U.S. Chemicals Are Rocketing Back

A decade ago, chemicals were just another fading U.S. manufacturing business. Companies were reluctant to invest in new factories because of soaring prices for the oil and natural gas that serve as both raw materials and power sources. Dow Chemical and others were closing plants and moving production to the Middle East to save money. “The conventional wisdom was we are not going to produce a lot of petrochemicals here,” says Kevin Swift, chief economist at the American Chemistry Council, an industry group.

Today, Dow, Exxon Mobil Corp., and Chevron Phillips Chemical Co. are putting the finishing touches on multibillion-dollar factories along the Texas Gulf Coast. The plants are part of $185 billion in proposed and recently completed investments, according to the chemistry council. “The U.S. is punching above its weight at the moment,” says Kevin McCarthy, a chemical industry analyst at Vertical Research Partners. Credit the rise of fracking. A torrent of cheap U.S. natural gas has made the country among the most profitable places to produce chemicals, beating out the Middle East in attracting projects. U.S. exports of polyethylene plastic to Asia will rise more than fivefold by 2020, with China as the primary destination, according to research company IHS Markit Ltd.