Emergency Allocation Rules Fail To Recognize Needs of Petrochemical Industry

The rapidly growing petrochemical industry plays a critical role in the Nation's economy comparable to that of the metals industry. However, future petrochemical growth could be subject to severe constraints as a result of constricted supplies of petroleum and natural gas. Because its basic feedstocks, natural gas, natural gas liquids, and petroleum liquids, also have valuable energy uses, the petrochemical industry must compete for its feedstocks with virtually the entire economy. Current Government allocation programs are based on fuel uses, not feedstock uses. Failure to recognize the hydrocarbon raw material feedstock requirements of the petrochemical industry could adversely impact the manufacture of such vital products as rubber, fibers, agricultural chemicals, plastics, and medical drugs. Most new petrochemical plants are based on the heavy crude fractions of naphtha and gas oil because the industry once believed that the domestic availability of natural gas and natural gas liquids was declining. Presently, petrochemical feedstocks account for 3.3 percent of U.S. consumption of crude oil, 2.7 percent of natural gas consumption, and 21 percent of all natural gas liquids consumed. Under normal market conditions, the high value added of petrochemical products would probably give the industry an advantage over other uses of crude oil. However, if confronted with the current Department of Energy (DOE) philosophy of equally distributing shortages across the board, the petrochemical industry could be more affected than other industrial users.