By Hector L. Rivero, President & CEO Texas Chemical Council and Association of Chemical Industry of Texas

The Texas Economic Development Act of 2001 (found in Chapter 313 of the Tax Code) is a provision that allows school districts to attract new business investment by providing a temporary freeze on school property tax valuations for new business investment.

The act allows new business investment to become established and mature before having to pay taxes on the full valuation of the new business property. The Chapter 313 provision will expire at the end of 2014 unless lawmakers act to extend it during the 2013 Texas Legislature.

This tax incentive is absolutely crucial to the chemical industry when considering new investment in Texas, and the Texas Chemical Council and Associated Chemical Industry of Texas are urging the Legislature to extend or make permanent this important tax incentive.

Under Chapter 313, a local school district may defer for 8 years the time before a new investment project goes onto the tax rolls at full value. The limitation on the taxable value of a project does not take effect until the third year of the project. A taxpayer may also make a separate application to the school district for a credit for taxes paid during the first two years on the value of the property.

The law was passed in 2001 as HB 1200. The legislation was in response to Texas losing a number of major new industrial projects to other states – events largely attributable to the state’s high property tax burden, and in particular, local school property taxes.

School districts had previously been able to offer tax abatements similar to those of cities and counties, but this authority was repealed in the mid 1990s. With the loss of school tax abatement authority, Texas fell from the nation’s top industrial location in 1996, as ranked by Site Selection Magazine, to 37th in 2000. Over those years, Texas lost 12 major facilities to other states – four to Oklahoma alone.

To become eligible for a Chapter 313, companies must make new investments in connection with manufacturing, research and development, or electricity generation using certain low emission technologies, and nuclear energy.

The investment must create 25 at least new jobs, or 10 jobs if the project is to be in a rural or economically disadvantaged school district. And at least 80 percent of these jobs must pay 110 percent of the county’s average manufacturing wage and provide health coverage.

Other states across the United States continue to look to Texas as the example of business-friendly: relatively low tax rates, abundant natural resources, fair and predictable regulations.

The Chapter 313 economic development incentive has proven to be an effective and critical tool for luring new investment and jobs to Texas. A number of major industrial projects have benefited from Chapter 313, and have stated that they would not be in Texas otherwise.

If Chapter 313 is not extended, companies will have an expensive reason to look elsewhere for their new capital investments.

By Hector L. Rivero, President & CEO Texas Chemical Council and Association of Chemical Industry of Texas

More than 96% of all manufactured goods are directly touched by the business of chemistry, making our industry an essential part of every facet of our nation’s economy! The chemical industry provides significant economic benefits in every state, especially Texas.

Chemical companies in Texas directly employ nearly 73,000 people, and indirectly contribute more than 600,000 jobs to the economy. For every industry job in Texas, an additional 6.3 jobs are created within the state’s economy. And these jobs are very high paying: the average wage of a chemical industry employee in Texas is over $86,000, which is 43% higher than the average manufacturing wage. Every year, these jobs generate $6.3 billion in earnings and $3.6 billion in federal, state and local taxes on personal income and $4.1 billion in Social Security and Medicare contributions.

Workers in our industry provide solutions that point the way toward responsible stewardship of our planet through sustainable energy, cleaner air and safe, clean water. The business of Chemistry translates into new products, new materials and innovation for the future.

Access to vast, new supplies of natural gas from shale deposits is one of the most dramatic domestic energy developments in the last 50 years. The economics of shale gas not only create a competitive advantage for U.S. and Texas petrochemical manufacturers, but also lead to greater domestic investment and industry growth.

An $8.5 billion investment in new and existing ethylene production infrastructure in Texas could generate a total of $37 billion in additional chemical industry output, bringing our state’s industry revenues to more than $182 billion, maintaining it as the country’s largest chemical producing state. These findings come in a recent American Chemistry Council report, “Shale Gas and New Petrochemicals Investment: Benefits for the Economy, Jobs and U.S. Manufacturing”.

In Texas, more than 81,000 permanent jobs could be created in the chemical industry and throughout the supply chain, from trade and craft jobs to highly skilled jobs.

More than $5.5 billion in wages would go into the pockets of Texas workers, generating $779 million in state tax revenue and more than $1 billion in federal revenue.

The American chemical industry relies on abundant, affordable natural gas as a source of energy and as a raw material, or “feedstock,” for countless chemical products. Lower natural gas prices give U.S. manufacturers an advantage over competitors in other parts of the world that rely on a more expensive oil-based feedstock.

Growth in domestic natural gas production reduces prices and creates a more stable supply. It is estimated that U.S. shale deposits contain 100 years of natural gas supply. This shale gas is a “game changer” that could rejuvenate America’s chemistry industry, strengthen U.S. manufacturing, boost exports, create jobs – and significantly improve America’s energy security.

The process of extracting natural gas from shale deposits includes hydraulic fracturing, where fluids and solids are pumped into the well. Proper government oversight and product stewardship is needed to protect the surrounding environment.

A comprehensive energy strategy must increase the production of domestic energy supplies while implementing balanced regulatory policies that protect our environment.

To maximize the national benefits of shale gas, our state and federal energy policy must avoid undue restrictions on natural gas supplies from shale deposits. State oversight of hydraulic fracturing is appropriate since state governments have the knowledge to oversee the process in their jurisdictions. But government policies should not undermine the availability of domestic natural gas.

The business of chemistry is at the heart of manufacturing – access to shale gas has the potential to dramatically boost Texas’ and America’s competitiveness and help meet our nation’s goals for increased job growth and global exports.

By Hector L. Rivero, President & CEO Texas Chemical Council andAssociation of Chemical Industry of Texas

Gov. Rick Perry (R-Texas) and the Texas Legislature should be commended for helping to make Texas a great place to do business. Their vision has resulted in Texas leading the nation in economic investment and job growth since the recession. The Texas chemical industry has played a major role with more than $15 billion in new capital investments announced and the potential for more if the state can meet the resource needs of this manufacturing renaissance. 

This manufacturing renaissance is enabling companies in the chemical industry an opportunity to compete globally with abundant, affordable and clean-burning natural gas as both an energy source and feedstock.

But 83 percent of U.S. manufacturers report a moderate/serious employment skills gap: they can’t find the qualified workers needed to build, operate and maintain plants.

This shortage of skilled labor is having a huge impact on Texas chemical manufacturers, resulting in poor workmanship, decreased operational efficiency and increased costs to employers for skills training and retraining. Coupled with an aging and increasingly retirement-eligible work force, our state public education system must do a better job of meeting the needs of Texas employers and preparing students for high paying careers in their communities. And considering Texas leads the nation in the percentage of high school dropouts, it’s clear our public education system is off track.

Research indicates a majority of students drop out of school because they’re bored and see no relevance in what they’re studying. The state’s current education policy prescribing rigid graduation requirements seems to be serving only the small percentage of students bound for four-year colleges and universities.

Lawmakers should provide more diversity in our high school curriculum, allowing students to develop a graduation plan that meets their interests and provides them with the skills necessary to pursue a variety of high paying career paths in demand across the state. Our education system must be aligned with the needs of Texas employers and offer a variety of educational opportunities to prepare students for today’s workplace.

Currently, the recommended high school graduation plan in Texas requires students to complete four years of English, social studies, math and science — a policy referred to as the “4 by 4” plan. Because 4 by 4 requirements limit choice, it’s more difficult for students to take elective courses in high school. The result is fewer students can take career and technical/vocational courses or pursue fine arts/humanities to the extent they would like.  Further, fewer schools even bother offering electives that might offer more applied learning and skills development in a career field students may be more interested in.
 
The irony about the state’s 4 by 4 requirements is it’s not part of the college admission requirements. No Texas university requires a fourth year of math or science course for admission.

With a dropout rate still far too high, it is critical students see relevance between their coursework and future career opportunities to keep them interested in school, engaged in learning and ensure more Texas kids graduate high school and realize one of many career opportunities.

Education policy should also encourage dual credit courses, public/private partnerships between schools and industry, and promote junior and community colleges for quality higher educational opportunities with successful career advancement.

To help school districts in developing a curriculum that translates into real jobs, the Texas Workforce Commission can share statewide and regional data about current and projected jobs in their communities with salary data. This will empower school counselors to provide students and parents with real information about career opportunities throughout the state.

In a state as large and diverse as Texas, one size does not fit all. Students and consumers demand more choices. To engage students, state policies must allow school districts to offer students more diverse education choices that inspire them to create and achieve their own dreams.

By Hector L. Rivero, President & CEO Texas Chemical Council andAssociation of Chemical Industry of Texas

They say everything’s bigger in Texas, and the Lone Star State has been ranked the best place to grow a business, according to CNBC’s 2012 rankings of the top states for business. But that favorable business climate has brought with it large population growth, which has severely strained energy resources in Texas.

The Texas power grid has just enough electricity to meet demand this summer, but an unexpected drop in generation or spike in demand could lead to rolling blackouts, according to Trip Doggett, president of the Electric Reliability Council of Texas (ERCOT) – the agency responsible for managing most of the state’s electric grid.

Doggett recently warned lawmakers the agency would likely declare Energy Emergency Alerts asking consumers to cut back on use. By managing the grid, ERCOT attempts to maintain a 13 percent reserve margin to be ready should demand spike or a generator shut down unexpectedly. Generation capacity has not kept up with population and demand growth, and ERCOT finds it difficult to maintain that reserve capacity in case of an emergency.

While new electricity generation is needed, saving energy is one of the best ways to deal with energy shortages, yet energy efficiency rarely gets its due. Energy efficiency is a must in any comprehensive energy policy.

The products of chemistry help make energy efficiency possible – in our homes, offices and factories and by making cars and packaging more lightweight. Texas Chemical Council members create materials and technologies for batteries, composites for more fuel-efficient cars, lightweight plastic packaging that reduces energy needs in shipping and transportation, and insulation, roofing, windows, and piping that increase energy efficiency in buildings.

The polyurethanes industry is constantly innovating, creating new products and technologies that improve energy efficiency. Rigid polyurethane insulations, including spray foam, pour-in-place foam and polyisocyanurate foam, can help reduce energy use in homes and other buildings, which is advantageous for builders, architects and homeowners. And continuous technical advances in polyurethane chemistry continue to make rigid polyurethane foam even more effective. Building insulation saves up to 40 times the energy used to create it; plastic house wrap that creates a weather resistant barrier saves up to 360 times the energy used to produce it.

Plastic auto parts now make up 50 percent of the volume of today’s new cars, dramatically reducing vehicle weight to significantly improve gas mileage – by up to seven percent for each 10 percent in weight reduction – while playing a critical role in helping improve vehicle safety.

Chemistry enables compact fluorescent bulbs to “fluoresce” and to use 70 percent less energy than incandescent bulbs – and LED lighting could cut global energy demand by 30 percent.

Replacing an old refrigerator with a new ENERGY STAR-qualified model (with improved insulation and coolant systems made possible by chemistry) conserves enough energy to light an average house for nearly four months.

Strong yet lightweight plastic packaging allows more products to be shipped with less weight, lightening the load and saving energy from factory to home.

Innovations also enable the sustainable technologies that are revolutionizing the way we generate and store energy – solar cells, wind turbines, rechargeable batteries and more.

Solar power technology relies on silicon-based chemistry, and innovative new plastic solar panels are poised to reach the mass residential market. Wind power turbine blades are made using plastics and chemical additives, helping deliver renewable energy to our nation’s electricity grid.

Lithium-ion and lithium-polymer batteries employ chemistry to create rechargeable batteries for automobiles, military equipment, laptops, mobile phones, MP3 players, etc.

Texas’ chemical industry is seeing a renaissance. Expanded supplies of affordable domestic natural gas from shale has enabled our industry to invest billions in new projects and thousands of new Texas jobs. To ensure that our country remains a good place to do business, our country must use its energy supplies wisely and chemical companies will continue to innovate and help businesses and consumers use less energy.

By Hector L. Rivero, President & CEO Texas Chemical Council and Association of Chemical Industry of Texas

With another drought-ridden summer approaching and the 2013 legislative session around the corner, Texas legislators are closely examining the complex issues around water – from supply and conservation, to the impact on the health and economic welfare of Texans across the state.

The Texas chemical industry, with over 200 manufacturing facilities operating across the state and several hundred thousand workers, recognizes that the combination of drought conditions and increased population demand on water is one of the greatest threats to keeping our manufacturing plants operating and maintaining our investment, jobs, and tax base in Texas. Consequently, thousands of jobs are in jeopardy if Texas does not take a proactive approach to addressing our water situation.

Having just experienced the worst one-year drought in state history, there is heightened awareness about our state’s water crisis. To effectively address and manage the water shortage, state and local government officials are focused on enforcing conservation plans and regulations that will help prepare the state for continuing drought conditions.

Texas Comptroller Susan Combs said, “From a water-supply perspective, we are just not prepared. If each town and city doesn’t come up with a successful water plan, the state will be worse off for it.”

State and local officials are analyzing the drought conditions over the last several years and assessing what worked, what failed and what needs improvement. Nearly every state Senate and House legislative committee has been charged with studying some aspect of the state’s drought conditions and developing recommendations for the Legislature. At a recent meeting of the House Natural Resources Committee, Chairman Allan Ritter (R-Nederland) pleaded with participants: “Please do not forget how dry that it can get.”

The Texas Water Development Board (TWDB) is reviewing ways to create a set of guidelines that would help communities determine how and when to conserve water, but it has limited authority to ensure that local water plans are actually implemented.

The Texas Commission of Environmental Quality (TCEQ), which does have enforcement authority on most water issues, recently passed rules giving the agency more flexibility to address drought issues in those river bays and basins where there is not a watermaster to enforce water usage.

State leaders are also looking at financing options to fund water infrastructure projects and implement conservation plans.  Last legislative session, Representative Ritter worked very hard to bring cities, utilities, manufacturers, agricultural users, and environmentalist together to find compromise funding solutions.

The House Natural Resources Committee discussed tap fees, utility fees, a tax on bottled water, and a number of other funding options, but no consensus could be reached.  Ritter’s committee has started its interim study to learn how other states and other countries have addressed water policy related to drought, supply, demand, and conservation. The Senate Natural Resources Committee has also made water policy among its top interim study priorities.

When it comes to water conservation, chemical companies have been very proactive in ensuring they are good water stewards. Many companies have developed their own conservation plans above what is required by the state.

The availability of water is one of the most important factors that businesses consider when deciding where to make capital investments and anchor their operations. Addressing our state water crisis will help retain existing jobs and the potential for new capital investment and creation of new high-paying manufacturing jobs. If the state cannot ensure the supply of water that industries require, they will go elsewhere.

What’s certain is that if we don’t have a fully-funded, comprehensive state water plan, it will impact the state’s economy and future growth. According to Comptroller Combs, “The lack of water, is the single most devastating thing that can happen to the (state’s) economy.”

By Hector L. Rivero, President & CEO Texas Chemical Council and Association of Chemical Industry of Texas

2012 marks the 25h Anniversary of the Texas Chemical Council’s Environmental Health and Safety (EHS) Seminar. Be sure to register for and attend the 25th Annual EHS Seminar next month (June 4th - 7th) at the beautiful Moody Gardens Resort and Conference Center in Galveston, Texas.

The seminar is hosted by the Texas Chemical Council (TCC), Association of Chemical Industry of Texas (ACIT), the Louisiana Chemical Association (LCA) and the Louisiana Chemical Industry Alliance (LCIA).

This is the second year that LCA and LCIA have partnered with TCC as co-hosts of the EHS Seminar, expanding the opportunities for safety training and excellence to owner company employees and contractors in Louisiana, Texas and across the Gulf Coast region.

The Texas/Louisiana EHS Seminar provides a great opportunity to enhance regulatory knowledge, learn best practices, network with industry peers, and hear from recognized safety experts. Whether you are an operator, engineer, or manager, the seminar provides knowledge to foster attendee’s personal growth and professional development for your organizations, while enhancing excellence in safety within the chemical industry.

The Seminar’s success is due in large part to the volunteers from member companies who invest hundreds of hours in planning and coordinating the seminar and securing expert presenters from all aspects of the industry. A special thanks goes to our Seminar Chair Maria Gallegos of Texas Brine Company. The EHS Seminar planning committee works hard to provide attendees with informative sessions and quality training programs.

Distinguished Guest Speakers
This year, distinguished guests will include OSHA’s Regional Administrator John Hermanson, and safety expert and author, Professor E. Scott Geller, Ph.D.

With OSHA’s chemical national emphasis program on process safety now underway, and initiatives addressing PELs, recordkeeping, the globally harmonized system for chemical labeling and communicating hazard information, Administrator Hermanson’s remarks will be of considerable and timely interest to all.

Dr. Geller is a world-renowned behavioral safety expert and author and recognized expert in helping organizations understand and manage human behavior in order to reduce workplace injuries.

Also, the Houston Business Roundtable & Houston Area Safety Council Contractor Safety Excellence Awards Program Winners will present their best practices.

Attendees can choose different tracks of training each of the four days, with topics varying from security and safety, to sustainability and energy management.

Register On-Line
Attendees are encouraged to register on-line before May 25th at: http://ehs-seminar.com/. In addition to normal attendee registration, single day vouchers are available for advance purchase. Site leaders often use vouchers as a safety incentive or as an award to employees or contractors.

The TCC, ACIT, LCA and LCIA are committed to helping members enhance the safety of their employees, neighbors and communities. Nationwide, the chemical industry spends more than $2 billion each year improving worker health and safety for its own employees.

As a result, the chemistry industry has reduced process safety incidents by nearly 60 percent over the past decade, and the illness and injury rates for the chemistry industry are one-quarter of the average rate for manufacturing, according to the federal Bureau of Labor Statistics.

Workers in the chemistry industry are safer than those in many other industries including retail, agriculture, food stores, and general merchandising. The chemical industry is very proud of its workplace safety record, and the EHS Seminar concludes with the TCC/ACIT Awards Banquet on June 7th, where TCC recognizes facilities that have demonstrated commitment and exemplary results toward safe operations throughout the previous year.

For more information about registering for (and/or sponsoring) the Texas/Louisiana EHS Seminar on June 4-7th, please click on: http://ehs-seminar.com/. We hope to see you there.

By Hector L. Rivero, President & CEO Texas Chemical Council and Association of Chemical Industry of Texas

Americans are recognizing that manufacturing is crucial to the economic and national security of our country. Manufacturing jobs are particularly important because they have a high economic multiplier effect resulting in exponential job growth for capital investment.

The attention on these jobs is timely, because we are on the cusp of a manufacturing renaissance, due in large part to the shale gas boom in Texas and other states. This abundant, affordable and clean-burning energy source enables the chemical industry an opportunity to compete globally, and proudly say “Made in the USA”.

But disturbingly, 83 percent of U.S. manufacturers report a moderate or serious skills gap: they can’t find qualified workers. It’s estimated that 5% of factory jobs remain unfilled – that’s 600,000 open positions nationwide.

The shortage of skilled labor is having an impact on Texas chemical manufacturers resulting in poor workmanship, decreased operational efficiency, and increased costs to employers for skills training and retraining. Coupled with an aging and increasingly retirement-eligible workforce, workforce development must be a priority for legislative leaders and our public school system. Considering that Texas leads the nation in the percentage of high school dropouts, it’s clear our public education system is off-track.

Our education system should not be one-size-fits-all. It must be better aligned to prepare students for both college and the workplace. Texas can step in line with the reality of today’s competitive job market by embracing a more flexible school system that provides multiple education options, including those found in career and technical education (CTE) programs.

80 percent of the fastest growing jobs today don’t require a traditional baccalaureate degree but do require technical skills. Yet Texas public schools offer little in the way of skills development for students who won’t pursue a four-year college degree. Some school districts recognize the workforce needs in their community and the diverse interest of their students, but find it difficult to offer CTE courses with existing state curriculum mandates.

CTE programs expose students to skills required for many high-paying jobs after high school by providing hands-on apprenticeships that lead to professional certifications and job placement. But most CTE courses are considered electives or “enrichment” classes and don’t offer credit toward a student’s degree plan. Studies show that students find academic courses more relevant when curriculum is taught in an applied manner, like that found in many CTE courses.

Despite instances of excellence, the quality of those offerings varies widely and the state lacks a systemic approach to encourage quality CTE programs statewide.

While all students need a common core of essential knowledge and skills, different students find alternative delivery methods and subject matter both relevant and rewarding. Quality CTE improves attendance, lowers dropout rates, increases graduation rates, and improves scores on standardized tests; and quality CTE also prepares students for future workforce opportunities.

Texas Workforce Commission Chairman Tom Pauken recently told a Texas House committee that public schools should offer more courses in skilled trades and create separate performance tests – one for students who plan to attend college and one for students in skilled trades.

According to Chairman Pauken, school administrators are constrained because performance and financial incentives imposed by the state are so linked to their students’ performance on the TAKS (Texas Assessment of Knowledge and Skills) test and the recently introduced (and now deferred) STAAR (State of Texas Assessments of Academic Readiness) test. 

“So much of our educational system is driven these days by this ‘teaching to the test’ mentality from the third grade through high school,” he added. “Resources, both dollars and time, are devoted to those classes which correspond to the subject matter tested by the TAKS and STAAR tests. However, vocational and technical classes remain largely neglected.”

And high school counselors should provide students and parents with information about high-paying career opportunities in their communities, not just information about college. TWC can easily provide school districts with regional job forecasts based on employer-provided data.

The Texas chemical industry desperately needs more skilled workers. The state can respond to this crisis and put a serious dent in the drop-out rate by: a) recognizing that not all students are 4-year university bound; b) emphasizing access to CTE programs in public schools; and c) requiring school counselors to provide data about high-paying jobs and career paths that may require a four-year degree, an associates degree or skills training.

We need you to speak out and help rebuild America. Tell your elected officials, your school board members, your principals, teachers, and friends that it’s time for our schools to provide real life curriculum to get America working again!

By Hector L. Rivero, President & CEO Texas Chemical Council and Association of Chemical Industry of Texas

Despite a slowdown in America’s economic recovery, the outlook for the U.S. chemicals manufacturing industry is more encouraging.

According to the American Chemistry Council’s (ACC) 2011 Year-End Situation and Outlook published late last year, gradual improvement will occur in 2012, before a stronger recovery takes hold in 2013.

The key to the domestic chemical industry recovery is continued access to the vast, new supplies of natural gas from previously untapped shale deposits. After years of high and volatile natural gas prices, the new economics of shale gas are creating a competitive advantage for domestic manufacturers, leading to greater investment, job creation and industry growth. Texas is among several states reaping the benefits of abundant supplies.

ACC’s President and CEO Cal Dooley said, “Most major end-use markets for chemistry in the U.S. have recovered, though growth has slowed for overall U.S. manufacturing.”

Dooley also noted that while developed nations – constrained by debt and tighter fiscal policies – are likely to expand chemistry production only moderately, output from emerging markets will increase more rapidly.

“The shale gas production boom is moderating natural gas prices and creating more stable supplies, which has allowed U.S. chemical manufacturers to become more competitive with producers abroad,” Dooley added.

Historically, an oil-to-natural gas price ratio of 6:1 or higher increases the global competitiveness of Gulf Coast-based petrochemicals and derivatives like plastic resins. For the last few years this ratio has been above 7:1, but more recently the high ratio of oil-to-natural gas prices has been more than 25:1, helping to spur capital investment.

The boom in oil and gas is creating both demand-side (pipe mills, oilfield machinery) and supply-side (chemicals, fertilizers, direct iron reduction) opportunities and this is likely to continue. There is also strength in light vehicles and aircraft, a recovery in construction materials, and industries involved with business investment (iron and steel, foundries, computers) are still strong.

The outlook for chemicals points to modest growth over the next several years and depends on strengthening domestic demand and an improvement in exports abroad. Exports were up nearly 11% to $189 billion in 2011 and are expected to exceed $230 billion in 2014.

Another study by PricewaterhouseCoopers indicates that developing domestic shale gas reserves has the potential to save U.S. manufacturers billions of dollars in energy costs and employ one million more workers. The report also acts as a call to action, by urging manufacturers to become “active stakeholders in the shale gas industry.”

“We do believe there is the possibility of a renaissance in U.S. manufacturing,” said Bob McCutcheon, one of the co-authors of the study.

According to the report, companies can see significant cost saving if they have access to cheap natural gas, especially since manufacturing consumes one-third of the country’s energy output. This will especially benefit industries like metals, chemical and industrial manufacturing that have high energy costs based on manufacturing processes.

Additionally, the chemical industry can see savings in raw materials that are derived from natural gas, which is expected to lead to more U.S. investment.

And the shale-oil and natural-gas boom has cracked open another lucrative market: gas liquids used to make plastics. The same drilling technologies that have unlocked vast amounts of crude and natural gas from previously unproductive shale formations also are reaping large stores of ethane, propane and butane, known as natural-gas liquids.

Processing ethane into chemicals is 50% cheaper than using crude oil-derived naptha and its availability has made U.S. petrochemical companies the envy of overseas competitors.

An earlier ACC study projected domestic petrochemical investments of approximately $16 billion related to reasonable increases in ethane supplies. Looking at the broader chemical industry, capital investment is expected to exceed $25 billion, further fueling economic and job growth.

But Dooley appropriately notes: “To sustain the recovery’s momentum, we need sound economic, energy and environmental policies that will encourage the growth of America’s manufacturing sector.”

By Hector L. Rivero, President & CEO Texas Chemical Council and Association of Chemical Industry of Texas

If there were ever a year to remind Texans of our state’s water issues, 2011 was it.  During months of drought and heat, our reservoirs and lakes dipped, cities restricted water usage and aging water mains burst. The persistent dry conditions paved the way for a record-breaking number of devastating wildfires across Texas.

The drought was estimated to have caused at least $5.2 billion in losses, and the fires cost billions more in damage. The past summer was the hottest on record and climatologists predict the state has finished the second year of a nine-year drought.

According to a recent draft of Texas’ state water plan, without improvements to our current system, by 2060, more than 80 percent of Texas’ population could lack enough water during a drought. To deal with a population that’s expected to double by then, Texas’ water infrastructure needs $231 billion in upgrades.

Some of those water, sewer, flood-control and conservation projects will be more easily financed because voters approved Proposition 2 back in November.

Smaller government entities that build and maintain our water system (towns, cities, and municipal utility districts) can’t borrow money as cheaply as the mighty state of Texas can. So to help out, the Texas Water Development Board (TWDB) will set up a fund to lend the little entities money at lower rates of interest than they would be able to get on their own.

The cost to Texas taxpayers is virtually nothing because the loan fund – up to $6 billion at any given time – will be financed through state bonds. Those bonds are paid off via loan payments from the smaller water entities, which in turn get their money from local taxes and bill payments.

This also helps cities by creating a revolving fund because they need access to capital without having to ask voters to replenish it every few elections. By keeping the fund under $6 billion, the TWDB won’t need to get it reauthorized at the polls. That certainly helps cities to plan ahead, just like the state has helped veterans gain access to a revolving fund for mortgages and land purchases.

Because Prop 2 passed, Texans will spend more on infrastructure and less on interest. No state tax dollars will be needed, and the local savings will show up in lower water bills.

Since state lawmakers won’t reconvene until January 2013, Lt. Gov. David Dewhurst and House Speaker Joe Straus have assigned “interim charges” to examine important issues this year.

Various committees in the Texas Legislature have begun studying the impact of the drought’s effect on power generation, agriculture and the economy.

Our industry has been asked about how the drought has affected business, and what water conservation initiatives industry employs in their operations that might be considered by Legislature in developing its future water policy.

While the chemical industry uses large volumes of water, most plants return well over 95 percent of the water used to downstream sources; and that water is returned cleaner than when it was captured. Many facilities are located along the Texas coast, so they are often at the end of rivers that provide them with water for their operations. As droughts dry up our state’s rivers, lakes and reservoirs, this impacts the supply of water for cities, agriculture and manufacturers all along a river basin and can often create dire shortages for industrial facilities located downstream.

Without an adequate supply of water, manufacturers would be unable to operate, resulting in significant loss of investment and jobs in many communities.  

Another issue with wide-reaching implications to the chemical industry is the future of “fracking” (or hydraulic fracturing) for natural gas drilling. Key lawmakers are encouraging drilling operators to invoke recycling technologies in their fracking operations.

The chemical industry in Texas is poised for new investment and job growth as a result of abundant new supply of natural gas from previously untapped shale deposits. Further development of shale gas and ethane can promote even greater expansion for our industry, provided sound science is used in any new regulations on gas producers.

Water will be one of the most important public policy issues for decades. It is important that all of us do our part to support conservation, recycling technologies, and sound public policy that will ensure a supply of water for our cities, our agricultural producers, and manufacturing for generations to come.