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Concentration of CO2 in the Atmosphere

The Plastics Production Surge

Refinery in Anancortes, Washington. Mt Baker is in the background. Photo: Walter Siegmund, Wikimedia Commons http://bit.ly/2uhVLJu.

George Harvey

Looking through the news on energy recently, I came across an article at CNN with the title, “Exxon’s Market Value Has Crumbled By $184 Billion.” (https://cnn.it/37JUisS) It said ExxonMobil stock was down 41% from its high in 2014.

This was interesting, but focusing on one company never tells a complete story. With that in mind, I took a look at the Dow Jones Oil & Gas Index to see whether Exxon was really all that much worse than the rest of the companies in the sector. I was a little surprised to find that a 41% decline was actually a little better than average. Regardless of what many people may think, most petroleum producers seem to be in trouble.

The situation is partly a product of their success with fracking and mining oil shale. Operations in those two areas have been so successful, in terms of volume, that oil and gas prices are at very low levels. Unfortunately for the oil and gas people, neither fracking nor shale mining is all that cheap, and the low prices are often below production costs. The more oil and gas they produce, the faster they lose money.

This situation is getting even more complicated because of climate change. Whole major corporations and whole countries are committing to ending use of fossil fuels. And as a result, in the midst of a supply glut and low prices, ExxonMobil and its competitors are operating in a market that is being reduced in size intentionally.

There are a number of ways for them to deal with this. A company called Danish Oil and Natural Gas, once commonly called “DONG,” provided us with one example of a solution. DONG rebranded itself as Ørsted, sold off its assets relating to fossil fuels, and started specializing in developing offshore wind farms. Today, Ørsted is one of the most successful offshore wind developers in the world and has made itself pretty much impervious to fossil fuel downturns, because it has no petroleum assets at all.

Many companies, however, lack that kind of foresight. A completely changed business plan is beyond their capacities, so they try to find the next best out. In many cases, they have decided that the best approach to a contracting market is to create a new market. If they cannot sell oil or natural gas, they will sell chemicals made from oil or natural gas. The most obvious large market for those chemicals is probably plastics.

An article on an expected increase in plastics production, “The Plastics Pipeline: A Surge of New Production Is on the Way,” was published by Yale Environment 360. (http://bit.ly/2HAvFUY) It explains why the world will soon be “awash in plastic.”

Your reaction to this might be something like, “Wait a minute! The world is already awash in plastics!” If so, then I would say your feelings on the subject may be healthy. But please understand that while things are getting really bad, they could get much, much worse. And while the fossil fuel giants might not actually wish the world to be a worse place, they are acting as though having too much plastic junk in the world might be an acceptable price to pay for maintaining their own profits.

The Yale Environment 360 article makes a point that is worth passing on. It is clearly stated in a quote from Judith Enck of Beyond Plastics, commenting on the fact that many plastics facilities are still in early development. “That’s why 2020 is so crucial,” she said. “There are a lot of these facilities that are in the permitting process. We’re pretty close to it all being too late.”

It is also worth noting that the large oil and gas companies are trying to build a market in a world that already has resistance, and the resistance is growing rapidly. These companies may have a lot of money to spend, but it is not as extensive as it might appear. They are in trouble for a reason, and the reason will not just go away because they can sell ethylene for making plastics in addition to the fuels they have traditionally pushed. They are, I believe, taking a far greater chance than Ørsted took in leaving the industry altogether.

The plastics solution to the fossil fuels problem has some likelihood of complete failure. Furthermore, it is important that it fail completely for the good of the planet. And interestingly, we actually can make that happen by refusing to buy or use plastics wherever we can.

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