Rising oil prices could affect thousands of products, including polypropylene sacks

Rising oil prices could affect thousands of products, including polypropylene sacks

22:14 - 09/03/2022

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It is predicted that, when there is a war, if Russia is subject to an embargo, Russian oil will not be brought to the market, causing the world oil price to skyrocket, but polypropylene is derived from oil to produce polypropylene sacks, then of course it will also have a huge impact on manufacturers of plastic products.

American drivers were in for another unwelcome surprise at the pump Monday. The national average for a gallon of gas rose about 5 cents overnight to $4.065, an astonishing 46 cents higher than it was only a week ago, according to AAA, and only a nickel shy of the record set in 2008. 

With the war in Ukraine escalating and talk of the U.S. imposing sanctions on Russian oil, the price of West Texas Intermediate crude — the U.S. benchmark — topped $120 a barrel Monday afternoon. Andrew Lipow, the president of Lipow Oil Associates, said traders were steering clear of Russian oil ahead of a possible embargo. “What you see is that the oil industry is imposing a de facto ban on oil from Russia, so, in essence, that takes oil off the market,” he said. 

Climbing prices at the pump are the most visible reminder of the rising cost of oil. But what people can’t see is also costing them. Petroleum derivatives hide in thousands of everyday goods and household products, from microfiber to moisturizer to medicine. Their prices are rising, too.

“Petroleum is at the root of so many different products, from makeup to plastic bags to fertilizer,” said Patrick DeHaan, the head of petroleum analysis at GasBuddy. “You can’t escape the use of oil.”

About 60 percent of global oil consumption is in the form of fuel. Much of what remains goes into a staggering array of products and household goods, many of which don’t have obvious connections to oil. 

Shoes and handbags made from vegan leather, for instance, are petroleum-based. So are nylon stockings, microfiber fleece and all sorts of other clothing made from synthetic materials. “If you wear eyeglasses, the cost of polycarbonate lenses just went up,” Lipow said, adding that he believes prices will go up on almost all goods with oil connections. 

Everything made out of — or packaged in — plastic will be more expensive. “A lot of plastics are made with polypropylene or polyethylene, and the basic building blocks of those are propane and ethane,” said Stewart Glickman, an energy equity analyst at CFRA Research. “Those typically are a percentage of the price of a barrel of oil.” The polypropylene sacks are manufactured entirely from virgin polypropylene.

Polypropylene sacks

Polypropylene sacks

Glickman said consumers can expect to pay more for smartphones, computers and TVs — all of which have plastic parts. And car prices are likely to stay in the stratosphere for longer. They don’t just run on gas — petroleum is a building block in tires to plastic body panels to foam seat cushions.  

Rising oil prices will also show up at the grocery store. “The agricultural industry is in the higher-impact segment,” said Faisal Hersi, an energy analyst at Edward Jones. Industrial fertilizer contains fossil fuels, so more expensive fertilizer means higher prices on grains. That has its own impact; plus it also gets passed on to customers when they put meat, eggs or dairy products in their carts.”

Also affected: the health care industry. Nearly all pharmaceutical raw materials and reagents are petrochemical-based. Consider the average medicine cabinet: Burn ointment, cold and allergy pills, gummy vitamins, adhesive bandages — even some condoms — are made with oil. 

If it’s made of particleboard, the medicine cabinet itself may be on the list. Oil is part of many building materials and furnishings, including asphalt roof shingles, plywood and shag carpet. “If you are buying furniture or insulation, the polyurethane that it is made from is going up in price. So are epoxies and adhesives,” Lipow said.

Tom Kloza, the global head of energy analysis for Oil Price Information Service, said, “Another thing you don’t think about is there’s a building boom right now.” That means even higher inflation on materials and machinery used in construction and infrastructure projects. 

Lipow said asphalt, for instance, tends to make up 15 percent to 25 percent of the cost of a paving project.

Kloza said that as filling potholes and fixing roads gets more expensive, “it’s going to cost more to move from Point A to Point B for everything.”.

But it may be a little less painful to watch. Unlike gas prices, which are rarely out of view, analysts say, prices on many of those other products will creep up over weeks or months. And until you’re in the market for another pair of vegan leather shoes, you might not notice. 

And of course, the price of polypropylene sacks will also increase significantly in the near future, due to the volatile political situation, plastic manufacturers have stocked a lot of virgin polypropylene to serve their plans. production planning in times of worldwide crisis.

Source: Collector