Big Oil Frets Over Demand for Plastics

The sector needs production of the material to rise to offset a decline in appetite for transport fuel

- Carol Ryan

"One word: plastics." Career advice given to Dustin Hoffman's aimless character in "The Graduate" turned out to be pretty solid.

Since the film's 1967 release, global plastic use has risen twentyfold. But the plot is thickening just as Big Oil grows dependent on the wonder material.

As people switch to electric cars, or at least buy more fuel-efficient versions of traditional vehicles, energy companies will have too much oil on their hands.

Transport currently accounts for over half of global oil demand.

Ciarán Healy, an oil market analyst at the International Energy Agency, points out that even without a further uptick in EV sales, efficiency improvements in internal combustion engine cars mean the same amount of driving will be done with less gas in the future. The IEA thinks the world is on track to have eight million barrels a day of excess oil capacity by 2030.

Energy companies hope consumers will soak up the glut through their clothing, food and electronic goods. Exxon Mobil expects demand for products that have fossil fuel-derived components and shells like "cellphones and medical supplies, as well as products necessary to preserve food and improve hygiene" to increase. London-listed BP thinks growth in petrochemicals will offset fuel declines for another decade.

Crude oil and natural gas are turned into petrochemical feedstocks such as naphtha or natural gas liquids in a gas-processing plant or at an oil refinery. They are then "cracked" into the building blocks of common plastics.