The resounding and almost awe-inspiring victory of president-elect Barack Obama heralded a landmark moment in history, and confirmed the US as still the land of opportunity.
Opportunity is likely to extend to the gases industry in the wake of that landslide victory over Republican rival John McCain, with future President Obama set to invest in infrastructure.
So what will this do for the industrial gases business?
It’s widely expected that over the course of the next four years, President Obama will embark on something of an investment spending spree, potentially to the tune of $1 trillion.
More and improved medical aid for the poor, investment in transport infrastructure such as roads and rail, and additional construction projects are among the probable investment initiatives anticipated to be pushed through by the US’ first black president.
Such projects would inevitably boost demand for gases, equipment and related services, most likely for the US gas companies if a ‘fortress’ type approach is taken and there is little reliance on imports.
With the exception of helium and rare gases however, most gases have an economic delivery radius of just 200 miles or less and the significance of imports as a factor is probably less than first thought.
This demand or consumption is likely to take place over the next four years of Obama’s presidency. So gasworld is left asking, how exactly can we expect our industry to be affected? And in which areas?
Discussing the wind of change blowing through the US, Airgas Chairman and CEO Peter McCausland exclusively told gasworld, “The US is in need of considerable infrastructure investment, ranging from the energy infrastructure such as power grids, LNG pipelines, and petrochemical development to public works infrastructure such as bridges, highways, and waterworks.”
“Whether the Obama administration is successful in implementing its infrastructure initiatives, such as rebuilding roads and bridges and stimulating alternative clean energies such as solar and wind power, remains to be seen. It seems logical that the energy and infrastructure policies will receive higher priority than an ambitious environmental agenda given the state of the economy,” he added.
Clearly there is a sense of agreement in the US, with the acknowledgement that an infrastructure build is indeed necessary across the country. Such a big ‘build’ could be seen as representing an increased growth driver for industrial gases, welding goods, and other such products.
As a company at the forefront of supplying an array of gases, equipment and hard goods, Airgas is well placed to assess the impact of policy change and increased infrastructure development on our industry. McCausland explains the increased demand this provides and also alludes to the reasons behind Airgas' success.
“A focused infrastructure build would support demand for industrial gases, welding goods, and safety supplies, all of which are at the core of our product offering. Airgas is the only nationwide distributor of these products, which allows contractors to manage their supply chain efficiently when coordinating multiple job sites across the country,” he said.
“Much of our contractor offering is new in the past two or three years and partially explains our success in the segment. In addition, the work that we are doing to gain operating efficiencies and derive further synergies from acquisitions, results in an overall better value proposition for our customers.”
A planet in peril
As well as the need for infrastructure investment, a balanced sense of environmental responsibility is thought to be required in the US too.
During the November victory speech which described ‘a new dawn of American leadership', president-elect Obama warned of the challenges ahead and described a planet in peril’. Democrat Obama is reportedly keen to cut US emissions by 80% from 1990 levels by the year 2050, taking a far tougher stance than the current Government and planning investment of up to $150bn in a clean energy economy over 10 years.
It could be suggested that in addition to the expectedly increasing gas demand to come, a tighter control over industrial emissions is on the way, along with the almost inevitable knock-on effects.
Perhaps a chain reaction could see industrial processes greatly affected and modified, to reduce the damage caused to an already ravaged environment? Or equally, an increased driver for specialty gases could be witnessed as a result of the closer monitoring of emissions?
Offering his vastly experienced viewpoint, McCausland told gasworld, “Increased environmental responsibility would likely take multiple forms. Of particular impact to Airgas are initiatives to further enhance emissions monitoring requirements, which use products such as ammonia and specialty gas. An environmentally friendly policy governing refrigerants would also be meaningful, to the extent that it focused on recovery and reclamation and on the discontinuation of the use of disposable refrigerants cylinders, which allow residual ODC’s and GHG’s to vent into the atmosphere, while waste steel containers clutter our landfills.”
“Finally, development of new environmental regulations or the tightening of existing ones may create opportunities for us to engineer solutions to our customers’ needs, as we provide products and technologies that help customers improve their energy efficiencies, reduce their environmental footprint, and remain in regulatory compliance.”
Having founded the company in 1982, McCausland has been Chairman and CEO of Airgas since 1987, presiding over the largest US distributor of indutrial, medical, and specialty gases and hard goods such as welding equipment and supplies.