Because of recent market conditions, I thought I would give you an overview of how natural gas is impacting polyethylene production in the US.

One of the exciting developments in polyethylene over the past few years is the discovery of vast new reserves of natural gas in the US. The US is now the world’s leader in natural gas production. How does this relate to polyethylene? For years, many have understood that plastics in general are a product of oil refining. That is still true today. Polyethylene can be produced from oil, and it is around the world. In the US, though, most polyethylene is derived from natural gas. This virtually guarantees that the US will enjoy the benefits of an abundant supply for years to come.

Compared with oil refining, natural gas has fewer end products (plastics) that it can be turned into. Polyethylene is one of those. Oil, on the other hand, can be refined into many other products, including gasoline, and it is likely that most oil refining in the US will be devoted to products other than polyethylene.

With the abundance of natural gas, the US has the prospect of being the world’s leader in the production of polyethylene for many years to come. Worldwide competitive matters will always play a part in the pricing structure, but this advantage puts polyethylene firmly in a strong cost position for the foreseeable future. Because foreign cost structures are higher than they are here in the US, the end price of commodities tends to remain relatively buoyant. In the end, though, our competitive advantages should allow for a certain level of price stability in the market.

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