Warning for oil industry: Future may not be plastics after all
Petroleum industry advocates have been trying to soothe investors’ worries over peak demand for transportation fuels by insisting that plastics and petrochemicals promise long-term growth.
Based on what I saw on vacation in India and London, though, they shouldn’t be so sure.
Luxury hotels in four Indian cities refused to provide bottled water, insisting that customers should trust their reverse osmosis machines instead. Every park had a sign declaring “No Polythene Allowed.” Lightweight fabric bags were common, and plastic shopping bags were difficult to find.
After years of watching plastic create social and environmental problems, people are shunning it.
India’s Ministry of Environment, Forest and Climate Change has banned all plastic bags thinner than 50 microns. The state of Sikkim has banned polystyrene foam food containers, while Karnataka state has banned all plastic bags, ban-
ners, buntings, flags, plates, cups, spoons and cling films.
London has also launched an anti-plastic campaign, with businesses proving their green bona fides by refusing to offer single-use containers. Bottled water and plastic bags are still common, but front-page stories about scientists finding 115 plastic cups in a dead sperm whale’s stomach topped social media sites last week.
Environmentalists have long complained about single-use bottles and bags, but governments and the public are finally taking note. Dozens of nations, including China, have placed strict limits on single-use products.
Nevertheless, the oil and gas sector is predicting demand for plastics and chemicals will skyrocket, and more than make up for shrinking demand for gasoline and diesel after 2030.
“Petrochemicals are set to account for more than a third of the growth in world oil demand to 2030, and nearly half the growth to 2050, adding nearly 7 million barrels of oil a day by then,” the International Energy Agency said in a report titled “The Future of Petrochemicals.”
Demand for plastics has doubled since 2000, the IEA reports. Oil and gas companies have spent hundreds of billions of dollars developing petrochemical plants around the world to meet the growing demand for ethylene, the building block of plastic that comes from ethane.
Low natural gas prices have brought more than 40 percent of the global ethane-based petrochemical production capacity to the United States, much of it along the Gulf Coast. That explains why the U.S. is the only major industrialized country without a national policy to wean consumers off single-use plastic products.
This financial interest in plastic also explains why Texas lawmakers have overturned plastic bag bans imposed by municipal authorities.
Sadly, the oil and gas industry has a long history of overlooking consumer sentiment. Executives consistently overestimate future demand for gasoline, and I suspect they are making the same mistake with plastic.
When consumer perceptions shifts, though, so does the market.
In the 1970s, scientists discovered that chlorofluorocarbons used in aerosol cans were eroding the planet’s ozone layer, which protects living things from ultraviolet light. People trusted scientists back then, and enough of us stopped using aerosols that corporations developed safer alternatives.
Politicians also trusted scientists, and the U.S. led negotiations for a global ban on most chlorofluorocarbons. The ozone layer has since improved. Imagine that, world leaders successfully addressing a global problem.
Today, two challenges face humanity: climate change and plastic pollution. Whether it is microbeads tainting drinking water, a plastic garbage island three times larger than France, or thin-film bags clogging storm drains and causing flooding, plastic pollution is worsening by the minute.
The world generates 300 million tons of plastic a year, half of it used to make single-use products, according to industry statistics. The IEA estimates that 10 million tons end up in the ocean.
If oil and gas companies plan to rely on petrochemicals for their future, they need to discourage pollution before governments impose more regulations.
Recycling is part of the answer. The National Association for PET Container Resources and the Association of Plastic Recyclers report that last year Americans recycled an all-time high of 29.2 percent of plastic produced.
The IEA, though, says recycling rates need to double. Companies will need to find new ways to inexpensively use recycled plastic material to encourage markets for recycled plastic.
The smarter move, and the only one with real impact, is to slash manufacturing of single-use products. But that will also diminish the demand for plastic that oil and gas companies say will keep them profitable.
Consumers recognize the threat that plastic pollution poses to their well-being. Oil and gas companies should recognize the threat to their bottom line.
The world generates 300 million tons of plastic a year, half of it used to make single-use products, according to industry statistics.