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Kevin Ross, president of the Scottish Plastic and Rubber Association, in front of the INEOS Grangemouth refinery and chemical plant. Reid Frazier/The Allegheny Front hide caption
On a quiet street overlooking Scotland's largest refinery and chemical plant, Kevin Ross surveys the newest outgrowth of the American oil and gas boom.
Since 2016, natural gas from the U.S. has been feeding the Grangemouth petrochemical plant, a vast complex of cooling towers, flaring towers and pipelines. The gas is originally harvested in Western Pennsylvania, sent through a pipeline to Philadelphia, and put on ships across the Atlantic.
"It comes here, is taken off the ships, put into large storage tanks," explains Ross, who's president of the Scottish Plastics and Rubber Association and runs a local plastics testing company.
Natural gas is mostly used for heating homes or fueling power plants. But when it comes out of the ground it contains another key ingredient — ethane, a building block of plastics — and that is now fueling another booming industry.
America is producing so much ethane that over 300 new petrochemical and plastics plants are either planned or under construction around the country. President Trump has touted the economic benefits of this, recently telling workers at a Shell ethane plant in Pennsylvania that "we are reclaiming our noble heritage as a nation of builders."
But there's more ethane than existing U.S. plants can use, so in short order the U.S. has also become the world's leading exporter of ethane. That's feeding growing plastics industries in India and China, as well as Europe — including the Grangemouth plant — and those exports are expected to keep growing.
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American shale gas is "driving investment decisions"
America's ethane boom was a lucky break for the European chemical company INEOS. In 2011, its own supplies from the North Sea were running low, says Warren Wilczewski, an economist with the U.S. Energy Information Administration.
"INEOS looked at the United States, where ethane supply was growing, and especially in the Appalachian region, that ethane had, like, no place to go," Wilczewski says. "And they recognized an opportunity."
INEOS commissioned a fleet of ships, the first ever to carry ethane by sea, to move the gas from a port near Philadelphia to plants in the U.K. and Norway.
It also signed a deal with Sunoco Logistics to ship that gas from Western Pennsylvania through the Mariner East pipeline. Sunoco's construction on that has been controversial because of its spotty environmental record and use of eminent domain. It's the subject of criminal investigations, including one by the FBI. But the pipeline has proved vital for INEOS' plan.
Ross, of the Scottish Plastics and Rubber Association, says the arrival of Pennsylvania shale gas has allowed the company to re-open a unit of the Grangemouth petrochemical plant that had been shut down for years; the plant is now operating at full production.
"I can't underestimate the importance of the American shale gas and the feedstock costs for INEOS," Ross says. "It is driving investment decisions into Grangemouth which wouldn't have been made if it wasn't for the availability of the shale gas."
INEOS did not agree to an interview for this story. But in a company video, CEO Jim Ratcliffe said the cost of ethane from Pennsylvania was about one-fourth of what he would have had to pay for it in Europe.
"I think for some of these [chemical plants] in Europe it's the only way they can survive, if we can bring some of the U.S. economics across to Europe," Ratcliffe said.
Pushback to fracking's "toxic element"
Plastics and petrochemicals are increasingly important to the oil and gas industry. They're expected to account for more than a third of growth in world oil demand by 2030, and half of all growth by 2050, according to the International Energy Agency. This worries environmentalists, who point out that the plastics industry accounts for around 4% of all carbon emissions, and that number is expected to increase.
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Much of the growth in plastics will be in Asia, where millions of people will be moving into the middle class in the next few decades, says Jennifer Van Dinter, an analyst at S&P Global Platts.
"If you're adding plumbing to a home, you're going to use PVC pipe," she says. "You might be using insulation, which is going to be derived from petrochemicals." She says more people also will be buying cars, and even if it's an electric model, "there's a lot of plastic components."
In Scotland, INEOS got over $350 million in loan guarantees from the U.K. to retrofit the Grangemouth plant for American shale gas. But the company also wants a local supply, and it's pushed for the U.K. to allow fracking. That's the controversial technology that breaks up rock deep underground to get hard-to-reach oil and natural gas, and which has made America's gas boom possible.
The idea was met by intense opposition.
Norman Philip, with Friends of the Earth Scotland, grew up in Grangemouth, where his father worked at the plant under a previous owner. But he opposes fracking because of what he's heard about it from communities in the U.S. and Australia.
"People were telling us of gas leaks. They were telling us of, like, children having headaches," he says. "There was a toxic element of it."
The pushback has resulted in an ironic twist: in 2015 Scotland put in place in moratorium on fracking, and the U.K. government recently did the same. And yet, it's still legal to import shale gas produced by fracking in the U.S.
Lee Sinclair is a railroad engineer at the Grangemouth petrochemical plant and has mixed feelings about that. "The only thing I don't like about it is, Scotland said, 'No you're not fracking here,' so they decided to go to America to get this gas," Sinclair says.
He'd rather the U.K. get its own local supply. But for now, he says, America's boom in gas and ethane is helping him keep his job.
The first commercial flight of the Qantas Boeing 787 Dreamliner aircraft on December 15, 2017 in Melbourne, Australia.
James D. Morgan | Getty Images
Qantas Airways completed a 19 hour 19 minute non-stop test flight from London to Sydney on Friday as it nears a decision on whether to order planes for what would be the world's longest-ever commercial route.
"We saw a double sunrise," Qantas Chief Executive Alan Joyce said after stepping off the flight, which followed a similar one from New York to Sydney last month.
The event included speeches from Australian Prime Minister Scott Morrison and Qantas Chairman Richard Goyder.
Qantas has named the project "Project Sunrise" after the airline's double sunrise endurance flights during World War Two, which remained airborne long enough to see two sunrises.
The plane on the London-Sydney research flight, a Boeing 787 Dreamliner, carried 50 passengers and had fuel remaining for roughly another 1 hour 45 minutes of flight time when it landed.
The airline needs to get pilots to agree on contract terms and a sign-off from Australia's aviation regulator to launch the flights by 2023.
Qantas has been considering an order for either an ultra-long range version of Airbus SE's A350-1000 or the Boeing Co 777-8, although the latter plane's entry into service has been delayed and so Boeing has put together an alternative offer to deal with that.
Captain Helen Trenerry, who led the test flight, said before takeoff on Wednesday that research data including activity monitoring, sleep diaries, cognitive testing and monitoring of melatonin levels would help determine whether the crew mix of one captain, one first officer and two second officers was appropriate or if more people were needed.
She said she would be happy to fly Sydney-London or Sydney-New York but would prefer regulations that limited the trips to around one a month for pilots because "they will be very, very long flights and fatiguing over the long term".
Mark Sedgwick, the president of the Australian and International Pilots Association representing Qantas pilots, said on Friday the research flights were "a step in the right direction" but the data set was probably too limited to inform broader fatigue management plans.
Citi analysts consider the ultra-long range flights to be a game-changing opportunity for the airline as it looks to capture a premium from travelers in return for cutting out a stop-over.
In a note to clients published in July, they forecast non-stop flights from Sydney to London and New York could add A$180 million annually to the carrier's profit before tax, which was A$A1.3 billion in the financial year ended June 30.
Qantas is due to hold an investor briefing on Tuesday where it could provide guidance on future capital spending plans.
The London-Sydney flight came as the airline on Friday kicked off celebrations for its 100th year of service next year.
The 787-9 with a limited number of passengers used on the research flight had a livery celebrating Qantas' centenary.
Google has become the latest big tech firm to move into banking by offering current accounts.
The firm said it plans to partner with banks and credit unions in the US to offer the "smart checking" accounts.
It said the service, to be launched via Google Pay, will allow users to add Google's analytic tools to traditional banking products.
The move follows offerings of credit cards, payment systems and loans by Facebook, Uber, Apple and Amazon.
While the products and arrangements differ, the tech giants entering the world of banking share an underlying motive: making themselves indispensable, says Gerard du Toit, a partner at the Bain & Co consulting firm.
"They're all competing for consumer attention and for their ecosystem and platform to win," he says.
Amazon's credit card and business loans are aimed at boosting its e-commerce business, while Uber Money is providing credit cards, debit accounts and money tracking tools to serve the company's taxi operations.
Facebook has said its Facebook Pay service will complement its messaging tools.
And both Google and Apple, which has teamed up with Goldman Sachs' new consumer arm, Marcus, on a credit card as part of its Apple Pay and Wallet service, want to to make iPhones and Androids essential.
Wading into financial services will also provide Google and Facebook information for their advertising business, helping to track what ads lead to purchases, Mr du Toit said.
The moves into banking are likely to add to the debates over the tech giants, which are already facing probes related to competition, data protection and privacy.
Some officials have also expressed worry about gaps in financial oversight as growing activity occurs outside of traditional banking. And in recent days, New York announced it would investigate Apple, after accusations that its credit card relied on "sexist" algorithms.
Mr du Toit said regulatory concerns represent the "fly in the soup" for tech firms.
"They will have to be very careful," he said.
In many cases, the tech firms are working with traditional banks - a sign they are aware of the potential issues, he said.
Google said its US partners, which reportedly include Citigroup, would start to offer the accounts by 2020.
"We believe our partners' regulatory and financial know-how is a great complement to our experience in building helpful tools and technology for our users," it said in a statement.
Amazon has offered small business loans since 2011 and launched its credit card with JP Morgan Chase in 2017.
But in some ways, the flurry of announcements by companies this year, is a sign that the US is late to the party.
In China and some other countries, the tech firms moved quickly into banking, motivated by the need to fill the gaps left by traditional finance industry that created hurdles for their businesses, whether they were e-commerce firms or food delivery companies.
In the US, however, the need was less pressing, thanks in part to the ubiquity of credit cards and other "good enough solutions", Mr du Toit said.
Big tech payment services provided by the likes of Alibaba's Ant Financial and Tencent's WeChat account for roughly 16% of China's GDP, compared to less than 1% in the US, according to the Bank for International Settlements, an organisation backed by 60 of the world's central banks.
Tech companies "are now increasingly getting into it because they do believe they can offer a materially better solution to customers," he said.
Last month, Facebook chief executive Mark Zuckerberg evoked the threat of Chinese competition while defending his firm's interest in developing a cryptocurrency before Congress last month.
"I view the financial infrastructure in the US as outdated," he said.
As the tech companies start to make use of their massive reach, close customer relationships and giant data sets, banks "have woken up" to the threat, leading to collaborations and other uneasy "frenemy" arrangements, Mr du Toit said.
With tech firms moving beyond credit cards, regional banks will get left behind, while smaller financial technology firms are forced out or acquired, Mr du Toit said.
"I sometimes describe this as a giant Darwinian experiment of different couplings of the banks and the big techs," he says. "There will be some mutations that succeed and others that fail."
While Google's earlier efforts to build up Google Pay failed to gain much traction in the US, the firm has developed significant payment business in India, where a Bain & Co survey found that more than half of respondents had used the platform in the last 12 months.
"I would not count them out," Mr du Toit said.
Google has become the latest big tech firm to move into banking by offering current accounts.
The firm said it plans to partner with banks and credit unions in the US to offer the "smart checking" accounts.
It said the service, to be launched via Google Pay, will allow users to add Google's analytic tools to traditional banking products.
The move follows offerings of credit cards, payment systems and loans by Facebook, Uber, Apple and Amazon.
While the products and arrangements differ, the tech giants entering the world of banking share an underlying motive: making themselves indispensable, says Gerard du Toit, a partner at the Bain & Co consulting firm.
"They're all competing for consumer attention and for their ecosystem and platform to win," he says.
Amazon's credit card and business loans are aimed at boosting its e-commerce business, while Uber Money is providing credit cards, debit accounts and money tracking tools to serve the company's taxi operations.
Facebook has said its Facebook Pay service will complement its messaging tools.
And both Google and Apple, which has teamed up with Goldman Sachs' new consumer arm, Marcus, on a credit card as part of its Apple Pay and Wallet service, want to to make iPhones and Androids essential.
Wading into financial services will also provide Google and Facebook information for their advertising business, helping to track what ads lead to purchases, Mr du Toit said.
The moves into banking are likely to add to the debates over the tech giants, which are already facing probes related to competition, data protection and privacy.
Some officials have also expressed worry about gaps in financial oversight as growing activity occurs outside of traditional banking. And in recent days, New York announced it would investigate Apple, after accusations that its credit card relied on "sexist" algorithms.
Mr du Toit said regulatory concerns represent the "fly in the soup" for tech firms.
"They will have to be very careful," he said.
In many cases, the tech firms are working with traditional banks - a sign they are aware of the potential issues, he said.
Google said its US partners, which reportedly include Citigroup, would start to offer the accounts by 2020.
"We believe our partners' regulatory and financial know-how is a great complement to our experience in building helpful tools and technology for our users," it said in a statement.
Amazon has offered small business loans since 2011 and launched its credit card with JP Morgan Chase in 2017.
But in some ways, the flurry of announcements by companies this year, is a sign that the US is late to the party.
In China and some other countries, the tech firms moved quickly into banking, motivated by the need to fill the gaps left by traditional finance industry that created hurdles for their businesses, whether they were e-commerce firms or food delivery companies.
In the US, however, the need was less pressing, thanks in part to the ubiquity of credit cards and other "good enough solutions", Mr du Toit said.
Big tech payment services provided by the likes of Alibaba's Ant Financial and Tencent's WeChat account for roughly 16% of China's GDP, compared to less than 1% in the US, according to the Bank for International Settlements, an organisation backed by 60 of the world's central banks.
Tech companies "are now increasingly getting into it because they do believe they can offer a materially better solution to customers," he said.
Last month, Facebook chief executive Mark Zuckerberg evoked the threat of Chinese competition while defending his firm's interest in developing a cryptocurrency before Congress last month.
"I view the financial infrastructure in the US as outdated," he said.
As the tech companies start to make use of their massive reach, close customer relationships and giant data sets, banks "have woken up" to the threat, leading to collaborations and other uneasy "frenemy" arrangements, Mr du Toit said.
With tech firms moving beyond credit cards, regional banks will get left behind, while smaller financial technology firms are forced out or acquired, Mr du Toit said.
"I sometimes describe this as a giant Darwinian experiment of different couplings of the banks and the big techs," he says. "There will be some mutations that succeed and others that fail."
While Google's earlier efforts to build up Google Pay failed to gain much traction in the US, the firm has developed significant payment business in India, where a Bain & Co survey found that more than half of respondents had used the platform in the last 12 months.
"I would not count them out," Mr du Toit said.
European stocks slipped on Thursday on concern over the state of U.S.-China trade talks, as data showed a stagnating economy in Germany.
The Stoxx Europe 600 SXXP, -0.11% dropped 0.08% to 405.52, which still is near to its record close of 414.06.
“European equities appear modestly cheap on an absolute basis and extremely cheap relative to government and corporate bonds,” said strategists at Citi, who forecast the Stoxx 600 will reach 420 by the end of 2020.
The German DAX DAX, -0.32% declined 0.34% to 13184.51, the French CAC 40 PX1, +0.01% weakened 0.04% to 5904.98 and the U.K. FTSE 100 UKX, -0.47% fell 0.18% to 7338.01,
Trade talks between the U.S. and China have hit a snag over farm purchases, according to The Wall Street Journal.
Meanwhile, Germany reported its economy grew 0.1% in the third quarter, which was slightly better than forecast but from a downwardly revised second quarter.
“In some sense, this is the ‘worst’ of both worlds for markets. Today’s data confirm that the German economy has now stalled, but the headlines are probably not dire enough to prompt an immediate and aggressive fiscal response from Berlin,” said Claus Vistesen, chief eurozone economist at research consulting firm Pantheon Macroeconomics.
Also on the economics front, U.K. retail sales grew 0.2% in the three months ending October, which is the worst showing in 16 months.
Of stocks on the move, Qiagen QIA, +10.38% jumped 13.6% after Bloomberg News reported biotechnology developer Thermo Fisher Scientific TMO, +1.37% has approached the German-listed genetic testing company with an offer. Neither Thermo Fisher nor Qiagen has commented.
Burberry Group BRBY, +4.22% rallied 4.5% as the luxury-goods company reported a stronger-than-forecast profit in its fiscal first half. It did cut its outlook for gross margin because of the disruptions in Hong Kong.
Daimler DAI, -2.90% as the Mercedes-Benz automaker said profits in 2020 and 2021 will be negatively affected by efforts to meet carbon targets. Daimler said it will cut an unspecified number of jobs.
3i Group III, -5.73% declined 4.4% after the private-equity firm reported a 10% return in the six months to September 30. The stock is nonetheless up 39% this year.
Google has become the latest big tech firm to move into banking by offering current accounts.
The firm said it plans to partner with banks and credit unions in the US to offer the "smart checking" accounts.
It said the service, to be launched via Google Pay, will allow users to add Google's analytic tools to traditional banking products.
The move follows offerings of credit cards, payment systems and loans by Facebook, Uber, Apple and Amazon.
While the products and arrangements differ, the tech giants entering the world of banking share an underlying motive: making themselves indispensable, says Gerard du Toit, a partner at the Bain & Co consulting firm.
"They're all competing for consumer attention and for their ecosystem and platform to win," he says.
Amazon's credit card and business loans are aimed at boosting its e-commerce business, while Uber Money is providing credit cards, debit accounts and money tracking tools to serve the company's taxi operations.
Facebook has said its Facebook Pay service will complement its messaging tools.
And both Google and Apple, which has teamed up with Goldman Sachs' new consumer arm, Marcus, on a credit card as part of its Apple Pay and Wallet service, want to to make iPhones and Androids essential.
Wading into financial services will also provide Google and Facebook information for their advertising business, helping to track what ads lead to purchases, Mr du Toit said.
The moves into banking are likely to add to the debates over the tech giants, which are already facing probes related to competition, data protection and privacy.
Some officials have also expressed worry about gaps in financial oversight as growing activity occurs outside of traditional banking. And in recent days, New York announced it would investigate Apple, after accusations that its credit card relied on "sexist" algorithms.
Mr du Toit said regulatory concerns represent the "fly in the soup" for tech firms.
"They will have to be very careful," he said.
In many cases, the tech firms are working with traditional banks - a sign they are aware of the potential issues, he said.
Google said its US partners, which reportedly include Citigroup, would start to offer the accounts by 2020.
"We believe our partners' regulatory and financial know-how is a great complement to our experience in building helpful tools and technology for our users," it said in a statement.
Amazon has offered small business loans since 2011 and launched its credit card with JP Morgan Chase in 2017.
But in some ways, the flurry of announcements by companies this year, is a sign that the US is late to the party.
In China and some other countries, the tech firms moved quickly into banking, motivated by the need to fill the gaps left by traditional finance industry that created hurdles for their businesses, whether they were e-commerce firms or food delivery companies.
In the US, however, the need was less pressing, thanks in part to the ubiquity of credit cards and other "good enough solutions", Mr du Toit said.
Big tech payment services provided by the likes of Alibaba's Ant Financial and Tencent's WeChat account for roughly 16% of China's GDP, compared to less than 1% in the US, according to the Bank for International Settlements, an organisation backed by 60 of the world's central banks.
Tech companies "are now increasingly getting into it because they do believe they can offer a materially better solution to customers," he said.
Last month, Facebook chief executive Mark Zuckerberg evoked the threat of Chinese competition while defending his firm's interest in developing a cryptocurrency before Congress last month.
"I view the financial infrastructure in the US as outdated," he said.
As the tech companies start to make use of their massive reach, close customer relationships and giant data sets, banks "have woken up" to the threat, leading to collaborations and other uneasy "frenemy" arrangements, Mr du Toit said.
With tech firms moving beyond credit cards, regional banks will get left behind, while smaller financial technology firms are forced out or acquired, Mr du Toit said.
"I sometimes describe this as a giant Darwinian experiment of different couplings of the banks and the big techs," he says. "There will be some mutations that succeed and others that fail."
While Google's earlier efforts to build up Google Pay failed to gain much traction in the US, the firm has developed significant payment business in India, where a Bain & Co survey found that more than half of respondents had used the platform in the last 12 months.
"I would not count them out," Mr du Toit said.
