Chemical Industry Will Invest $71.7 Billion and Create 537,000 Jobs Due to Shale Gas, ACC Says

more+
less-
more+
less-

The U.S. chemical industry will invest $71.7 billion and create 537,000 direct and indirect jobs by 2020 due largely to the transformative effect of shale gas on the industry’s global competitiveness, according to the American Chemistry Council (ACC). The ACC examined the economic benefits of this investment in a new report, “Shale Gas, Competitiveness, and New U.S. Chemical Industry Investment: An Analysis Based on Announced Projects.”

This report is the third in a series by the ACC examining the potential economic and employment benefits of shale gas development. The previous two analyzed the potential economic effects of increased manufacturing production benefiting from increased shale gas production.

The latest report states that shale gas is giving the United States a new competitive advantage because growth in domestic production is helping to reduce U.S. natural gas prices and to create a more stable supply of natural gas and ethane. Ethane’s relatively low price gives U.S. manufacturers an advantage over many competitors around the world that rely on naphtha, a more expensive, oil-based feedstock. Accordingly, chemical companies worldwide have announced plans for a significant number of new projects to build and expand their capacity in the United States.

The report notes that “through the end of March 2013, nearly 100 chemical industry investments valued at $71.7 billion had been announced” and that “the majority are being made to expand production capacity for ethylene, ethylene derivatives (i.e., polyethylene, polyvinyl chloride, etc.), ammonia, methanol, propylene, and chlorine.” The report clarifies that “much of the investment is geared toward export markets, which can help improve the U.S. trade deficit” and that “roughly half of the announced investments to date are from firms based outside the U.S.”

The report projects the following economic impacts from increased chemical industry output by 2020:

  • $71.7 billion announced chemical industry investments leading to $66.8 billion in increased chemical industry output—a 9 percent gain over what output would otherwise be
  • More than 46,000 direct chemical industry jobs
  • 264,000 indirect jobs due to purchases of raw materials, equipment, and services in the supply chain
  • An additional $100 billion in indirect economic output

The report also anticipates that the combined 310,000 direct and indirect jobs will earn payrolls totaling $23.8 billion. This, in turn, will have the ripple effect of supporting an additional 226,000 payroll-induced jobs due to spending in communities. The report estimates the resulting increase in federal, state, and local tax collection at $14 billion.

The report calls for legislative and regulatory policies that reflect the importance of natural gas as an energy source and manufacturing feedstock while protecting water supplies and the environment.

If you have any questions about the ACC report, please contact Dena E. Wiggins at 202.661.2225 or wigginsd@ballardspahr.com, Harry Weiss at 215.864.8129 or weiss@ballardspahr.com, or Jack N. Semrani at 202.661.7640 or semranij@ballardspahr.com.