Reversal of Fortune in Chemical Week Magazine

April 9, 2012 - San Antonio, TX

Sentiment at the recent American Fuel and Petrochemical Manufacturers’ International Petrochemical Conference (IPC) highlights how quickly U.S. petrochemical markets have been transformed by surging supplies and lower costs for natural gas and feedstocks.

Attendance at IPC was nearly 3,000, up roughly a third from the 2009 trough. Discussions that year were somber and focused on defensive positioning for a U.S. petrochemical industry that was viewed as a global cost laggard. Exports were dropping and U.S. producers were bracing for the possibility of becoming net importers of petrochemical products.

Low costs for natural gas and feedstocks have quickly reestablished a huge cost advantage for U.S. petrochemical makers, which are now on on the offensive. Producers have announced roughly 10 million m.t./year of new ethylene capacity, which will fuel a boom in derivative exports.

Marvin Schlanger, chairman of the supervisory board of LyondellBasell Industries, summed up the shift when he received the 2012 Petrochemical Heritage Award from the Chemical Heritage Foundation and Founders Club at IPC. Schlanger noted that development of natural gas from shale is the most significant U.S. energy development in the last half century. “Low-cost energy will fuel a renaissance of American manufacturing,” Schlanger says. “Benefits will be felt beyond petrochemicals as American products will be exported across the world.”

A national energy policy has the potential to significantly strengthen the U.S. economy and competitive position of U.S. chemical makers, Schlanger says. “We don’t need massive new investments or exotic technology,” Schlanger says. “We need leadership with a dose of political willpower.”

Schlanger argued for a balanced approach to energy policy, calling for increasing domestic hydrocarbon resources in an environmentally sound manner coupled with government support for development of alternative fuels to diversify energy supplies. Schlanger says his comments are only an outline of policy. “The real issue is starting a dialogue. I am optimistic this will finally happen,” Schlanger says. There is broad support for development of a U.S. energy policy, he adds. “Our need for domestic economic growth may have reached a tipping point that will result in progress.”

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