(311d) Geopolitical Factors Influencing the Evolution of the Chemical Industry

Authors: 
West, D., SABIC
The basic chemicals and plastics industry is built on a simple principle: find a cheap feedstock and convert it into something more valuable. However, the right feedstock depends on place and time. Certain policies and actions of various governments have influenced the evolution and profitability of the chemical industry during the past 50 years, sometimes in surprising ways. For example, high oil prices and US government funding encouraged the development and commercialization of coal gasification technology during the late 1970s and early 1980s. This enabled China to develop a competitive basic chemical industry using coal as a feedstock during the last 25 years. Similarly, an abrupt increase in oil prices during the first decade of the 21st century encouraged the present shale gas revolution, causing a major shift in the economy of producing basic chemicals and polymers in the US. If history is our guide, then what governments choose to fund and regulate may be as important as market forces in determining the shape of our industry and profession in the future.