Summary
Dow's closing of their ethylene and derivatives plants in Hahnville, Louisiana is simply another move in the long term flight from domestic production which began in the early 1980s. What the article implies is that Dow's move is the result of competition from foreign producers, but fails to mention that Dow (and all of the other major domestic petrochemical producers) are joint venture partners in these new ethylene complexes in the Middle East and Asia. The petrochemicals previously produced in the U.S. and exported are now produced offshore (by U.S. company joint ventures) and imported to the U.S. and as we are now a net importer of oil, we will eventually become a net importer of petrochemicals.
Analysis
In the short term, the reduction in ethylene production by Dow will definitely support domestic pricing and it is common for U.S. ethylene producers to temporarily shutdown plants for this reason. And, Dow's move will benefit all domestic ethylene producers. That is all well and good, but what is really significant is that Dow is permanently closing this facility and it will never be replaced and neither will the jobs and taxes lost. Consider the long term trends. There has not been a grassroots refinery built in the U.S. in over 40 years. There has not been a grassroots ethylene plant built in the U.S. in over 20 years. In fact, there has not been a major petrochemical plant built in the U.S. in over 10 years. My experience in the industry spans 30 years of project development and implementation. I have worked on many projects in many countries, but only one small project in the U.S.
