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Peak Cheap Oil: Wither Plastics?

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  • Peak Cheap Oil: Wither Plastics?





    Plastic

    A Toxic Love Story

    By Susan Freinkel

    (Houghton Mifflin Harcourt; 324 pages; $27)

    Before the Second World War, worldwide consumption of plastic was practically negligible. Today, we consume 600 billion pounds of it each year. We've made more of it in the past decade than in all the years that preceded it. There is plastic in your car, in your clothes, in your children's toys; odds are there are traces of it in your body. The story of how this material of our own invention has come to invade every aspect of our lives - sometimes for better, often for worse - is the subject of San Francisco writer Susan Freinkel's new book, "Plastic: A Toxic Love Story."

    The challenges of writing a book such as this one are made clear in its appendix. Titled "Cast of Characters," it tabulates the book's dramatis personae - a handy cheat sheet for any reader of a saga spanning multiple decades and continents. But in "Plastic," the characters have an array of names to rival those in the most confounding Russian novel: polyethylene, polystyrene, polyurethane, polycarbonate, polypropylene and so on.

    Freinkel's central challenge is to make this cast of polys vivid. Fortunately, she has struck upon an ingenious organizational scheme: Each chapter tells the story of a particular object, its history and its significance. An exploration of the plastic comb, one of the oldest incarnations of the material, serves to introduce us to the aura of pure promise that surrounded plastic like a halo in its early years.

    Plastic was the material to liberate us, in more ways than one. To the conservationist, it spared us the need to hunt more ivory or tortoiseshell; to the democrat, it brought abundance and even a kind of opulence to the lower classes; to the feminist - or, at least, postwar readers of women's magazine's like House Beautiful - it meant an end to entire subsets of household chores. "Plastics are here to free you from drudgery," chirped that magazine in 1947, a sanguinity it maintained in 1953, when it promised: "You will have a greater chance to be yourself than any people in the history of civilization."







    A meditation on the Frisbee serves to explore how plastic became "the medium of play." Another chapter examines how the same material can at once be saving our lives and potentially doing our endocrine systems harm. An investigation of the disposable lighter is an occasion to criticize the idea of single-use products and to vividly render the severe problem of ocean-borne debris. The plastic bag offers a window into recent political battles over plastic, while the plastic bottle prompts a romp through the convoluted world of recycling (most plastics recycled in San Francisco, we learn, end up being processed in China).

    When you write about something so ubiquitous as plastic, you must be prepared to write in several modes, and Freinkel rises to this task: Sometimes "Plastic" is a work of cultural history; sometimes, a work of business reporting; sometimes, an environmentalist screed. Where Freinkel is perhaps most at home is as a science writer. She manages to render the most dull chemical reaction into vigorous, breathless sentences like this one: "I tried to imagine the molecules roller-coastering through the three-quarter-mile-long circuit of pipe, pulling closer and closer together, lining up, forming new bonds, gaining weight and mass until they dropped out of their airy gaseous state and pooled into a liquid resin."

    Freinkel's cheeky "Cast of Characters" notwithstanding, molecules, of course, aren't the only figures in her book. As her subtitle, "A Toxic Love Story," suggests, there are people, too: the other end of this troubled tale of love. Freinkel manages to ferret out some of the odder plastic enthusiasts, living and dead: the factory worker who feels a surge of pride each time he encounters a Ziploc bag, the homeless scavenger whose philosophical system combines Buddhism and paranoia, the married couple who fell in love over a shared passion for making art from plastic litter, and the Frisbee mogul who had his ashes molded into the toys his company made ("He wanted to come and rest on a roof somewhere, just out of reach, so he could bathe in the sun," says an admirer in remembrance).

    Yet if there is something pathological in the way these people relate to plastic, it is only emblematic of a species-wide pathology. The central thesis of Freinkel's book is that while our relationship with plastic is a deeply flawed one (a toxic one, even), it's also one from which we have benefited greatly, and one we might yet manage to fix. Closing with the image of a New Jersey bridge - an actual, enduring, functional unit of infrastructure - constructed of recycled plastic, Freinkel entreats us to show the archaeologists who will judge us years hence "that we were a people with the ingenuity to make wondrous materials and the wisdom to use them well."

    http://sfgate.com/cgi-bin/article.cg...RV9C1J1VUF.DTL



    love him or hate him, there was only one Norman . . . .

  • #2
    Re: Peak Cheap Oil: Wither Plastics?

    I have been wondering for a time if investing in plastic producing companies could not be a good Peak Oil investment. The logic: if the price of oil increases the price of plastic will increase, and we cannot weane ourselves easily out of plastic. The flaw: I really know almost nothing about plastic fabrication and therefore have not executed the investment. However, if you look at the stock of companies like DOW, DD or POL, for example, you can see that, generally speaking, they have done better than the S&P index for the last couple of years, at least.

    If someone knows more than me (which is not difficult at all) and can tell me whether plastic companies could be a good PCO play, and why, I'd appreciate it. My two ideas for PCO investment: plastic and beer (beer being a good antidepressant).

    Comment


    • #3
      Re: Peak Cheap Oil: Wither Plastics?

      Originally posted by Alvaro Spain
      I have been wondering for a time if investing in plastic producing companies could not be a good Peak Oil investment. The logic: if the price of oil increases the price of plastic will increase, and we cannot weane ourselves easily out of plastic. The flaw: I really know almost nothing about plastic fabrication and therefore have not executed the investment. However, if you look at the stock of companies like DOW, DD or POL, for example, you can see that, generally speaking, they have done better than the S&P index for the last couple of years, at least.
      Well, you can look towards gasoline refiners as proxies.

      I don't believe, however, that gasoline refiners are doing well at all despite the combination of absolutely necessary gasoline, insufficient refinery capacity in some regions of the world, and high gasoline prices.

      Why would plastics manufacturers be different?

      Comment


      • #4
        Re: Peak Cheap Oil: Wither Plastics?

        Originally posted by c1ue View Post
        Well, you can look towards gasoline refiners as proxies.

        I don't believe, however, that gasoline refiners are doing well at all despite the combination of absolutely necessary gasoline, insufficient refinery capacity in some regions of the world, and high gasoline prices.

        Why would plastics manufacturers be different?
        Thank you for your suggestion. In fact, I have just taken a quick look at the stock quotes of some gasoline refineries, such as Valero or Connacher, and their stock valuation is way higher than in 2001. It is true that they, as a group, appear to have suffered a massive bubble in the years 2004-2008, though. In any case, if we consider a decade long time span they have maintained their value better than SPY.

        Why would plastics manufacturers be different? Here lies the connundrum. Perhaps plastics can be made out of natural gas (I don't really know much about all this), which, in EJ's word, is undervalued right now.

        Also, the reaction of people with respect to high gasoline prices is probably different than to high plastic prices. High plastic prices get passed to consumers by producers. Regular people won't notice them or be able to deffend themselves against them.

        Disclaimer: I don't really know what I am talking about. I am sorry if I am sadly mistaken.

        Comment


        • #5
          Re: Peak Cheap Oil: Wither Plastics?

          Originally posted by Alvaro Spain View Post
          the reaction of people with respect to high gasoline prices is probably different than to high plastic prices. High plastic prices get passed to consumers by producers. Regular people won't notice them or be able to defend themselves against them.
          Consumers defend themselves against high gas prices.

          I'd like to see that.

          Where's it playing

          Comment


          • #6
            Re: Peak Cheap Oil: Wither Plastics?

            Originally posted by Alvaro Spain
            Why would plastics manufacturers be different? Here lies the connundrum. Perhaps plastics can be made out of natural gas (I don't really know much about all this), which, in EJ's word, is undervalued right now.

            Also, the reaction of people with respect to high gasoline prices is probably different than to high plastic prices. High plastic prices get passed to consumers by producers. Regular people won't notice them or be able to deffend themselves against them.
            It is possible, but I think the price of packaging as oil increases becomes a more and more significant part of product cost - and thus will get 'managed' by goods producers.

            Certainly in the bottled water world the price of PET is becoming much more significant a component in the product's wholesale cost.

            Comment


            • #7
              Re: Peak Cheap Oil: Wither Plastics?

              Originally posted by don View Post
              Consumers defend themselves against high gas prices.

              I'd like to see that.

              Where's it playing
              In Europe, of course, where most people live in downtown and in the last year are using more often public transportation, which in many european countries is high quality.

              Comment


              • #8
                Re: Peak Cheap Oil: Wither Plastics?

                Originally posted by Alvaro Spain View Post
                I have been wondering for a time if investing in plastic producing companies could not be a good Peak Oil investment. The logic: if the price of oil increases the price of plastic will increase, and we cannot weane ourselves easily out of plastic. The flaw: I really know almost nothing about plastic fabrication and therefore have not executed the investment. However, if you look at the stock of companies like DOW, DD or POL, for example, you can see that, generally speaking, they have done better than the S&P index for the last couple of years, at least.

                If someone knows more than me (which is not difficult at all) and can tell me whether plastic companies could be a good PCO play, and why, I'd appreciate it. My two ideas for PCO investment: plastic and beer (beer being a good antidepressant).
                I disagree with this logic.

                If the price only rises due to increases in the cost of raw materials, how does the manufacturer increase their profit? They are simply passing along their increased costs to the consumer. I don't see how this improves their margins.

                While there may not be perfect substitutes for some plastic products, there are definitely some substitutes.

                If anything, this sounds like a chance to invest in glass bottle manufacturers or paper products although nearly everything is made using oil in some way or another.

                This is only my opinion and is a very simplistic way of analyzing the situation so take it for what it's worth. I think beer is a much safer bet.

                Comment


                • #9
                  Re: Peak Cheap Oil: Wither Plastics?

                  If anything plastic companies would be hurt by all this. Raw material prices can be passed along, but they risk consumers seekin cheaper alternatives. "Paper or plastic ma'am?"

                  Comment


                  • #10
                    Re: Peak Cheap Oil: Wither Plastics?

                    Originally posted by DSpencer View Post
                    I disagree with this logic.

                    If the price only rises due to increases in the cost of raw materials, how does the manufacturer increase their profit? They are simply passing along their increased costs to the consumer. I don't see how this improves their margins.

                    While there may not be perfect substitutes for some plastic products, there are definitely some substitutes.

                    If anything, this sounds like a chance to invest in glass bottle manufacturers or paper products although nearly everything is made using oil in some way or another.

                    This is only my opinion and is a very simplistic way of analyzing the situation so take it for what it's worth. I think beer is a much safer bet.
                    Disagreement is welcome. I am no economic analyst at all. Just a common man trying to protect his savings.

                    Beer is a good bet and you have only to look at the stock quotes of companies like HINKY or BUD, beating SPY by an ample margin. My logic for beer is: depression (or PCO) makes depressed people, and beer helps. I don't drink beer myself. I am just a natural therapist and know about the value of beer.

                    My other logic: if the price of plastic increases the manufacturer increases his margins (out of greed, so to speak), and tells his customers that the new higher price is due solely to the plastic hike. This logic might not sound orthodox from an economy point of view but I have seen it applied again and again in the real world. Perfect competition and rational markets are, from my point of view, popular delusions.

                    Another possibility, the manufacturer of plastic has locked future supplies of oil at a good price, but sells his items at the current price of oil.

                    Comment


                    • #11
                      Re: Peak Cheap Oil: Wither Plastics?

                      They are simply passing along their increased costs to the consumer.
                      And slowly the consumption of the product goes down.

                      Most of the containers for milk that I see are paper, beer primarily glass with aluminum being next.

                      Comment


                      • #12
                        Re: Peak Cheap Oil: Wither Plastics?

                        Originally posted by Shakespear View Post
                        And slowly the consumption of the product goes down.
                        Of course (assuming that incomes don't rise sufficiently) but, if I may ask, of which product? Perhaps not the product whose price has been increased, but another one, perceived as less important to the consumer, with or without any price increases.

                        FWIW, I did never say that beer or milk used any plastic.

                        Comment


                        • #13
                          Re: Peak Cheap Oil: Wither Plastics?

                          Originally posted by Alvaro Spain View Post

                          My other logic: if the price of plastic increases the manufacturer increases his margins (out of greed, so to speak), and tells his customers that the new higher price is due solely to the plastic hike. This logic might not sound orthodox from an economy point of view but I have seen it applied again and again in the real world. Perfect competition and rational markets are, from my point of view, popular delusions.

                          Another possibility, the manufacturer of plastic has locked future supplies of oil at a good price, but sells his items at the current price of oil.
                          1. This is a possibility. Basically the same situation with health insurance costs regarding the effect of the PPACA "obamacare". Ins. companies used the PPACA to increase costs in excess of what the legislation was likely to actually cost them. This probably worked especially well given that it was well known and the ins. companies probably used it as an unspoken form of price collusion.

                          I still think there are enough differences regarding demand, # of firms involved, and possible substitutes to make that a very risky bet.

                          2. If you can find the right company this could be a very good play. Basically try to find out which plastic company shares your concerns about PCO and has a contracted oil price. If I recall this is the strategy that Southwest airlines used to their advantage a few years ago.

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