Register

Peak Oil is You


Donate Bitcoins ;-) or Paypal :-)


Page added on September 11, 2017

Bookmark and Share

The Plastic Fantasy That’s Propping Up the Oil Market

The Plastic Fantasy That’s Propping Up the Oil Market thumbnail

Kenya’s mountains of plastic bags might not seem central to oil’s grand narrative, but they are. Last week, the East African country banned almost everything about them: making them, importing them, selling them, using them, with penalties of up to four years in jail or fines up to $38,000.

This type of prohibition carries a warning for an oil business that’s depending on petrochemicals — and the plastics made from them — to pick up the slack when we all switch from gas guzzlers to electric cars. Saudi Aramco is betting its future on petrochemicals. The International Energy Agency thinks they’ll drive crude sales for decades, accounting for 44 percent of oil demand growth between 2015 and 2040.

Plastic Fantastic
Petrochemicals are seen as the strongest source of global oil demand growth in 2015-2040
Source: International Energy Agency

But, as Kenya shows, the days of single-use plastic packaging may already be numbered. And with this stuff making up about a quarter of all the plastic used, that will have a profound impact on the petrochemicals industry.

Environmental fears are only going to worsen. The Great Pacific Garbage Patch — a concentration of marine debris, most of which is plastics — is estimated to be roughly the size of Texas. There are similar areas, brought together by ocean currents, in the Atlantic and Indian Oceans and they aren’t going anywhere.

Plastic doesn’t biodegrade, it just breaks down into smaller and smaller pieces. Remember all those subprime mortgages from a decade ago? They got chopped up and mixed in with “good” debt and sold on as investment-grade securities, almost bringing the financial system to its knees. Think of plastic as a chemical equivalent to those loans: no matter how much it breaks up, it’s still plastic.

On the current track, by 2050 our oceans could contain more plastics than fish (by weight), according to a 2016 report by the World Economic Forum and the Ellen MacArthur Foundation.  Plastic waste is moving rapidly up the agendas of countries around the world. Kenya’s ban is one of many initiatives.

Last month, India reaffirmed a ban on non-biodegradable plastic bags in Delhi, while the introduction of a 5 pence charge for single-use bags in England in October 2016 led to an 85 percent reduction in their use.  And bags are only a small part of the problem, accounting for 1 percent of plastic waste entering the sea, according to the Green Alliance.

Far worse are plastic bottles, making up one-third of marine plastic pollution. Recycling them would have a huge impact, both on the waste problem and on demand for new petrochemicals feedstock.

Last week, Scotland’s First Minister Nicola Sturgeon committed to introduce a deposit and return scheme on all drinks containers in the country. A similar plan introduced in Germany in 2003 boosted recycling of refillable plastic bottles to 98.5 percent. Several European countries have done the same and more will follow.

All this undermines the petrochemicals sector’s need for oil-based feedstocks from both sides: cutting demand for its end products while boosting the supply of recycled material for the production process.

Just like the electrification of passenger cars, the backlash against plastics — particularly for single-use items such as carrier bags, food containers and bottles — will hurt the oil sector. Yet another existential challenge for Saudi Aramco and others to wrestle with.

 

Bloomberg



8 Comments on "The Plastic Fantasy That’s Propping Up the Oil Market"

  1. Go Speed Racer on Mon, 11th Sep 2017 4:55 am 

    This whole topic is a testimony to the insane
    stupidity of absolutely everybody.

    Plastic is a fuel. It’s oil. It burns very nicely in
    a waste-to-energy facility.

    There is no other reasonable solution. Make the
    plastic go away, tolerate that it emits CO2 and
    other fumes. Get free energy.

    This would keep it out of the oceans. It’s shameful that
    marine creatures are being killed painful slow deaths
    by extreme stupidity of litterbugs.

    Liberals are more to blame, than conservatives.
    Because the libs oppose trash incineration,
    They want to dump trash on the ground.

  2. baha on Mon, 11th Sep 2017 5:17 am 

    I don’t want to inhale your trash either, wrap your fish in paper…

  3. Sissyfuss on Mon, 11th Sep 2017 9:39 am 

    I ran a tricounty recycling organization for 7 years and the people were solidly behind it but the landfill owners and their paid off local politicians did everything they could to shut us down. Recycling is bad for business in that forcing you to buy single use items keeps the profits maximized. And it keeps the landfills humming. Govt needs to not only encourage recycling but make it mandatory. Extremely difficult to do with the present day makeup of the body politic.

  4. Boat on Mon, 11th Sep 2017 10:05 am 

    Go Speed Racer on Mon, 11th Sep 2017 4:55 am

    A liberal state like California recycles around 60 percent much like progressive EU countries. Texas run by conservatives, the recycle rate is around 13 percent. Politics make a difference. Do a little more research.

  5. Tom on Mon, 11th Sep 2017 11:01 am 

    We should cut down more trees & start making everything out of wood again !!!!!

  6. rockman on Mon, 11th Sep 2017 12:10 pm 

    “Petrochemicals are seen as the strongest source of global oil demand growth in 2015-2040”. The environmental problem are as described. But the article would have more credibility if it didn’t link plastic production to oil. The vast majority of plastics production DOES NOT come from oil:

    “Although crude oil is a source of raw material (feedstock) for making plastics, it is not the major source of feedstock for plastics production in the United States. Plastics are produced from natural gas, feedstocks derived from natural gas processing, and feedstocks derived from crude oil refining. The EIA is unable to determine the specific amounts or origin of the feedstocks that are actually used to manufacture plastics in the United States.”

    And what that last sentence is indicating is that those products from crude oil processing used for plastics production are the “refinery gases” IOW not the gasoline, diesel, jet fuel and other heavier hydrocarbon chains. In reality not only is future plastics production NOT going to be constrained by decreased oil production the increase in lighter oils such as from the shales yield a much higher % of refinery gas, such as ethane (which is also a significant component of NG from shales such as the Marcellus).

    And this increases has led to tens of $BILLION being spent on ethane crackers that produce ethylene. Ethylene is the most commonly produced petrochemical. It is the root chemical for a kingdom of plastics, resins, adhesives and synthetic products used in virtually every aspect of modern life.”

    Bottom: a decrease in future oil production WILL NOT result in less plastics production. IOW it WILL
    NOT be a cure for future plastics pollution.

  7. Go Speed Racer on Mon, 11th Sep 2017 3:31 pm 

    Great big garbage fires will
    Make America Great Again.

  8. Go Speed Racer on Mon, 11th Sep 2017 7:05 pm 

    I love that cloud of black smoke
    Ya get when ya throw an old shower
    curtain onto a raging pallet fire.

    Now, the liberal way is to choke a
    whale to death with that shower curtain.

    But the conservative way is make energy
    and smoke out of it.

    And no whale will ever choke, on an
    old shower curtain that’s been burnt up
    in a big black cloud of stinky smoke.

Leave a Reply

Your email address will not be published. Required fields are marked *