Will Nat-Gas Hikes Hurt The Dow Chemical Company (DOW) Earnings?

But one interesting fight Dow has taken on is in trying to keep the recent glut of U.S.-produced natural gas within the nation’s borders. Gas producers have sought ways to boost exports through liquefied natural gas terminals, but given the energy-intensive nature of chemical production and Dow’s own need for nat-gas-based inputs, chemical companies would rather see prices remain low to give them a competitive advantage over foreign competitors. In particular, low ethane costs have boosted margins for Dow, E I Du Pont De Nemours And Co (NYSE:DD), and other chemical-makers. Yet already, nat-gas prices have recovered somewhat from last year’s lows, and that could increase input costs for Dow.

Another challenge for Dow and its peers comes from the labor force. Despite high unemployment, chemical companies are having trouble finding skilled workers able to perform the tasks it needs in a growing industry. If those pressures end up requiring higher wage costs, then Dow might struggle to keep its overall expenses in line.

In the Dow earnings report, watch to see how the company responds to DuPont’s report from today. With most other companies focusing on agriculture, it’ll be interesting to see if Dow follows suit or seeks to differentiate itself by remaining loyal to its chemical roots.

The article Will Nat-Gas Hikes Hurt Dow Chemical Earnings? originally appeared on Fool.com.

Fool contributor Dan Caplinger has no position in any stocks mentioned. You can follow him on Twitter @DanCaplinger. The Motley Fool has no position in any of the stocks mentioned.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.