U.S. shortage of oil/NG & high prices driving U.S. chemical manufacturers

[philb]

to move operations overseas where energy prices are much cheaper:

Even at prices well below those only a few weeks ago, natural gas is still expensive, especially for manufacturers of such products as commodity petrochemicals and ammonia fertilizers. Many of these manufacturers have curtailed production recently in response to very high absolute and relative natural gas prices. The fact that gas and oil prices are at parity in the U.S. does not address the huge disparity between gas prices in the U.S. and gas prices in many overseas markets.

Natural gas prices are below $2/mmBtu in numerous major producing areas, including Trinidad, Qatar, and Saudi Arabia. These pricing disparities will only intensify pressure on domestic manufacturers as overseas producers with large volumes of stranded gas add downstream operations. In response to this price disparity, considerable amounts of commodity chemical production capacity have left the U.S. and should continue to leave the U.S. These same pricing disparities are behind the recent large-scale investments in LNG infrastructure around the world.

[Kolesar]

1. I had been wondering about methane costs affecting fertilizer cost

and effects on US agriculture. A link would be super. PM me. I don't get here much of late.

[phantom power]

2. This was one of Kunstler's predictions.

Disaster for agriculture, as fertilizer becomes unaffordable. Although opinions vary about this, since alternative agricultural practices might make up the difference.

[Oerdin]

4. Reality check

http://www.spokesmanreview.com/idaho/story.asp?ID=110501

"2005 farming receipts best in over 30 years" That is the profits after expenses are the best in 30 years in inflation adjusted terms. Much of this has to do with farm subsidies and politicians trying to use said subsidies to buy votes in fly over states but the fact remains that your claims that fertilizer is unaffordable are bolderdash.

The main reasons chemical companies are off shoring operations are the same reasons most other industries are off shoring operations namely 1) wages are cheaper 2) there aren't tarrifs to stop unfair competition 3) there are few to no safety regulations 4) some countries offer more subsidies to them which increase their profit margins. This isn't rocket science it all comes down to companies seeking the highest returns at the lowest possible capital investment cost. Long term there is no way to stop this off shoring without tarrifs though economists can argue all day (and night) about what ratio of tarrifs to free trade to free trade is optimal for economic growth. Having to much of either is bad for a national economy.

[Kolesar]

5. "Living on oatmeal and winter squash here in Ohio"

thanks for the link &thanks phantom power.

[philb]

6. the lower oil/N.G. prices are more important than lower wages in this case

[phantom power]

7. It's a prediction, not necessarily a current reality.

And it's not my prediction, it's Kunstler's. I think it's a safe bet that fertilizer made from fossil hydrocarbons is going to get more expensive. What might be done to adapt to that (or not) is way beyond my expertise. I can barely grow a tomato plant.

[rfkrfk]

3. using N.G. for chemicals in the US, is insane

N.G. in the US could be traded for gasoline,
in an easy conversion of a typical gasonline engine.

NG, diesel, fuel oil, gasoline, propane, are compliments

NG derived chemicals should be made where NG is currently
being flared.