 |
 |
| Back Issues |
|
|
|
|
ACS Members can sign up to receive C&EN e-mail newsletter.  |
|
|
 Join ACS |
|
|||||||||
|
FEEDSTOCKS
A general strike in Venezuela, tensions in Iraq, and an early cold spell combined to drive up oil and natural gas prices in December, concerning many in the chemical industry.
The cold weather was the main reason that the spot price of Henry Hub natural gas finished the year at $4.79 per million btu, up about 60 cents on the month and nearly double year-ago levels. Some experts also blame less drilling activity last year. The run-up in pricing--particularly in natural gas, which sets pricing for ethane, the feedstock for roughly 70% of the North American ethylene industry--is troublesome, says Frank J. Mitsch, an analyst with Bear Stearns. "Natural gas prices remain slightly disadvantaged relative to crude oil prices at present," he says. That will make it harder for U.S. chemical producers to compete internationally, because European and Asian ethylene is naphtha-based. Rick Henson, vice president of petrochemicals and feedstocks at Nova Chemicals, which relies heavily on natural gas at its ethane-based crackers in Alberta, is thankful the current spike in natural gas isn't as bad as that in 2000, when gas prices quadrupled to $10 and ethane-based ethylene crackers in the U.S. and Canada had to shut down. Moreover, companies may be better prepared this time around. "We have a very active price-risk management in oil and gas," Henson says. The volatility of global events makes experts reluctant to predict what will happen next in oil, but many say natural gas prices should ease as the weather gets warmer. |
|||||||||
|
Chemical & Engineering News |
|||||||||
|
||||||||
|
||||||||
|
||||||||
|
||||||||
