Energy transition can’t happen without chemicals
Martha Gilchrist Moore, chief economist and managing director for economics and statistics of the American Chemistry Council.
Despite a number of challenges that have plagued the petrochemical industry, Martha Gilchrist Moore, chief economist and managing director for economics and statistics of the American Chemistry Council (ACC), is enthusiastically optimistic about those challenges turning around in the near future.
"The chemical industry in the U.S. is well-poised for the coming year. There are a lot of things pointing in the right direction. You've got a strong natural gas demand, and the energy fundamentals and new capacity are coming on line," Moore said as a participant of a recent webinar. "The table is set for a relatively good year for the chemical industry, notwithstanding some of the risks with respect to Ukraine, commodity price shocks and inflation."
Rhoman Hardy, senior vice president of Shell Chemicals and Products -- U.S. Gulf Coast, agreed with Moore's assessment that "the outlook is really, really strong" for the chemical industry in the Gulf Coast and for Louisiana.
"Louisiana is uniquely positioned for the energy transition and for sustainability, and people are trying to figure out what that means for Louisiana," Hardy said. "I think it's actually a unique advantage for Louisiana, and we're embracing it. We're in a moment of realizing that the chemical industry is key to the energy transition. It won't happen without it thriving."
Moore is confident that construction and automotive, as well as health and safety, will be key markets that drive growth in Louisiana in the coming years.
Energy transition can’t happen without chemicals
Rhoman Hardy, senior vice president of Shell Chemicals and Products — U.S. Gulf Coast.
"Construction and vehicles are two of the key end use markets we look at," Moore said, adding that approximately $4,000 worth of chemistry is in every vehicle. "There's about $12,000 worth in every single- family housing start, so those are really, really important markets."
Moore said she foresees "a very, very strong demand" for light vehicles, although that demand may not be easily met.
"We saw the pickup after the pandemic recession, but that's been tempered by these ongoing, persistent supply challenges with respect to semiconductors. They're just not able to produce the [electric] vehicles because of the lack of semiconductors and defects on the chemistry that's included in there," she said.
Embracing new opportunities
Moore observed the ACC is seeing mortgage rates rise, but added there's still very strong demand for housing. "There was a lot of pent-up demand from last year because of supply chain disruptions that moved forward into this year," Moore said. "We've also got millennials who are starting to really enter the housing market and that's creating a lot of upward pressure for housing."
"We're looking for 1.62 million this year for housing starts -- which is the best year since 2006 -- and easing just very slightly to 1.55 million in 2023, so those are strong markets for the chemical industry."
Hardy said he senses that the move toward energy transition has sped up. As evidence, he pointed out that chemical companies are increasingly diversifying their portfolios to better weather future volatility, but he also added that these disruptions have created more opportunities.
"It's happening even more now with things that are tied to the energy transition, like going to electric vehicles. Things are going to battery technology," he said. "We see demand growing even faster than before, so I think a lot of companies are evaluating whether they should participate in that. It's heavily linked to companies' research and development positions and other specific things."
Products that are emerging due to the energy transition "are definitely driving every conversation with our customers and within our companies," Hardy said.
