Hydraulic fracturing and horizontal well drilling have given American companies access to vast new reserves of oil and gas, and have dramatically increased the production of hydrocarbons in the United States. Since 2010, the U.S. has added roughly 5 million barrels of oil per day, and natural gas production is up roughly 33% over that same time period.
‘The American Interest’ notes that the effects of this energy revolution have been felt the world over—they’ve brought gasoline prices down for American drivers while remaking the global oil market. But in the U.S., they’ve been an enormous boon to an industry most Americans are likely unfamiliar with: petrochemicals. As the WSJ reports, cheap petrochemical feedstocks (a byproduct of oil and gas drilling) are pushing the U.S. petrochemical industry to new heights:
“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. 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. […]
“It’s a tectonic shift in the hemispherical balance of who makes what to essentially feed the manufacturing sector,” said Dow Chief Executive Andrew Liveris, referring to the growth of production in the U.S. His company now plans to double down on its U.S. expansion with a $4 billion investment in a handful of projects over the next five years. […]
The new investment will establish the U.S. as a major exporter of plastic and reduce its trade deficit, economists say. 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.
That’s a lot of money, and it’s a ‘staggering’ number of jobs, “The American Interest” argues. This is one of the unheralded consequences of this new energy renaissance that the U.S. finds itself in, and it’s creating a rosier economic outlook for years to come.
This big win for America has also produced a number of losers, namely Middle Eastern petrostates who in years past had looked to petrochemicals as an important industry to help them diversify away from simply pumping and exporting crude oil and natural gas. But thanks to cheap shale-sourced petrochemical feedstocks, the lion’s share of new investment money in the industry is heading to the U.S.