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With petrochemical expansions making up a sizeable portion of more than $6 billion in new construction for the Baton Rouge metropolitan area, it’s one of the vital economic drivers this year.

“We’ll have a very stable petrochemical industry for the remainder of this year,” says Dan Borné, president of the Louisiana Chemical Association. “I don’t see any great swings up or down, but a steady industry in employment and production over the next nine to 12 months. I don’t expect the American economy to take a severe dip.”

While a weaker U.S. dollar might sound unnerving to some, it’s a plus for the chemical industry in export markets. It undersells the Euro, making U.S. products more appealing financially than European ones.

That’s good news for the area, which has the state’s highest concentration of chemical activity. Stronger demand is also enlivening the chemical industry with expansions, which is creating new jobs and construction work. Its growth has also made Louisiana the second-largest producer of chemicals in the nation, shipping about $50 billion of products in 2006. Of that total, $5 billion was exported.

“Exports are big part of our industry’s stability,” Borné says. “For the petrochem industry, the world is a small sphere and the competition is fierce.”

But the national economic slowdown could also affect the industry.

Borné is watchful for a lingering housing downturn in the nation that could hurt long-term demand for chemically based products that go into flooring, wall coverings, plumbing or anything vinyl or plastic. But he says the downturn would likely be offset by stronger European sales.

Efforts also are under way to address two major industry issues that could improve profitability and growth.

Borné says his group is working with Gov. Bobby Jindal to repeal a 3.3% state sales tax on business utilities this year, to help ease energy costs and make the industry more competitive with other states with no such tax. He says they’re also working with Jindal to improve job training to address the labor shortage, which is stymieing further expansion.

Huge expansions at refineries in St. James and St. John the Baptist parishes are welcome economically, but Borné says they also increase the price of labor for everyone.

More good news is coming from the ammonia industry thanks to Midwest corn and wheat growers increasing crops for ethanol, says Jim Harris, head of the Louisiana Ammonia Producers.

Terra Industries is investing $10 million to restart production of 400,000 tons of ammonia in Donaldsonville this year. The move, which will create 25 jobs, comes after the company stopped production in 2004. The industry, with its once-robust nine companies and 3,500 workers, dwindled to three plants and 500 people by 2007. High natural gas prices along with China- and Russia-subsidized ammonia nearly decimated the area industry, but prices have since fallen and the subsidies are now gone.

“With these trends and our proximity on the market, our prices on ammonia have doubled so we’re doing OK right now,” Harris says. “We’re really doing quite good right now.”

While he can’t say if this is the first of more reopenings or expansions, Harris does say it’s possible with increasing ethanol production. The three remaining companies—CF Industries, PCS Nitrogen and Mosaic Phosphates—account for 30% of ammonia production in the U.S.

Borné says several ethanol plants are planned for Louisiana, suggesting the alternative fuel is here to stay. But their arrival could divert agricultural products from livestock feed and, in turn, make meat and dairy products more expensive.

Don Briggs, president of the Louisiana Oil & Gas Association, says there is considerable development around the Baton Rouge area that will translate into new wells being drilled. Industry-related service companies like CK Associates and environmental companies are expected to grow as the offshore industry grows this year.

“We probably will see high prices remain,” Briggs says. “If that happens, we’ll probably see more drilling activity in Louisiana—in oil and natural gas—in the Baton Rouge area and surrounding areas.”

Analysts and economists predict oil dropping to $85 a barrel this year, but not below that amount, Briggs says. But there are some predicting $200 a barrel by the fourth quarter.

With only 5% of the world’s untapped crude oil reserves available to western companies, the Gulf of Mexico is extremely attractive for more drilling. Briggs says Baton Rouge is one of many areas in the state that should benefit from this activity.

“For the first time in the history of the world, your producer states are in the driver’s seat,” he says. “We’ve always had the opportunity to buy oil cheap, but with demand growing and it’s so tight, the producing oil states and countries are in the catbird’s seat.