The shale revolution has fueled phenomenal growth in the US energy industry. And, much of it has been centered here in Texas. We’ve watched West Texas Intermediate, also known as Texas Light Sweet or WTI, go from a low of $27.96 per barrel on February 9, 2016 to a steady $68.68 per barrel today. Trucks filled with oil pipe are once again rumbling down Texas highways and neighboring oil-producing states. There is no doubt that America’s hydrocarbon industry is here to stay.
Fewer have recognized, however, that a more competitive and efficient energy sector has given birth to a staggering growth in petrochemical facilities – mostly along the Texas Gulf Coast.
The effects are rippling from Beaumont to Houston to Corpus Christi and beyond. There’s money in those petrochemicals and producers are on a fast track to get raw stock and product to market both domestically and abroad. Petrochemicals, also known as petroleum distillates, are simply chemical products derived from petroleum.
For example, ethylene is the main component of plastic. Ethylene is produced by steam cracking hydrocarbon feedstocks. Plastic is used to make hundreds of millions of products around the globe. Other products made from petrochemicals include paints, detergents, solvents, drugs, explosives, fertilizer, insulation, shingles, pesticides, flooring and the list goes on.
Why should apartment real estate professionals, apartment owners and apartment investors care? An industry expansion of this magnitude will have positive and long-term impact on the job outlook and population of Texas. This spells increased housing demand for the multifamily residential sector.
Consider the following: the American Chemistry Council predicts that it will add $294 billion to the US’s economic output and 462,000 jobs by 2025 – just over the next 8 years! Even now, $185 billion in new US petrochemical projects are in construction or planning per the American Chemistry Council. Dow Chief Executive Andrew Liveris pointed out, “It’s a tectonic shift in the hemispherical balance of who makes what to essentially feed the manufacturing sector.”
Net US petrochemical exports, which include plastic as well as products such as fertilizer, adhesives and solvents, will grow to $110 billion a year by 2027, compared to $17 billion last year. ExxonMobil has plans to build the world’s largest ethylene cracker plant near Taft, Texas, the friendliest cotton pickin’ town in Texas per the signs near the city limits. DowDuPont’s ethylene and plastics plant in Freeport is now on line and producing 1.5 million metric tons of ethylene annually with plans to increase to 2 million metric tons per year in the near future. Similarly, Chevron Phillips started up it’s ethane cracker located in the Baytown Cedar Bayou Facility. For each major development, dozens of smaller projects to produce supporting products and services and additional personnel are needed the feed the ravenous appetites of these large plant facilities.
So, we have one more reason – one more BIG reason to be optimistic in the continued health and bullishness in the Texas apartment industry. These areas provide opportunities for a deeper look and formulating a multi-year plan for apartment investing in Texas.
If you have considered adding Texas apartment properties to your portfolio in the past, now may be a good time for experienced due diligence. If you are considering new apartment development in Texas, please give us a call. We love to talk apartments.
Better World Properties LLC provides complete Apartment Life Cycle Solutions to apartment owners and investors including property management, process and performance consulting, deal generation, closing and financing. To learn more about the Better World Family of Companies services click here.
Better yet, come visit. Bring your boots and we’ll give you the grand Lone Star tour.