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U.S. Pumps Money Into Chemical Industry Despite Falling Oil Prices

Falling oil price. Red arrow graph chart moving down near the barrels with oil.

$145 Billion in Chemical Industry Investment Projects Slated for 2015

Crude oil prices have been falling in 2015, but investments in the U.S. chemical industry have been rising. This is a result of increased capacity which is expected to reflect by the end of 2020.
In 2015 alone, the total value of investment projects is expected to exceed $145 billion. By the end of 2014 the total value of investment projects topped $136 billion. This information was reported by the ACC (American Chemistry Council).

Since feedstocks and gas prices are closely linked, the declining oil price is now a major concern for U.S. produces of chemicals like ethylene. There is substantial competition with bulk chemical producers in Europe and across Asia that use these oil-based feedstocks.

U.S. Ethylene Production Best in the World

Declining crude oil prices have only reduced new investment plans for the U.S. as opposed to stopping them completely. The number of delayed projects account for barely 5% of total investments, but upwards of 12% in overall delayed projects are possible.

During the course of 2014, capital expenditure in the U.S. chemical industry spiked to $33.4 billion in 2014 – up 64% from 2010. By 2018 the capital expenditure in the U.S. chemicals industry is expected to reach $45.8 billion.

The U.S. has a definite advantage in terms of ethylene production capacity. The only concern is the cost involved in investing in greenfield sites. It is expected that the oil-to-gas price ratio will make the U.S. the ideal location for ethylene.

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