AEIdeas

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Discussion: (7 comments)

  1. MacDaddyWatch

    Cheap feedstocks are behind a manufacturing renaissance for several industries.

    Butane, propane, ethylene, methane, methylene, ethane etc. are all critical feedstocks and are all by-products of the shale/gas boom.

    America is getting TWO-BANGS for its buck–and Obama is openly hostile to and vigorously against everything.

  2. So rather than ingesting the platitudes of industry propaganda (ya know, follow the money), I head on over to the industrial production (IP) data and look up chemicals (NAICS code 325) and plastics and rubber products (NAICS code 326).

    Chemicals account for ~12% and rubber ~3% of IP.

    So 4+ years after the collapse of natural gas prices and the more recent collapse in NGL prices, chemicals output is 88% and rubber output is 92% of the 2007 business cycle peak. Overall IP is ~95% of peak.

    Conclusion: The chemicals and rubber sectors are trailing and certainly not pointing to any manuafacturing renaissance.

    1. Citizen B.

      Note that Prof. Perry used the words “sparking a manufacturing renaissance” and this quote among others:

      “Deerfield, Ill.-based fertilizer maker CF Industries Inc. is planning to spend up to $2 billion boosting its U.S. production through 2016.”

      Get back to us on nat gas related plastic and chemical IP in a couple of years.

      1. Get back to us on nat gas related plastic and chemical IP in a couple of years.

        Ya, by then it will be another recession.

        Professor Perry has been playing to this unsubstantiated narrative for years. Did you know that fertilizers are a component of NAICS 3253, pesticide, fertilizer, and other agricultural, which represents 0.50% of IP? I fell off my chair LMAO about that CF Industries manufacturing spark. Industry needs to invest in capex for both maintenance and growth purposes.

        1. Citizen B.

          Sorry to read of inbalance resuting in a fall from your chair. Positive results across a broad spectrum of industrial production, a result of natrual gas sparked investments, will hopefully heal your negative bias.

          1. result of natrual (sic) gas sparked investments,

            Ya sure, the only thing that needs to righted is your moronic talking points.

            Chemicals IP trails manufacturing IP from the 2007 peak. Chemicals were NEGATIVE in Q2 and Q3 2012 while real natural gas prices were the lowest in 10+ years. Dow Chemical is closing a plant in Midland, Michigan (of the 20 global plants to be closed, that’s the only one I’m aware of in the U.S.) and cutting capex by 20%. According to Perry, that renaissance spark should be a raging fire by now.

    2. Jon Murphy

      On top of what Citizen B. said, the recent weakness in chemicals and plastics is more due to weak international demand than anything to do with natural gas prices.

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