President’s Message: Texas Shale Gas is a Potential Boom for the Chemical Industry

TCC President & CEO Hector L. Rivero

The chemical industry in Texas is poised for new investment and job growth as a result of new and abundant supplies of natural gas from previously untapped shale deposits in Texas and across the U.S.  These formations in Texas include the Barnett Shale (near Fort Worth), Woodford Shale (in West Texas), Eagle Ford Shale (in South Texas), and the Hayneville Shale (in East Texas).

After a decade of high and volatile natural gas prices, these new U.S. shale plays are creating a more competitive environment for Texas petrochemical manufacturers, which are attracting new investment and industry growth in our state.  Advances in horizontal drilling and hydraulic fracturing have changed the dynamics for shale gas extraction and have provided the U.S. with access to large gas reserves that can help U.S. manufacturing compete against Europe and Asia.

The business of chemistry manufactures thousands of products that make American lives better, healthier, and safer.  Our industry is energy-intensive, and chemical manufacturers rely on natural gas not only to as an energy source to heat and power our facilities, but also as a key raw material, or “feedstock,” used to make many of our products.

Chemical companies also use ethane – a natural gas liquid (NGL)  – as a feedstock in numerous applications.  Its relatively low price gives U.S. manufacturers advantages over many competitors around the world that rely on naphtha, a more expensive, oil-based feedstock.  Growth in domestic shale gas production is helping to reduce U.S. natural gas prices and create a more stable supply of natural gas and ethane for manufacturing.

In its new report, Shale Gas and New Petrochemicals Investment: Benefits for the Economy, Jobs and US Manufacturing, the American Chemistry Council (ACC) highlights the opportunity for shale gas to strengthen U.S. manufacturing, boost economic output and create jobs.

ACC analyzed the impact of a hypothetical, but realistic 25 percent increase in ethane supply on growth in the petrochemical sector.  It found that the increase would generate:

Investments are being made in areas of the country that have been hardest-hit by declines in manufacturing.  The Eagle Ford shale formation in South Texas is close to the existing Gulf Coast industry and infrastructure, and portions are reported to be rich in ethane and other NGLs.  These NGLs add to the economic attractiveness of the shale gas growth story.

In the decades to come, some estimate that shale gas could provide 25% of America’s natural gas needs, compared to just 8% in 2008. The availability of this low priced natural gas (and ethane) could improve U.S. industry competitiveness.

A number of other leading industries, including aluminum, cement, iron and steel, glass, and paper, are large consumers of natural gas that also would benefit from shale gas developments and could conceivably boost capital investments and output.

Further development of the nation’s shale gas and ethane can drive an even greater expansion in domestic petrochemical capacity, provided that policymakers avoid unreasonable restrictions on supply.  Our country must ensure that our regulatory policies allow us to capitalize on shale gas as a vital energy source and manufacturing feedstock.

ACC President Cal Dooley: NAT GAS Act Isn’t the Solution for Energy

Cal Dooley

Despite the recent hubbub about shale gas, a key part of the story has yet to be told.

The emergence of natural gas from shale as an abundant, reliable source of domestic energy is one of the most meaningful developments in America’s energy and economic security.

It is dramatically improving the outlook for the U.S. chemical industry, U.S. manufacturers and our economy as a whole. But this potential can only be realized if we put the brakes on proposals that would either constrain supply or distort markets, such as the New Alternative Transportation to Give Americans Solutions Act (NAT GAS Act).

The NAT GAS Act aims to boost the production and use of natural gas vehicles (NGVs) by offering an estimated $5 billion in taxpayer-funded subsidies to the manufacturers and equipment suppliers who produce NGVs and the people who buy them.

The NAT GAS Act is misguided policy. First, it would create a massive new subsidy for a market that is already developing on its own in sectors where the fundamentals support it, at a time when Congress is struggling to cut spending. And not only is it expensive, it’s highly inefficient. A recent analysis of the bill by Ernst & Young concluded it would result in an average subsidy of $135,000 per NGV projected to come online. It would artificially create new demand for natural gas at a time demand is already growing significantly in the power sector.

Finally, it would negatively affect consumers, both residential and industrial, because subsidies like those proposed in the NAT GAS Act add volatility to the market.

A return to volatile natural gas markets, similar to those the U.S. experienced in the previous decade, would undermine a growing resurgence in the domestic chemical industry, a sector that employs 720,000 Americans directly and supports more than 5 million jobs across the economy.

This renaissance has the potential to drive growth throughout our manufacturing sector, increase U.S. exports and put hundreds of thousands of Americans back to work. Let me explain how.

Natural gas is the primary raw material, or feedstock, used by the chemical industry to create ingredients for 96 percent of all manufactured goods. To put it simply, natural gas is to the chemical industry, and chemical products are to manufactured goods, as flour is to a bakery.

Stable feedstock costs for the chemical industry mean greater certainty for other manufacturers, which helps keep consumer prices low and leaves more resources available for expansion and hiring throughout the economy.

Shale gas has been a game changer for the domestic chemical industry. For the first time in years, U.S. chemical manufacturers have a competitive advantage over foreign chemical producers who rely primarily on petroleum-based feedstocks because domestic natural gas prices have stabilized, while world oil prices have spiked. This advantage is driving demand for U.S. chemical products overseas and boosting American exports.

But that’s only part of the story. In recent months, numerous chemical manufacturers have announced new investments thanks to the outlook for predictable domestic natural gas markets.

For example, Dow Chemical Co. announced it will restart operations in facilities idled during the recession and Eastman Chemical Co. has already done so. Executives from Bayer are in talks with companies interested in building new ethane crackers at its two industrial parks in West Virginia, and other companies including Chevron Phillips Chemical Co. and LyondellBasell are considering expanding operations in the U.S.

These investments will generate new, high-paying jobs in the chemical industry and hundreds of thousands more throughout the economy.

But as anyone who owns a business knows, investment decisions are based on certainty and a positive view of the future. By injecting volatility into natural gas markets, policies such as the NAT GAS Act undermine the certainty chemical companies need to justify new investments and create jobs.

Our nation desperately needs a comprehensive energy plan that promotes all energy sources. Proposals such as the NAT GAS Act, which put investment, competitiveness and job creation in domestic manufacturing at risk, are not the answer.

Calvin “Cal” M. Dooley is president and CEO of the American Chemical Council and a former Democratic Member of Congress from California.

Austin Mayor, City Council Members Propose Plastic Bag Ban

Mayor Lee Leffingwell

Austin Mayor Lee Leffingwell and Council Members Mike Martinez and Chris Riley have announced a proposal to phase out free plastic bags at retail stores.

Austin retailers and grocery stores would no longer be able to offer plastic bags at checkout counters under a ban.  If passed, the bag ban would be phased in gradually, although it’s not clear when it would start.

The City Council will vote Aug. 4 on the resolution that would direct staff members to propose a scope for the ban and a timetable for phasing it in. Staff members would have to present a plan to the council in November.

According to Mayor Leffingwell, city staffers would work with retailers and other stakeholders to write that plan.  Details such as whether small retailers should be exempt, what penalties retailers could face for not complying and when the ban should take effect will be worked out over the next four months, he said.

Leffingwell criticized plastic bags for littering rivers and streams, harming wildlife and too often ending up in landfills.  Consumers who reuse the bags to carry their lunches and pick up after their pets disagree.  At a news conference last week, Leffingwell acknowledged it’s going to take some convincing to get people to change their habits.

“To a great degree, it’s going to depend on changing hearts and minds around the city, people believing this is the right thing to do,” Leffingwell said. “This is Austin. I think they will.”

There would be some exceptions.  Plastic bags would be allowed for things such as raw meat and newspaper deliveries.  City officials claim Austinites use about 260 million plastic bags a year, costing the city $850,000 a year in collection, litter management and landfill costs.

The Texas Retailers Association (TRA) opposes a plastic bag ban, saying voluntary efforts are effective. 

TRA President Ronnie Volkening said Austin retailers are making progress in getting more people to recycle.  He pointed to the results of a pilot program in Austin in 2008 and 2009.

“Over that period of time, those participating stores were able to reduce the amount of plastic bags that they were giving away as part of the purchase process by twenty percent,” Volkening said.

The voluntary Austin program has been a big success: over a year and a half, the large retailers sold 907,000 reusable bags, increased the pounds of plastic bags they recycled by 74 percent and bought 20 percent fewer pounds of plastic bags.

Recycled plastic bags are used for all sorts of consumer products, from fencing to deck furniture and more plastic bags.  But the city says voluntary efforts by local retailers aren’t going far enough.  The city’s single stream recycling program does not accept plastic bags but many stores have a recycling drop off. 

Retailers likely would take a hit under a ban. Many would have to cancel or rework contracts with bag makers.  Cities such as Brownsville, Texas and San Francisco have already banned “free” plastic bags. Portland, Oregon just voted in such a ban.

Austin city leaders, led by then-Council Member Leffingwell, nearly enacted a plastic bag ban in 2008 and then held off when six big retailers — H-E-B, Randalls, Wal-Mart, Target, Walgreens and Whole Foods — agreed to try to reduce by 50 percent the amount of plastic bags they send to landfills.

But Mayor Leffingwell believes that program hasn’t been effective enough, he said.

“I’m sure many retailers have a lot of plastic bags on hand or (long-term) contracts with bag companies. We want to take those things into consideration,” Leffingwell said. “Our goal will be to develop a reasonable ordinance that doesn’t cause hardship. It would be a hardship to enact a ban immediately.”

Leffingwell said he thinks paper bags should still be an option at checkout counters because they're included in Austin’s curbside collection program for recyclables and they don’t gum up recycling machinery as plastic bags do.

But he said retailers might want or need to charge a fee of a few cents per paper bag to compel customers to get in the habit of bringing canvas or reusable bags.

The mayor said he would prefer that compostable plastic bags not be allowed because they can be tough to distinguish from other plastic bags, which might make a ban difficult to enforce.

Volkening said the retailer’s group would prefer to see an expanded, voluntary program that includes a campaign to educate customers about the issue and encourage them to use reusable bags.  He said that before enacting any ban, the city should study the cost to retailers, the practicality of requiring all customers to forgo plastic bags and the environmental effects of paper bags.

EPA Reaches Deal with Texas Plants to Get New Air Permits

136 Texas chemical plants and refineries have reached a deal with the Environmental Protection Agency (EPA) to receive new permits even though the long-standing battle between the State and the federal agency is far from over.

The EPA’s announcement last month that it had reached a deal for all companies to apply for new permits came after the agency ruled last year that Texas’ so-called “flexible permits” violated the federal Clean Air Act. Texas officials blasted the EPA ruling, challenging the ruling in court and saying it could hurt companies’ bottom-lines, lead to layoffs or even force some older facilities to declare bankruptcy.

The long-running war between Texas and the EPA, which has evolved from a fight over environmental regulation into a fight over states’ rights, led the federal agency to take an unusual hands-on attitude in the Lone Star State, even as the battle continues.

Gov. Rick Perry frequently uses the EPA as an example of the Obama administration meddling in state affairs, an issue he could push more forcefully as he considers a GOP presidential run.

For the companies, however, operating stability is key, and so they worked directly with the EPA to resolve the thorny issue that could have forced them out of business.

“I’m pleasantly surprised that we were able to get the flexible permit holders to agree to get new permits outside of an aggressive enforcement effort,” the EPA’s regional administrator Al Armendariz told The Associated Press.

The Texas Commission on Environmental Quality insisted its permits were acceptable, saying the EPA had forced businesses into “this additional, unnecessary permitting process... even though existing permits were legal and protective of the environment.”

“It's a shame the federal government used the flexible permit program as yet another mechanism to interject their radical philosophy in an already existing permit at a time when stability and certainty in our regulatory environment is so critical,” the agency said in a statement.

Indeed, Perry spokeswoman Katherine Cesinger said the agreements reinforce the governor’s argument of federal intrusion into state affairs

“Texas’ flexible permitting process was already in full compliance with the federal Clean Air Act, and the unnecessary processes the EPA strong-armed Texas businesses into undertaking will result in zero environmental benefit while adding an additional layer of costly administrative burdens on employers during these tough economic times,” she said in a statement.

Even though the companies have reached a deal with the EPA and the Texas environmental agency is cooperating, the state is still pursuing a lawsuit challenging the EPA’s ruling on flexible permits. The state is also suing the EPA over other environmental regulations.

“There are a number of areas where there is still significant disagreement between EPA and Texas officials about environmental protections,” Armendariz acknowledged.

The EPA had ruled that Texas’ flexible permits, which provided an umbrella-limit for all pollution, were impossible to enforce and violated federal rules. The agency claimed the permits allowed facilities to emit more pollution than allowed under the federal law.

To meet the requirements for the new permits, some of the facilities — especially the older refineries and chemical plants — will have to make costly improvements, prompting Texas’ argument that the EPA’s decision would unnecessarily harm the industries.

TCEQ Chairman Bryan Shaw: EPA Decision Will Cost Texas Jobs

Dr. Bryan Shaw

Last month, the Environmental Protection Agency released the Cross-State Air Pollution Rule. This is another rule in an endless line of new federal regulations, all with the stated purpose of improving air quality. 

Like so many other regulations from the EPA, this rule will cut Texas jobs, cut Texas economic growth, increase Texas energy costs and harm Texas energy security.

Most alarming is the EPA’s conscious curtailment of the due process rights of Texas and its citizens by failing to provide proper notice and thus the opportunity to provide meaningful comments on the rule. The EPA claims Texas was given proper notice, but we maintain that a lone sentence in a 256-page proposed rule could hardly be considered adequate notice.

While the TCEQ was proactive and submitted comments on the new rule, those comments cannot be considered meaningful. Why? Because the EPA did not provide Texas with proposed emission budgets, time frames, etc., that were provided to every other state included in the proposed rule. Nor did the EPA contact Texas officials to alert them to Texas’ inclusion in the final rule.

To add insult to injury, Texas power plant emissions did not significantly contribute to downwind particulate matter pollution, based on the modeling in support of the EPA’s proposal. In other words, Texas did not cross the EPA “contribution threshold” and therefore should be excluded from the rule. But in the final rule, the EPA’s revised modeling now links Texas emissions to Madison County, Ill. — quite a distance.

And in another questionable decision, the EPA is issuing a supplemental proposal to take comment on the inclusion of six additional states found to significantly contribute to downwind ozone in the same post-proposal modeling. But Texas was not afforded that same opportunity.

The disparate treatment of Texas is troubling and flies in the face of proper notice and comment.

The EPA’s late decision to add Texas in the particulate matter portion of the rule and lack of transparency in this decision brings to question the validity of the science used and whether federally mandated sulfur dioxide reductions in Texas are necessary for public health protection.

This rule will impose great costs on coal-fired power plants, causing some to shut down or curtail operations, threatening the state’s electrical capacity reserve margins needed to avoid power disruption during times of peak demand. Such a scenario could lead to blackouts, which create serious health risks to Texans dependent upon reliable energy.

Despite EPA assurances, it is difficult to see how other sources of energy — natural gas-fired plants, solar or wind energy — can compensate for these shutdowns, given the rule’s January 2012 compliance date. If power plants are forced to shut down or curtail operations, Texans and the Texas economy will suffer.

For many Texans, increased energy costs and increased consumer costs merely mean further tightening of already-tight budgets. But for fixed- and low-income populations, the prospect of hot Texas summers and skyrocketing electric bills is frightening. And particularly for the elderly, this may mean threats to their health with an increased incidence of heat stroke and heat stress.

Like so many of the EPA’s proposed rules — extreme tightening of ozone limits, global warming control schemes, attempts to nullify Texas’ very successful flexible permitting program — this rule seems not so much intended to improve the environment as to impose unnecessary, expensive federal controls on industry and increase the costs of energy to consumers.

And increased energy costs also increase the price of nearly everything consumers purchase. It seems even more peculiar to impose these higher costs on Americans during a lingering recession.

The EPA has once again gone beyond its mission by re-creating its own science. As with the pending new ozone standard, the EPA has supposedly “proven” that protective levels of any emission simply do not exist. Under this administration, the only acceptable emission limit of any pollutant is zero. This philosophy is in direct contrast to a healthy environment, healthy economy and sound science.

Dr. Bryan Shaw is chairman of the Texas Commission on Environmental Quality.

Congressman Pete Olson: Cost of EPA Rules Will Be Very High

Rep. Pete Olson  (R-Texas)

As our nation continues to struggle to regain its economic footing, we need policies that energize job growth. It is no surprise that a number of states are challenging numerous recent regulations coming out of the Environmental Protection Agency (EPA). 

The EPA has been trying to usurp states’ rights to control the air permitting process for new industrial and power projects. Texas is one of several states that is rightfully fighting this and other overreaching EPA actions in the courts.

The uncertainty caused by the EPA’s excessive regulatory behavior has resulted in construction delays, scaled-back projects and even the termination of some projects throughout the nation. Not only does this reduce manufacturing growth and the supply of energy, but it also destroys jobs.

Earlier this year, the EPA finalized its emissions rules for industrial, commercial and institutional boilers and process heaters, Maximum Achievable Control Technology (MACT) and other standards. These regulations set emission limits for boilers and incinerators used in the industrial and manufacturing facilities of businesses that employ thousands of people in multiple industries.

Some of the businesses that are severely affected by these standards include petroleum refiners, extractors of crude petroleum and natural gas, manufacturers of lumber and wood products, rubber and plastics products, pulp and paper mills, chemical manufacturers, and steel works among others. These rules also affect small businesses and the operations of commercial buildings, colleges and universities, hospitals and medical centers, city and municipal buildings, and others.

These standards will impact more than 200,000 boilers and incinerators, and while the Clean Air Act authorizes regulation of these types of sources, the cost to implement the rules as published by EPA this past March will be extraordinarily high. Overall, the EPA itself estimated that complying with their rules would cost $5.8 billion in capital, and around $2.2 billion annually.

Estimates by regulated entities have projected that the Boiler MACT rule alone will be much higher and will cost the manufacturing industry over $14 billion in capital costs and threaten 224,000 jobs. That number doesn’t even take into account the billions more that will be spent in annual operating and other costs. 

After issuing the standards and receiving an overwhelming volume of comments expressing concern with the fast pace for implementing these rules, the EPA asked a federal court for an additional 15 months to re-propose the rules and solicit more public comment. In order to give the EPA the time they requested to get this right, a number of my colleagues and I who sit on the House Energy and Commerce Committee introduced the EPA Regulatory Relief Act.

This bill will give the EPA time to develop achievable and affordable standards for the Boiler MACT and three other interrelated rules. Under this measure, the EPA will have an additional 15 months to revise and finalize the regulations for boilers and incinerators. It will also extend compliance deadlines from three to at least five years to give facilities enough time to meet the standards. Most importantly, it will ensure that the new regulations are actually achievable by real-world facilities and that the rules employ the least burdensome alternatives available under the Clean Air Act.

This legislation will ensure a necessary and proper balance between improving air quality and protecting our economy. Common sense can go a long way when exercised appropriately. A strong economic recovery can be achieved through a stable regulatory environment where businesses can make solid long-term decisions that will allow for job growth and expansion.

Rep. Pete Olson (R-Texas) is a member of the House Energy and Commerce Committee.

U.S. House GOP Target EPA in Environmental Spending Bill

House Republicans last week made no secret that their Department of the Interior, Environmental Protection Agency (EPA) and Related Agencies spending bill is designed to trim back the EPA, which they said is a huge creator of uncertainty in an already uncertain environment for business and job creation.

The overall bill, H.R. 2584, cuts spending by about 7 percent, but the EPA could be cut by 18 percent. Republican supporters of the bill said these cuts are justified, in part because the EPA received stimulus money that pumped up its budget. But they also made it clear on the House floor that it’s time to rein in the agency.

“The EPA’s unrestrained effort to regulate greenhouse gases and the pursuit of an overly aggressive regulatory agenda are signs of an agency that has lost its bearing,” said Rep. Mike Simpson (R-Idaho), who chairs the House Appropriations subcommittee on Interior and Environment.

“Wherever I go, the biggest complaint I hear about the federal government is about how the EPA is creating economic uncertainty and killing jobs,” Simpson said.

House Appropriations Committee Chairman Hal Rogers (R-Kentucky) stressed that increased funding for EPA, including through the 2009 stimulus bill, means cuts can now be considered.

“Some have complained that these cuts are too much, too fast,” Rogers said. “It’s important to remember that these agencies and programs have seen unprecedented massive increases in spending in recent years. This sort of excess has contributed to our astronomical debt.”

Under the bill, EPA would receive $7.15 billion, down from $8.65 billion in the current fiscal year. Rogers and others noted that the additional funds EPA has received means the agency still has $3 billion in unused funds.

As expected, House Democrats rejected these arguments, and accused Republicans of attaching other “policy earmarks” to the bill that they said would weaken environmental protection. Rep. Jim Moran (D-Virginia) said the bill cuts wildlife grants, cuts a key endangered species conservation fund by 95 percent, and cuts the land and water conservation fund by 78 percent.

The White House has threatened to veto the measure, alleging it would undermine vital conservation programs and public health protections. The formal statement of administration policy continues a collision course between the White House and congressional Republicans who are launching consistent attacks on Obama administration initiatives, such as greenhouse gas regulations.

The lengthy statement criticizes a number of provisions in the bill that would substantially cut spending for the agencies and thwart several specific policies.

The White House is taking aim at a number of specific provisions, including language that blocks tougher regulation of pollution from mountaintop mining operations, greenhouse gas regulations, a major utility air-toxics rule, and many other policy measures.

The statement also takes aim at various funding cuts, such as slashing the Land and Water Conservation Fund and funding for wastewater and drinking water treatment infrastructure.

Business Trade Groups Warn White House on Ozone Limits

Business groups are stepping up pressure on the Obama administration to stop the Environmental Protection Agency (EPA) from enacting tougher limits on smog-forming ozone, saying a new rule pending White House approval would damp the fragile economic recovery.

EPA administrator Lisa Jackson is pushing back, with encouragement from environmental and medical groups, stressing the threat smog poses to public health and likening some of the groups’ warnings to predictions in the 1990s that tighter limits on ozone would lead to the banning of fireworks and backyard barbecues. The EPA says tightening the standard could save as many as 12,000 lives a year and generate as much as $100 billion annually in health benefits by 2020, by reducing spending on health problems associated with excessive ozone, such as asthma and bronchitis.

A White House spokesman said that President Barack Obama supported a standard “guided by science and the law” and that in implementing a standard “we will do so in a way that maximizes flexibility to ensure it does not impede our economic recovery in any way.”

The ozone issue presents the White House with a difficult choice between angering environmentalists, many of whom cheered Mr. Obama’s election in 2008 but have voiced disappointment with some of his policies, and vexing the business community — and opening itself to further Republican attacks on the president’s regulatory policies as the election campaign gets under way.

Business groups are casting the proposal as a threat to jobs, a sensitive issue with unemployment above 9%, and sense that Jackson, who in the case of ozone faces no court mandate, is vulnerable.

In recent weeks, the heads of more than half a dozen trade associations — including the American Chemistry Council, Business Roundtable, the U.S. Chamber of Commerce, the National Association of Manufacturers and the American Petroleum Institute — have met with Jackson to try to persuade her not to go forward with a proposal to set the nation’s air-quality standard for ozone at 60 to 70 parts per billion. In 2008, the George W. Bush administration tightened the ozone standard to 75 ppb, where it stands now, from 84 ppb.

The new constraint would be expensive. The EPA says a standard of 60 ppb could cost the economy as much as $90 billion annually by 2020. The costs could include new emissions controls that businesses might have to install; higher electricity prices as power plants switched to cleaner-burning but costlier fuels; and more frequent auto inspections.

Business groups say the costs could be significantly higher because the proposal assumes the use of certain technologies that have yet to be developed.

Local governments deemed out of compliance with federal air-quality standards must come up with plans for achieving compliance or risk the loss of federal highway dollars. Business groups say new and expanding businesses would be required to install new pollution controls to avoid any emission increases, and some would either hold off on investing or shift their operations elsewhere… including outside the U.S.

Andrew Liveris

The chairman of the Business Roundtable’s Regulatory Reform Working Group, Dow Chemical Co. CEO Andrew Liveris, has also appealed to White House Chief of Staff Bill Daley, telling him in an open letter last week that whatever standard the administration picks would be prohibitively expensive and could “seriously impede economic expansion.” 

Just last month, President Obama announced that Liveris would lead a joint effort by industry, universities and the federal government to help reposition the U.S. as a leader in cutting-edge manufacturing.

“Establishing these new ozone standards would be tantamount to putting ‘Not Open for Business’ signs in counties across the country at precisely the wrong moment, when unemployment is high and on the rise,” the Business Roundtable’s president, John Engler said.

Jackson has said tightening the ozone standard is “long overdue” but has delayed a final decision on her agency’s proposal three times in the past year. Earlier this month, the EPA forwarded a draft final decision on ozone to a White House office that reviews major proposed regulations before publication.

Part of the reason business groups are upset with Jackson is that she has reopened what they thought was an issue settled when the Bush administration tightened the standard. The EPA normally waits at least five years before revising the standards.

Moreover, unlike some other rules that have generated business opposition, such as an EPA proposal to tighten limits on pollution from industrial boilers, a court has not ordered the lower ozone limit. That distinction, businesses say, gives Jackson the latitude to refrain from tightening the standard. Jackson has countered that the Bush ozone standards were “not legally defensible, given the scientific evidence” before the agency.

Texas Manufacturing Outlook Survey: Activity Picks Up in July

Texas factory activity expanded in July, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, rose from 5.6 to 10.8, suggesting output growth picked up this month.

Other measures of current manufacturing conditions also indicated growing activity, and the pace of new orders increased. The shipments index rose to a reading of 7.8 after coming in at zero last month. The capacity utilization index was positive but remained near zero, indicating little change over the prior month. The new orders index rose sharply from 6.4 in June to 16 in July. Thirty-four percent of firms said order volumes increased this month, the highest share since November 2010.

Indexes reflecting general business conditions improved in July. The general business activity index remained negative for the third month in a row but jumped from –17.5 to –2, suggesting only a slight worsening this month. The company outlook index rose from 7.2 in June to 11 in July, indicating manufacturers were more optimistic about their firms’ prospects for the near future. Ninety percent of respondents said their outlooks were unchanged or improved from last month.

Labor market indicators reflected more hiring and longer workweeks. The employment index came in at 12.1, up from 5.3 in June. Twenty-two percent of manufacturers reported hiring new workers, the highest share this year. The hours worked index rose from 1.5 to 7.9.

Prices and wages increased again in July. The raw materials price index rose slightly after trending down in recent months, edging up from 31.1 to 34.3. The finished goods price index fell from 10 in June to 4.6 in July, suggesting selling prices rose but at a slower pace than last month. More than 50 percent of respondents anticipate further increases in raw materials prices over the next six months, while 27 percent expect higher finished goods prices. The wages and benefits index moved up from 15.5 in June to 18.4 in July, although the great majority of respondents noted no change in labor costs.

Expectations regarding future business conditions were generally more optimistic in July. The indexes of future general business activity and future company outlook edged up this month after trending down in the first half of the year. Several indexes of future manufacturing activity, including production, rose in July while others edged down but remained in solid positive territory.

The Dallas Fed conducts the Texas Manufacturing Outlook Survey monthly to obtain a timely assessment of the state’s factory activity. Data were collected Jul.12–20, and 87 Texas manufacturers responded to the survey. Firms are asked whether output, employment, orders, prices and other indicators increased, decreased or remained unchanged over the previous month.

Survey responses are used to calculate an index for each indicator. Each index is calculated by subtracting the percentage of respondents reporting a decrease from the percentage reporting an increase. When the share of firms reporting an increase exceeds the share reporting a decrease, the index will be greater than zero, suggesting the indicator has increased over the prior month. If the share of firms reporting a decrease exceeds the share reporting an increase, the index will be below zero, suggesting the indicator has decreased over the prior month. An index will be zero when the number of firms reporting an increase is equal to the number of firms reporting a decrease.

Oil & Gas Employment Rises
Texas’ oil and gas industry employment returned to its pre-recession highs in June, with 224,200 workers involved in exploration and production according to the Texas Petroleum Index.

The employment figure, which is nearly 15 percent higher than June 2010, marks the first time more Texans have been working in the state’s oil and gas industry than in October 2008, the peak of the industry’s last boom, said Karr Ingham, the economist who created the TPI and updates it monthly.

“In the past 12 months, the industry has added more than 28,600 jobs, which is nearly 13 percent of all jobs added to the Texas economy,” Ingham said. “That’s really an accomplishment, considering the TPI in June indicates the industry still has not recovered to the level of economic health that created the last jobs milestone.”

The Texas Petro Index is a composite based on economic indicators such as commodity prices, production volumes, employment and drilling data. The index starts with 1995 as the base year.
The Texas Petro Index grew in June for the 18th consecutive month to 243.5, from a low in December 2009 of 186.6.  It has not yet returned to its peak, 286.0, recorded in September and October 2008.

This recent growth spurt is different from the prior boom from 2002 to 2008. Back then the growth was due largely to transformation of the natural gas drilling and production business as advances in technology opened shale plays to greater activity.

“In the current expansion, the industry has returned to its crude oil roots, but even at that, it is not the same industry as it was in the 1980s and 1990s,” Ingham said.

Natural gas prices continue to be lower than they were during the prior boom, while statewide rig counts have yet to return to 2008 peak — down about 100 rigs through June.

Over the last 12 months, the upstream oil and gas industry has directly accounted for nearly 13 percent of all jobs added to the Texas economy, Ingham said. From May to June alone, the statewide economy added an estimated 32,000 jobs on a seasonally adjusted basis, and the upstream oil and gas industry accounted for nearly 10 percent of those jobs.

Obituary: Southeast Texas Industry Icon Don Boumans, 86

Don Boumans

Southeast Texas industry icon Donald “Don” Theodore Boumans passed away July 10, 2011, at Harbor Hospice in Beaumont, at the age of 86.

Don was born in Broussard, Louisiana on March 3, 1925. Don served his country in the United States Marine Corps during World War II and was awarded the Purple Heart. After graduating from University of Southwest Louisiana with a B.S. degree in Chemical Engineering, Don worked for Goodrich-Gulf Inc. as plant manager and retired after thirty-eight years in 1991 as Vice President of the Rubber Division.

He founded the Plant Managers Association for the Golden Triangle Industrial Area.  He was a member of the Southeast Texas Plant Managers Association and the Association of Chemical Industry of Texas.  Don served on the boards of Mid Jefferson Hospital and Hughen School and he was Chair of the Salvation Army Advisory Board.  He served as both President and Chair of the Junior Achievement of the Golden Triangle.  The Don Boumans Leadership Award is a tribute to his vital endeavors on behalf of Junior Achievement.  Don has served as President of the Port Neches-Groves Rotary Club, President of the Port Neches Chamber of Commerce and Chair of both the local chapter and Region VI of the Texas Association of Business.  In 1983 Don was awarded the Texas Association of Business Life Member 1st Award.  He had served as Executive Director of the Golden Triangle Business Roundtable since June 1, 1991.

His wife, Syble Boumans and family survive Don.  In lieu of flowers, donations may be made to Junior Achievement (505 Milam, Suite 700, Beaumont, Texas 77701); or to Southern Crescent Technical College; or Atlanta Ballet (3195 Dowlen Road, Suite 101, Beaumont, Texas 77706).

SMRP’s MaRS Conference – August 18th & 19th at Moody Gardens

Join us for the Houston Chapter of the Society for Maintenance and Reliability Professionals (SMRP)’s 5th Annual Maintenance and Reliability Symposium (MaRS) at Moody Gardens Resort and Conference Center on Galveston Island.

The MaRS event – on August 18th and 19th – is supported by Texas Chemical Council (TCC) and Associated Chemical Industry of Texas (ACIT) for its training value and networking opportunities for the industry’s newest generation of maintenance and reliability engineers.

Proceeds from MaRS are used to provide scholarships for engineering students and technicians enrolled in degree plans/programs in related fields of study.  MaRS supports current and future industry needs for skilled personnel and enhances the productivity of the refining and chemical industry in the United States.

Attendance at MaRS is open to all interested parties… attendees do NOT have to be a member of SMRP.  Registration for the conference is affordable too: $200 per person before August 1, and $250 thereafter. MaRS is geared toward maintenance and/or reliability engineers/technicians with 0 to 10 years experience and managers new in their roles as leaders of the maintenance/reliability effort.

The technical program offers timely presentations that address topics under one of the Five Pillars of the Maintenance and Reliability Body of Knowledge: Business and Management; Process Reliability; Equipment Reliability; Work Management and Organization and Leadership.  Attendees create their own course of study by selecting 5 sessions from 25 presentations to choose from.

The latest in technology and industrial services is on display in the trade show that runs concurrently with the presentation schedule. 

The event features three panels with industry professionals, plant managers, and maintenance managers covering topics of current interest, including: 1) Current Trends in Maintenance and Reliability; 2) My Plant’s Plan to Improve Reliability; and 3) Smart Tools.

Upcoming TCC & ACIT Events

August 18-19th - SMRP MaRS Conference. For more information, click here.

September 7th – ACIT South Texas Reverse Trade Show. Details to follow.

October 5th – ACIT Mid Coast Breakfast. Details to follow.

October 13th – TCC/ACIT Annual Meeting Luncheon - Hilton Houston Hobby Airport Hotel. Details to follow.

October 21st – ACIT Mid Coast Golf Tournament. Details to follow.

October 27th – ACIT Houston Ship Channel Fall Golf Tournament. Details to follow.

Upcoming Member Events

For a listing of TCC & ACIT Member promotions and events, please click http://www.acit.org/categories/Events/Upcoming-Member-Events/.
(These events are not organized or endorsed by TCC or ACIT.)