Oil companies’ diversification into petrochemicals may not go to plan

debate the future of transport fuels. That of petrochemicals—used to make everything from plastic packaging to paint—has seemed unequivocally bright. The International Energy Agency , an industry forecaster, expects them to account for half the growth in oil demand from 2019 to 2025. Better yet, America’s shale boom has furnished cheap feedstock in the form of natural gas. ExxonMobil is spending $20bn on chemical and refining facilities along America’s Gulf Coast, near Texas’s Permian basin.

On paper, the allure of petrochemicals remains strong. If the internal-combustion engine falls out of favour, the thinking goes, even sanctimonious environmentalists will still purchase polyester camping tents and synthetic sandals.

The trouble is that too many big oil companies are making the same bet. Last year the increase in ethylene capacity was 60% higher than the rise in ethylene demand, according to theThe subsequent decline in ethylene prices had little impact on companies’ strategies.

The pandemic does mean that oil companies have less cash for new projects. Cheap oil is also benefiting naphtha crackers in Asia, which produce chemicals from crude, and eroding the advantage of American ethane crackers, which rely on gas. Even so, the coronavirus looks unlikely to sap individual oil firms’ enthusiasm for petrochemicals. . Converting ethane to ethylene is still profitable, says Alan Gelder of Wood Mackenzie, an energy-research firm, “just not as profitable as some hoped”. For many oil companies facing sceptical investors and an upstream business with uncertain short- and long-term prospects, petrochemicals have the dubious honour of being among their least bad options.

In Japan,on July 1st plastic shopping bag will be charged! It’s silly policy that goes against the trend of the world during the pandemic.

Hooray!!

Remember in the Graduate he was told to get into 'plastics.' True then and still true today. Not sure where we stand about getting 'into' Mrs. Robinson, then or now.

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