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Houston’s Manufacturing and Petrochemical Industries Thriving, Thanks to Shale

The city of Houston is often fondly referred to as the “Energy Capital of the World.” Oil and gas production has brought Houston much success and growth over the years and, as a result, Houstonians now reap the benefits many other locally booming industries that were spurred by the petroleum industry. In particular, Houston has seen a large, swift growth in its manufacturing and petrochemical businesses.

Manufacturing companies see Houston as an attractive destination to start or grow their business due to a variety of factors. The energy industry, relatively low cost of living, and access to a world-class port, are just a few examples of the perks business owners can find in the Bayou City. Steve Sonneberg, President of Emerson Process Management stated:

“Houston is a great place for locating our business due the access it provides to oil and gas and refining producers.”

Vaan Gaskets Executive Vice President Antonio Rafael Rivero further elaborated on the attractiveness of Houston saying:

“In addition to the infrastructure, skilled labor force and proximity to its customers, it’s important that Houston is recognized as the Energy Capital of the World, and is at the epicenter of North- South and East-West commerce.”

According to the Greater Houston Partnership’s (GHP) 2016 Spring Report, the Houston manufacturing industry currently employs 240,000 workers, and 115,000 of those workers are involved in some sort of energy manufacturing. Many of these workers are employed by one of the 90 petroleum manufacturing establishments that are housed in Houston.

The petrochemical industry has also received a boost from the energy industry, and fracking in particular. Businesses around the country are taking advantage of the low natural gas prices brought on from fracking. According to the Greater Houston Partnership (GHP), the U.S. industries are now seeing a major cost advantage from shale:

“The surplus of cheap natural gas in the United States means that petrochemical manufacturers    pay less for gas byproducts used as feedstocks to make chemicals and plastics.”

The petrochemical industry has a massive presence in Houston thanks to the energy industry, so Houston is directly reaping the benefits of cheap natural gas from fracking. The GHP report stated:

“Primarily driven by low natural gas prices, the downstream refining and chemical plants in east Houston are enjoying a massive $50 billion construction boom.”

Out of the $50 billion currently being invested in petrochemical construction, $31 billion of that construction will be completed by 2017. Of this $50 billion, $32.7 billion is going to petrochemical plant expansions, and another $6.7 billion is being invested into new LNG export facilities.

Lower oil and natural gas prices from fracking aren’t slowing Houston down, but instead are allowing other industries to grow and prosper within the city limits. Thanks to the infrastructure put in place by the town’s energy dynasty, Houston is perfectly positioned to take advantage of cheap natural gas in both the petrochemical and manufacturing sectors, and it is doing so at a rapid pace.

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