U.S. Shale Energy Predicted to Increase Plastics Production 10 Percent by 2020

An IHS study supported by SPI: The Plastics Industry Trade Association projects U.S. shale energy development to be responsible for a 10 percent increase in production for the plastics industry by 2020. That number rises to nearly 13 percent in 2025. The report, America’s New Energy Future: The Unconventional Oil and Gas Revolution and the Economy — Volume 3: A Manufacturing Renaissance, is the last of a three-part series that offers an independent assessment of the importance of shale energy development to the U.S. economy.

“The abundant new sources of natural gas via shale are set to be a real game-changer for the U.S. plastics industry,” said SPI President and CEO William R. Carteaux. “This new IHS study shows how shale energy development is creating a global competitive advantage for U.S. plastics manufacturers by bringing energy and feedstock prices down. Particularly when you consider that most resins in the United States are produced from natural gas, while those in Europe and Asia are made from oil-based feedstock.”

The report also finds that over the next decade, the U.S. plastics industry will realize significant increases directly attributable to shale energy development in employment, value added to GDP and labor income. By 2020, the shale boom will be responsible for adding close to 15,000 jobs, nearly US$1.3 billion in value added to GDP and US$868 million in labor income.

U.S. trade position will continue to improve, owing to the significant reduction in energy imports and the increased global competiveness of U.S.-based energy-intensive industries, according to the study. Driven by a rise in domestic production and manufacturing that will displace imports, as well as a favorable export position for these industries, the trade deficit will be reduced by more than $164 billion in 2020 — equivalent to one-third of the current U.S. trade deficit.

“Prior to the recent expansion of unconventional gas, the outlook for the industry was bleak—it was suffering from significant plant shut-downs and capacity reductions,” said Mark Wegenka, managing director, chemical consulting at IHS, and a contributing author of the study. “However, as a result of these unconventional oil and gas supplies, we’ve witnessed a complete turnaround. The industry is not only competitive again, but it is attracting significant domestic and foreign investment and adding capacity that is resulting in more high-quality U.S. jobs that pay well.”

The new study builds on previous IHS research that focused solely on upstream shale energy activity and found that that sector of the energy value chain currently supports more than 1.7 million jobs and will grow to nearly 3 million by the end of the decade. The study widens the breadth of the research to include the entire range of economic activity that begins with the development of oil and gas production and ends with the overall macroeconomic contributions on the manufacturing sector and broader U.S. economy.

The transportation of these shale resources, their transformation into products and then into industrial uses, such as the production of petrochemicals, currently support nearly 377,000 jobs throughout the economy. Combined with upstream activity (oil and gas production), the entire shale energy development value chain currently supports more than 2.1 million jobs. Total jobs supported by this value chain will rise to more than 3.3 million in 2020 and reach nearly 3.9 million by 2025, the study says.

Click here to download the complete report and methodology.

 

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