Higher natural gas prices will decrease profitability of US petchem industry

Higher normal natural gas prices in 2004-06 could lower the peak cyclical profits of US chemical producers of methanol, ammonia, ethylene and its derivatives.For the 15 years through 1999, US consumers of natural gas enjoyed a "golden era" of cheap and plentiful feedstock. The ratio of oil to natural gas prices was at or above 10, making US natural gas-based chemical plants competitive vs. Western European and Asian oil-based chemicals.The US is the world's leading supplier of chemicals, with gross exports of 13-15% and net exports of 5-7% of total US production. Click here to enlarge imageSince 1999, however, the absolute natural gas price doubled and the oil:natural gas price ratio...

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