This writing involves an article in the December 19 issue of Chemical and Engineering News entitled, "US Firms Detail Investments".
A 3.3 billion pound per year cracker will be constructed at Cedar Bayou, Texas. A 1.1 billion pound polyethylene plant will be constructed at Cedar Bayou or Sweeney, Texas. Expansion of ethylene capacity by 850,000,000 pounds will be made at Laporte, Texas. A 1.7 billion pound methanol plant will be restarted in Channelview, Texas. A propylene-producing metathesis unit will also be constructed at Channelview.
Two companies are studying a polypropylene oxide/tertiary butyl alcohol plant for China.
If the US investment climate is bad, why these several major investments in Texas? The answer is a combination of favorable investment climate and proximity to markets. In spite of the fact that the Obama Administration is antagonistic to business with its various regulations and high taxes, Texas has offered compensating factors. It has no state income tax, so that in spite of high federal taxes, the total tax burden is less significant. The products produced in Texas are also available to various parts of the US at freight costs considerably less than materials produced abroad.
Unfortunately, the petrochemical nature of these high-dollar value investments do not produce many jobs. Many of the individual operations are automated, but those few jobs available are high-paying. However, the low-cost availability of these products to other customer-manufacturers in the US does contribute materially to secondary jobs. If these basic petrochemical investments were made abroad rather than in the US, those secondary jobs would likely also not be available.
The bottom line is that a favorable investment climate not only promotes investment, but also results in jobs. We now have in the US high unemployment, because the investment climate is more favorable to production overseas.
Friday, December 30, 2011
Investment Climate
This writing is based on another article in the December 19 issue of Chemical and Engineering News. The article is entitled, "Air Products Invests in China".
The basic business of Air Products and Chemicals Is to separate nitrogen and oxygen from air. The Air Products investment in China is to supply another Chinese company with oxygen and nitrogen for converting coal to various oil products. Air Products has also constructed an ammonia plant in China to supply ammonia to another Chinese company for manufacture of light-emitting diodes. The obvious question is why is Air Products pumping its investment money into China. The answer is fairly obvious,. While we have lots of coal in the US and could also convert coal into oil products, the Obama Administration is stuck on renewable energy and makes it almost impossible to justify the conversion of coal to oil.
The ammonia situation is not significantly different. The ammonia generation must go where the light emitting diodes are produced. Why not produce light emitting diodes in the United States? The answer again is an unfavorable business climate, as developed by the Obama Administration. Labor costs are high and there too many regulations, all of which lead to insufficient return on investment. Since the return on investment in China is higher, that's where light emitting diodes will be produced and also where Air Products justifies having an ammonia manufacturing plant.
The basic business of Air Products and Chemicals Is to separate nitrogen and oxygen from air. The Air Products investment in China is to supply another Chinese company with oxygen and nitrogen for converting coal to various oil products. Air Products has also constructed an ammonia plant in China to supply ammonia to another Chinese company for manufacture of light-emitting diodes. The obvious question is why is Air Products pumping its investment money into China. The answer is fairly obvious,. While we have lots of coal in the US and could also convert coal into oil products, the Obama Administration is stuck on renewable energy and makes it almost impossible to justify the conversion of coal to oil.
The ammonia situation is not significantly different. The ammonia generation must go where the light emitting diodes are produced. Why not produce light emitting diodes in the United States? The answer again is an unfavorable business climate, as developed by the Obama Administration. Labor costs are high and there too many regulations, all of which lead to insufficient return on investment. Since the return on investment in China is higher, that's where light emitting diodes will be produced and also where Air Products justifies having an ammonia manufacturing plant.
Thursday, December 29, 2011
Speaker Boehner Doesn't Understand Reduced Spending
e-mail to Rep. Neugebauer:
In the December 19 issue of Chemical and Engineering News, Susan Morrissey has an article entitled, Rocky Road for Federal budget". It concerns the fact that Democrats have stalled passage of an omnibus spending bill, apparently developed by House Republicans. The stalling actually involves a dispute on the included payroll tax, which is not part of the omnibus spending. It is said that the spending bill was approved by sections of both the House and Senate. The spending bill includes nine fiscal 2012 appropriations bills.
Let us recall that we have a tremendous national debt and a tremendous budget deficit. We have been looking for ways to reduce government spending, but this is what the House Republicans have come up with and which has been generally accepted by the Senate: The total spending bill is $915 billion, which is almost $1 trillion.
The Department of Defense gets a cut of an almost insignificant 3%. The Department of Energy, which I previously said should be completely eliminated, maintains an expenditure of $1.8 billion. That apparently does not include Department of Energy scientific research, which will grow from $46 million to $4.9 billion. The budget for the National Institutes of Health will grow by 1%.The NIH grants, which I have been railing against, will remain unchanged. The EPA will get an almost insignificant cut of 3%. .
If House Speaker Boehner considers this to be a reasonable approach for fiscal funding of government, he needs to be taken out.
In the December 19 issue of Chemical and Engineering News, Susan Morrissey has an article entitled, Rocky Road for Federal budget". It concerns the fact that Democrats have stalled passage of an omnibus spending bill, apparently developed by House Republicans. The stalling actually involves a dispute on the included payroll tax, which is not part of the omnibus spending. It is said that the spending bill was approved by sections of both the House and Senate. The spending bill includes nine fiscal 2012 appropriations bills.
Let us recall that we have a tremendous national debt and a tremendous budget deficit. We have been looking for ways to reduce government spending, but this is what the House Republicans have come up with and which has been generally accepted by the Senate: The total spending bill is $915 billion, which is almost $1 trillion.
The Department of Defense gets a cut of an almost insignificant 3%. The Department of Energy, which I previously said should be completely eliminated, maintains an expenditure of $1.8 billion. That apparently does not include Department of Energy scientific research, which will grow from $46 million to $4.9 billion. The budget for the National Institutes of Health will grow by 1%.The NIH grants, which I have been railing against, will remain unchanged. The EPA will get an almost insignificant cut of 3%. .
If House Speaker Boehner considers this to be a reasonable approach for fiscal funding of government, he needs to be taken out.
Tuesday, December 20, 2011
EU Carbon Tax on Airlines
Cheryl Hogue has an article entitled, "Unfriendly Skies" in the October 17 issue of Chemical and Engineering News. It is basically about an argument between international airlines and the European Union. The European Union (EU) says that when airline flights enter EU space, they generate significant quantities of carbon dioxide through the burning of their jet fuel. The EU says the airlines are subject to "Cap & Trade", which essentially means they must pay tax. The airline object, because it will cost money.
This is only a small segment of the many arguments which involve Cap & Trade, not only at the European Union level, but which also in the US
It may be interesting to review Cap & Trade, for what it really is; a government tax.
Since the collapse of the Soviet Union, Western Europe has been continually moving toward a socialistic culture. However, the inherent economics of socialism is starting to catch up with them. We see this in the economic problems of Greece, followed by Italy and Spain. Even Germany will eventually not be exempt. Collectively, they will all go down to defeat, as the EU is unable to meet its obligations to the various populations.
These obligations involve governmental benefits, such as free housing, free medical care, etc., without the production level to sustain these costs. In an effort to maintain solvency in the various governmental coffers, and the EU in total, various tax forms been developed. The latest of these is the "carbon tax", which has previously been disguised as "Cap & Trade". It is just another new name for a tax to postpone the eventual collapse of socialism, as governments are unable to obtain sufficient revenue to continue the offering of benefits to its populations.
This is only a small segment of the many arguments which involve Cap & Trade, not only at the European Union level, but which also in the US
It may be interesting to review Cap & Trade, for what it really is; a government tax.
Since the collapse of the Soviet Union, Western Europe has been continually moving toward a socialistic culture. However, the inherent economics of socialism is starting to catch up with them. We see this in the economic problems of Greece, followed by Italy and Spain. Even Germany will eventually not be exempt. Collectively, they will all go down to defeat, as the EU is unable to meet its obligations to the various populations.
These obligations involve governmental benefits, such as free housing, free medical care, etc., without the production level to sustain these costs. In an effort to maintain solvency in the various governmental coffers, and the EU in total, various tax forms been developed. The latest of these is the "carbon tax", which has previously been disguised as "Cap & Trade". It is just another new name for a tax to postpone the eventual collapse of socialism, as governments are unable to obtain sufficient revenue to continue the offering of benefits to its populations.
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