This Chemical Reaction Hasn't Burned Investors
It might be true that America got ahead of itself in terms of oil and natural gas production, but that hasn't done anything except help a handful of chemical companies with operations stateside. Natural gas liquids, such as ethane, have been so cheap lately that Dow Chemical has noted over $100 billion in planned investment by chemical companies to take advantage of the currently cheap feedstocks. While it's doubtful all of them will make it to the finish line, any increase in demand for ethane should help producers that have turned to rejecting ethane because the market price is so low.
As demand slowly begins to increase, it is very likely that the price will tick up with it, which should be a good thing for all involved. Local producers have more than enough supply to accommodate these capital projects, so it's doubtful that the chemical companies will lose the entire margin advantage any time soon. Several companies are stepping up on both sides of the equation, and our analysts detail a couple of them in the following video.
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The article This Chemical Reaction Hasn't Burned Investors originally appeared on Fool.com.
Joel South has no position in any stocks mentioned. Taylor Muckerman has no position in any stocks mentioned. The Motley Fool recommends Enterprise Products Partners L.P. and Spectra Energy. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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