent jobs up and down the supply chain over the next decade. In addition to the anticipated 462,000 manufacturing jobs, the analysis project nearly 97,000 temporary jobs will be created during the peak of the construction phase.

Attracting new investment

“A decade ago, the U.S. was among the highest-cost plastics producers,” said Steve Russell, ACC’s vice president of plastics. “Today, America is one of the most attractive places in the world to invest in plastics manufacturing. Even after recent declines in oil prices, our nation has a decisive edge.”plastics

Based on the ACC’s analysis, the combined output from the new investments in resin, compounding and ancillary chemistries (additives, colorants, ect.) and products will be $46.8 billion. Many of the new investments are export-oriented. Recent work by Nexant Consulting found that between 2014 and 2030, net plastic resin exports will more than triple, rising nearly $15 billion from $6.5 billion to $21.5 billion.

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Important disclosures: The information provided herein is believed to be reliable; however, EnerCom, Inc. makes no representation or warranty as to its completeness or accuracy. EnerCom’s conclusions are based upon information gathered from sources deemed to be reliable. This note is not intended as an offer or solicitation for the purchase or sale of any security or financial instrument of any company mentioned in this note. This note was prepared for general circulation and does not provide investment recommendations specific to individual investors. All readers of the note must make their own investment decisions based upon their specific investment objectives and financial situation utilizing their own financial advisors as they deem necessary. Investors should consider a company’s entire financial and operational structure in making any investment decisions. Past performance of any company discussed in this note should not be taken as an indication or guarantee of future results. EnerCom is a multi-disciplined management consulting services firm that regularly intends to seek business, or currently may be undertaking business, with companies covered on Oil & Gas 360®, and thereby seeks to receive compensation from these companies for its services. In addition, EnerCom, or its principals or employees, may have an economic interest in any of these companies. As a result, readers of EnerCom’s Oil & Gas 360® should be aware that the firm may have a conflict of interest that could affect the objectivity of this note. EnerCom, or its principals or employees, may have an economic interest in any of the companies covered in this report or on Oil & Gas 360®. As a result, readers of EnerCom’s reports or Oil & Gas 360® should be aware that the firm may have a conflict of interest that could affect the objectivity of this report.