Domestic crude oil and natural gas production increases are occurring in traditional production areas such as Texas as well as newer areas like North Dakota and the Marcellus region, more than compensating for declines in other states. Despite lower international crude prices, many new U.S. production areas are still economically favorable. As a result, crude oil and natural gas production are expected to remain strong.
To accommodate new production and shifts in product demand, America’s fuel and petrochemical manufacturers are making large capital investments at home. Over the next five years, the refining industry plans to spend more than $50 billion3 on facility projects. With U.S. and world diesel demand growing faster than demand for gasoline, U.S. refiners’ investments and changes to operations have allowed them to increase diesel volumes much more than gasoline over the past five years. Investments are also being made to access and use more U.S. light crude oil and Canadian heavy oil, decreasing America’s dependence on imports outside of North America. Crude oil imports outside of Canada fell from a peak share of over 55 percent of supply in 2005 to only 28 percent in 2014.4
AFPM estimates that since 2011 its members have made a significant capital investment of more than $3 billion in tank car safety.
For petrochemical manufacturers, increased natural gas production and lower energy prices have positioned the United States among the most attractive manufacturing centers in the world. In 2014, the petrochemical industry executed almost 100 projects including grassroots, expansion and rebuilding worth over $13 billion.5 In addition, the petrochemical industry currently proposes spending over $59 billion over the next five years6 to take advantage of abundant American shale gas and the cost advantage it affords them over their foreign competitors. Global chemical companies are also making large investments to shift manufacturing capacity back to the United States.
Abundant energy reserves unleashed through shale development and technology advances must be delivered safely to our refineries and petrochemical facilities, stimulating investment in additional transportation infrastructure. Shipments by rail have risen 4000 percent from 2008–2013,7 while pipeline transmission rose 10.6 percent from 2009–2013.8 During 2014, more new pipeline projects were approved and additional investment is needed to keep pace with rising oil production across the country. U.S. refiners are investing in fleet enhancements to increase safety by rail and have an outstanding record of compliance with transportation safety regulations.
4. U.S. Energy Information Administration [Back]
5. Industrial Info Resources PECWeb Database [Back]
6. Industrial Info Resources Topline Market Spending Forecast. 2014 Q4 Edition [Back]
7. AllTranstek [Back]
8. Association of Oil Pipe Lines [Back]