Shale Revolution Feeds Petrochemical Profits

December 7th, 2013
in econ_news

By Jesse Thompson - Federal Reserve Bank of Dallas

Booming natural gas production from shale has undeniably benefited U.S. petrochemical production and profitability. New energy supplies from shale have been so abundant that prices for natural gas and coproduced natural gas liquids, or NGLs, have rarely been lower, helping reduce overall costs.

Follow up:

At the same time, oil and its by-products have rarely been higher. The price differential has driven a shift wherever possible from heavier raw-material inputs—oil by-products such as naphtha—to lighter inputs, including NGLs. Since 2011, the preference for NGLs (ethane, propane and butane) has placed sectors dependent on heavy-material inputs at a competitive disadvantage.

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