The chemical industry, the nation's largest consumer of natural gas, both for energy and as a chemical feedstock, is rapidly moving offshore in search of cheaper gas--and taking jobs and capital with it.
With feedstock costs rising, efficient chemical producers gain on inefficient competitors.
The reality of abundant natural gas is also a blessing for Texas and the US in the manufacturing sector of the economy, where natural gas is used as a feedstock in all manner of chemical, fertilizer, plastics and other manufacturing processes.
Marquee value stocks like Alcoa, Dow Chemical and DuPont are caught in the pincers of rising feedstock costs and declining product pricing.
The most vociferous is DOW Chemical that is rightly concerned that higher gas prices translate into higher feedstock prices for its manufacturing processes.
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The question is when storing of electricity in batteries or a fuel cell feedstock will become more eonomicial than burning a form of chemical energy to gain mechanical power.
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Things went sour when Huntsman, like many other chemical companies, suffered from rapidly escalating costs of petroleum, which it uses as a feedstock for many products.
Chemical and fertilizer manufacturers like Dow and Potash, for example, use gas as a fuel and a feedstock.
The grim toll of rising energy costs continues: Dow Chemical (44, DOW), dependent on hydrocarbons (oil, natural gas, coal) for feedstock, has endured a 23% stock slide from a year ago.
At the same time these investments are being made to exploit the cheap natural gas resource, the chemical industry is ramping up tens of billions of its own investments, counting on affordable gas as a critical feedstock.
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