Engineering News

Dow CEO Voices Concern About Impact of Escalating
Energy and Feedstock Costs on US Chemical Industry

Thursday September 15, 12:00 pm ET

MIDLAND, Mich., Sept. 15 /PRNewswire-FirstCall/ -- Andrew Liveris, Chief Executive Officer of The Dow Chemical Company warned today that the persistently high price of oil and natural gas, exacerbated in the wake of Hurricane Katrina, poses a severe threat to the long-term health of the chemical industry in the United States.

"For two and a half years or more our industry has done all that it can to mitigate the impact of escalating feedstock and energy costs, which have been particularly severe in relation to US natural gas," said Liveris.

"We've been sharply focused on reducing operating expenses, improving energy efficiency, increasing productivity and generally controlling those things we are able to control in an effort to address this unprecedented challenge.

"But right now, with oil and natural gas prices at astronomically high levels and showing no signs of receding, the US chemical industry faces the very real risk of being unable to invest in its own future in this country."

Liveris underscored the industry's efforts to heighten government's awareness of the issue, and he acknowledged the benefits that will be derived over time from the recent passage of the Energy Policy Act of 2005.

"Although the legislation makes progress toward reducing demand and increasing the availability and the diversity of fuel sources in the United States, it needs to go further -- particularly in relation to closing the projected gap between natural gas demand and available supply.

"In the near-term, focusing on energy efficiency and conservation can help -- but this alone cannot resolve the nation's energy needs. We absolutely must drive toward environmentally sound production of our nation's vast off- shore energy reserves. Only then can we ensure that industry in this country endures in the face of ever-tougher competition from other parts of the world."

Liveris also said that Dow would continue to focus on managing price and volume in a way that would allow it to re-invest in its existing facilities and to grow the business into the future. As an immediate measure, the Company will be seeking price increases across its entire portfolio of chemical and plastic products.

"At Dow, much has been done -- and will continue to be done -- to manage our own cost structure and to offset the impact of ever-higher energy and feedstock costs. At this point, however, we have no choice but to ask our customers to pay more for our products in order to safeguard their supplies into the future."

Dow is a leader in science and technology, providing innovative chemical, plastic and agricultural products and services to many essential consumer markets. With annual sales of $40 billion, Dow serves customers in 175 countries and a wide range of markets that are vital to human progress: food, transportation, health and medicine, personal and home care, and building and construction, among others. Committed to the principles of sustainable development, Dow and its 43,000 employees seek to balance economic, environmental and social responsibilities.

Source: The Dow Chemical Company

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