Progressives Loathe Oil And Gas, But Modern Life Would Stop Without Them
What would a world without oil and gas look like? We’re getting a preview: surging prices for food and other everyday goods.
Oil and natural gas aren’t needed to only generate energy. They’re also critical for an array of products including face masks, diapers, and vegan leather.
Consider fertilizer, which is produced using hydrogen from natural gas (the molecule CH4). Natural gas accounts for about 75% to 90% of fertilizer production costs. [bold, links added]
Russia and Belarus are large producers, and uncertainty about sanctions has reduced their exports.
But skyrocketing natural gas prices in Europe have also pushed fertilizer producers such as Norway’s Yara and Hungary’s Nitrogenmuvek to curtail production. Some suspended operations last fall when Russia slowed natural-gas deliveries.
As a result, fertilizer prices last month hit a record. Many farmers are scaling back land in cultivation. Some say they plan to use less fertilizer, which could reduce crop yields. Others are switching from planting corn and wheat to soybeans, which require less fertilizer.
The fertilizer shortage couldn’t have come at a worse time. The war is disrupting grain shipments from Russia and Ukraine, which account for a quarter of global wheat exports.
Wheat prices last month hit a record. While Americans will have to pay more for cereal and pasta, Africans could experience severe food shortages.
At the same time, food manufacturers report that the cost of plastics for containers and packaging is soaring. Plastics are made from oil and natural gas, which are in short supply globally.
Hydrocarbons known as natural-gas liquids are used as feedstock for petrochemical plants.
Ethane (C2H6) is isolated from natural gas and then processed into ethylene, which is converted through a chain of chemical reactions into polyethylene—the most common plastic in use today, found in shopping bags, water bottles, catheters, and even bulletproof vests.
U.S. shale fracking produced a gusher of natural gas liquids including ethane. As a result, the cost of plastic feedstock plunged and petrochemical investment exploded.
Ethane prices today are about half of what they were in 2011, though they crept up this past year as demand increased.
In 2018 the American Chemistry Council estimated that 333 chemical-industry projects valued at more than $200 billion had been announced since 2010.
With so much gas from shale fields, the U.S. in 2015 became the world’s top exporter of ethane, surpassing Norway.
One little-appreciated fact is that some cheap plastic products imported from China are made from ethane fracked in the U.S.
Overseas petrochemical plants also use petroleum-based hydrocarbon naphtha as a feedstock. Russia is a major exporter of naphtha, but fracking has made low-cost American ethane more globally competitive.
Another common byproduct of natural gas processing and oil refining is polypropylene. There’s a good chance you’re wearing something with polypropylene.
It’s in iPhone cases, fitness apparel, and female sanitary products. Early in the pandemic, Exxon Mobil tapped its petrochemical supply chain to ramp up polypropylene production for face masks.
Polypropylene is also often used in appliances, medical sutures, food containers, furniture, and plastic drinking straws. Progressives in places like Seattle and San Francisco have banned single-serve plastic straws.
Yet they mandated face masks, which are made from the same raw material. Surgical masks are now among the most common kinds of litter in California, especially near schools.
The inconvenient truth for progressives is that petrochemicals are ubiquitous and indispensable. Replacing oil and gas as an energy source poses enormous technological challenges.
Replacing them as a product feedstock would be next to impossible. As much as progressives loathe fossil fuels, they can’t live without them.
Drive an electric car or ride a bike? Streets are paved with asphalt, which is made from petroleum bitumen. The cost of asphalt, by the way, is also soaring in tandem with oil prices.
Russia’s invasion of Ukraine has highlighted how even a modest decline in the supply of oil and gas can send prices for energy and raw materials soaring.
Government policies that restrict oil and gas production won’t only increase energy prices. They will raise prices and lead to shortages across the economy. Welcome to the wonderful world without oil and gas.
Read more at WSJ
Trackback from your site.