PORT ARTHUR, Texas -- Fracking is fueling a manufacturing renaissance in some parts of the country. Companies want to use the gas to provide energy -- but one sector uses natural gas to make materials that go into virutally everything we own.
The chemical industry is spending billions to expand its business in the United States. And it’s all because of fracking.
The boom is taking shape at places like BASF’s massive “ethane cracker” in Port Arthur, Texas. Unit manager Andy Miller looks up at what looks like an enormous HVAC system. He points to a furnace, where oil and natural gas are heated to 2,000 degrees Fahrenheit and turns into ethylene, an ingredient in most plastics. From here, the ethylene will go elsewhere to be turned into a variety of consumer goods, like food packaging, antifreeze, even diapers.
“This is where we start to build the building blocks to make those products,” Miller says.
Until recently, this plant used only oil to make ethylene. But last year, BASF started using natural gas as well. Why? It’s cheap. Really cheap. Natural gas was once over $12 per thousand cubic feet, as recently as 2008. With the spread of fracking into gas-rich states like Texas and Pennsylvania, it’s now between $3 and $4.
Because of this, the U.S. is now one of the cheapest places on earth to make plastic. Chemical companies are expanding plants that make ethylene and fertilizer, or building new ones.
“It is a huge deal,” says Joe Chang, global editor of ICIS Chemical Business. “It’s a great amount of expansion, all based on the premise that you’re going to have these low-cost natural gas feedstocks for some time.”
Chang estimates the industry will expand in the U.S. by a whopping 38 percent in the next few years.
Most of the jobs from this boom will be created outside the chemical plants.
“There’s a whole lot motels in the area, the businesses stay packed, so the area around here’s been booming pretty good,” said Randall Delahoussaye, safety director for Port Arthur branch of DeBusk Services Group. The company does industrial cleaning and maintenance at chemical plants and refineries along the Gulf.
Cheap gas means more plastic. And more jobs in Port Arthur. But it may also mean more pollution.
Jason Warrior lives in an apartment complex close to some of Port Arthur’s refineries and chemical plants. He wonders if what’s coming out of the smokestacks are the cause of his six-year-old daughter’s asthma. Sometimes the flares burn brightly in the middle of the night.
“Probably like 2, 3 in the morning -- something like that? They start burning them off. You’ll see the whole apartments around here just light up,” Warrior says.
The industry says it’s getting cleaner all the time. EPA figures show the pollution at many of the plants in Port Arthur is declining. But the plants still produce close to 4 million pounds of toxic air emissions a year.
The chemical industry is looking to expand its footprint -- new plants are in the works for Pennsylvania and West Virginia.
It’s the biggest shopping day of the year and almost 100 million Americans are planning to hit stores to hunt for Black Friday bargains.
These days it’s not just retailers trying to lure customers with good deals. For shoppers who build up an appetite, a lot of restaurants now offer Black Friday deals, like LongHorn Steakhouse and Red Lobster. A growing number of hotels want a piece of the action, too.
"Black Friday is not just a shopping day, it’s really a deal day," says Chekitan Dev, professor of marketing and Branding at Cornell University's School of Hotel Administration. "One of the reasons why hotels and restaurants are jumping on the BF bandwagon is because they’re looking to divert that spending from things to experiences," Dev says.
Case in point: the Trump Hotel Collection is offering 30 percent off suites booked between Black Friday and Cyber Monday.
"More and more hospitality is actually coming into the forefront in terms of something you give as gift," says Eric Trump, executive vice president of acquisitions and development for the Trump Organization. "A lot of times people tired of the knitted sweater for lack of a better gift. They want that weekend in Las Vegas or Chicago or New York."
This year many retailers were open for business on Thanksgiving Day. Spending this year is expected to be up from last year's $810 million — but not sharply.
There's just been a groundbreaking for a $4 billion railway from the port of Mombasa in Kenya to the capital Nairobi. It's the first phase of a massive rail project that could directly affect the economies of five East and Central African countries. The BBC's Emmanuel Igunza reports on the story from Nairobi.
ADM is a grain company. It takes corn, soybeans, and wheat and turns them into food ingredients, animal feed, chemicals, and fuel. It had pushed hard for the GrainCorp deal. Earlier this week, it offered up an additional $200 million to build agriculture infrastructure in Australia, to sweeten the pot a little. No such luck.
The company was counting on GrainCorp to expand its global reach, something it’s been promising investors. “Our strategy is to do some investment for growth outside the U.S.,” said ADM CEO Patricia Woertz at a Morgan Stanley conference earlier this month.
The failure of the deal surprised Kevin Kerr, a market strategist at Kingsview and editor of CommodityConfidential.com. “It’s going to limit their ability to access Asia, which is what they were really going after. And, this would have been a really good conduit for that.” Asia is the market you dream about these days if you are a grain company. “China has a lot of mouths to feed, and agriculture is growing and growing,” he says.
ADM already owns about 20 percent of the GrainCorp and says it’ll look for other places to invest.
Kerr expects we’ll see more of this sort of deal-busting. As governments of resource rich countries -- try to protect what they have.