Executive Briefings

The Shale Revolution's Staggering Impact in Just One Word: Plastics

When new parents in Rio de Janeiro buy baby food in plastic containers, they are bringing home a little piece of the U.S. shale revolution.

The Shale Revolution's Staggering Impact in Just One Word: Plastics

That boom in drilling has expanded the output of oil and gas in the U.S. more than 57 percent in the past decade, lowering prices for the primary ingredients Dow Chemical Co. uses to make tiny plastic pellets. Some of the pellets are exported to Brazil, where they are reshaped into the plastic pouches filled with puréed fruits and vegetables.

Tons more will be shipping soon as Dow completes $8bn in new and expanded U.S. petrochemical facilities mostly along the Gulf of Mexico over the next year, part of the industry’s largest transformation in a generation.

The scale of the sector’s investment is staggering: $185bn in new U.S. petrochemical projects are in construction or planning, according to the American Chemistry Council. Last year, expenditures on chemical plants alone accounted for half of all capital investment in U.S. manufacturing, up from less than 20 percent in 2009, according to the Census Bureau.

Integrated oil firms including Exxon Mobil Corp. and Royal Dutch Shell PLC are racing to take advantage of the cheap byproducts of the oil and gas being unlocked by shale drilling. The companies are expanding petrochemical units that produce the materials eventually used to fashion car fenders, smartphones, shampoo bottles and other plastic stuff being bought more and more by the world’s burgeoning middle classes.

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That boom in drilling has expanded the output of oil and gas in the U.S. more than 57 percent in the past decade, lowering prices for the primary ingredients Dow Chemical Co. uses to make tiny plastic pellets. Some of the pellets are exported to Brazil, where they are reshaped into the plastic pouches filled with puréed fruits and vegetables.

Tons more will be shipping soon as Dow completes $8bn in new and expanded U.S. petrochemical facilities mostly along the Gulf of Mexico over the next year, part of the industry’s largest transformation in a generation.

The scale of the sector’s investment is staggering: $185bn in new U.S. petrochemical projects are in construction or planning, according to the American Chemistry Council. Last year, expenditures on chemical plants alone accounted for half of all capital investment in U.S. manufacturing, up from less than 20 percent in 2009, according to the Census Bureau.

Integrated oil firms including Exxon Mobil Corp. and Royal Dutch Shell PLC are racing to take advantage of the cheap byproducts of the oil and gas being unlocked by shale drilling. The companies are expanding petrochemical units that produce the materials eventually used to fashion car fenders, smartphones, shampoo bottles and other plastic stuff being bought more and more by the world’s burgeoning middle classes.

Read Full Article

The Shale Revolution's Staggering Impact in Just One Word: Plastics