For Immediate Release
Chicago, IL – January 21, 2013 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include The Dow Chemical Company , Exxon Mobil Corporation (XOM - Free Report) , Chevron Corporation (CVX - Free Report) , Phillips 66 (PSX - Free Report) and Goldman Sachs Group Inc. (GS - Free Report) .
Get the most recent insight from Zacks Equity Research with the free Profit from the Pros newsletter: https://at.zacks.com/?id=5513
Here are highlights from Friday’s Analyst Blog:
Shale Fueling Chemicals Boom
A resurgence in the chemicals industry is in progress, primarily driven by unprecedented growth in U.S. oil and gas production. The discovery of abundant reserves of natural gas trapped within shale rock and new and economical methods of extraction are the primary factors driving such production growth.
New methods of extraction such as horizontal drilling and hydraulic fracturing have provided access to shale reserves which were earlier inaccessible. They have also lowered associated costs, in turn pushing down prices of many key inputs for petrochemical production and ethane in particular. Ethane is used to produce ethylene, the starting point in the production of plastics like polyethylene.
As a result, petrochemical majors like The Dow Chemical Company , Exxon Mobil Corporation (XOM - Free Report) and CPChem – a joint venture of Chevron Corporation (CVX - Free Report) and Phillips 66 (PSX - Free Report) – are helping the U.S. chemicals sector grow by setting up facilities to produce ethylene from ethane. Yet, only about three years ago the chemicals industry was projected to decline over the long term.
The likes of Dow Chemical were earlier considering investing in the Middle East and going into production of specialized products. However, the shale powered resurgence has changed the situation quite radically. According to the chief economist of the American Chemistry Council (ACC), the U.S. is now the ideal location for chemical manufacturers.
Goldman Sachs Group Inc. (GS - Free Report) believes that shale gas investments and production are being driven by the high prices of crude oil worldwide. This has led to the higher investment in the U.S. oil and gas industry. In 2011, exploration and production expenditure amounted to $138 billion in the U.S. compared to $35 billion in China, $10 billion in Russia and $5 billion in Saudi Arabia. Goldman Sachs’ global head of commodity research believes that a tax regime which is favorable has also led to an increase in investments.
The rise in crude prices has subsequently led to an increase in the cost of naptha, which is produced from oil. Naptha accounts for around half of the world’s ethylene production and now costs around $100 a barrel, increasing marginally over last year. On the other hand, the price of ethane has declined from 80 cents from over a year ago to below 23 cents. This is a consequence of the additions to natural gas capacity over the period.
It is of course generally being accepted that the price of ethane will increase over time. The chief executive of Dow Chemical, Andrew Liveris believes prices will stabilize on the higher side of thirty cents. But investment research group Alembic believes that even if ethane costs between 40-50 cents per gallon, the cost of production of ethylene will be between $400-500 a ton in the U.S. compared to $1,200 a ton in Europe. This has led to companies like Bayer setting up ethane manufacturing facilities in the U.S.
Not just the chemicals sector, the rise in shale gas production has led to positive effects for the entire economy. Prices of electricity have fallen and energy independence has increased. Former U.S. secretaries of energy Bill Richardson and Spencer Abraham believe the U.S. could even emerge as a net exporter of liquefied natural gas by 2016. The U.S. Department of Energy thinks LNG exports could in turn spark off $47 billion in new economic activity for the U.S. by 2020.
Additionally, the use of gas in place of coal to generate power has led to carbon emissions in the U.S. falling to levels last witnessed in 1992 in the first quarter of 2012. Clearly, the shale gas revolution is here to stay.
Want more from Zacks Equity Research? Subscribe to the free Profit from the Pros newsletter: https://at.zacks.com/?id=5515.
About Zacks Equity Research
Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.
Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.
Zacks "Profit from the Pros" e-mail newsletter provides highlights of the latest analysis from Zacks Equity Research. Subscribe to this free newsletter today: https://at.zacks.com/?id=5517
Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978 by Leon Zacks. As a PhD from MIT Len knew he could find patterns in stock market data that would lead to superior investment results. Amongst his many accomplishments was the formation of his proprietary stock picking system; the Zacks Rank, which continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros at https://at.zacks.com/?id=5518.
Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
Follow us on Twitter: http://twitter.com/zacksresearch
Join us on Facebook: http://www.facebook.com/home.php#/pages/Zacks-Investment-Research/57553657748?ref=ts
Disclaimer: Past performance does not guarantee future results. Investors should always research companies and securities before making any investments. Nothing herein should be construed as an offer or solicitation to buy or sell any security.
Zacks Investment Research
800-767-3771 ext. 9339