The Real Cost of Raw Resin

Whether we like it or not, we live in a world that is dominated by plastic. It plays a part in all the tools we use in our daily lives from our cars and bicycles to our televisions and computers. Everywhere we turn, there’s plastic in something. So how exactly did plastic become so pervasive as our go-to material? Well a lot of it has to do with cost. Commodity plastics are currently priced between $0.51 - $1.75 per pound (depending on the resin and grade needed) based on pricing provided by Plastic News, which is significantly cheaper than other raw materials, so switching from metal to plastic in some industrial components can save manufacturers lots of money.

On the surface, these affordable prices are extremely attractive to anyone looking to save costs, but what that also means is that we may be taking these resources for granted. What these prices don’t factor in is the environmental cost of producing plastics. The plastic synthesis process has a significant environmental effect, and the market is grossly subsidizing that cost by ignoring these calculable impacts. So what would happen if the price of plastic reflected its true cost? Would plastic producers, waste collectors, and end users treat these materials differently? Before we can make that call, let’s first find out how much plastic really costs.

The Process

Let’s first go over the different steps in the process of creating plastic before we start analyzing the cost of each step. The process of creating plastic can be found and easily understood thanks to the Plastics Industry Association.

First and foremost, we start the process off with petroleum-based raw materials such as oil, natural gas, and biogas. These materials are refined into ethane and propane.

The ethane and propane go through a process of “cracking” which converts them into monomers like ethylene and propylene using high heat.

The ethylene and propylene are combined using a catalyst to create a polymer powder.

Then the powder is fed into an extruder and pelletized so that we end up with plastic pellets to be used for manufacturing.

Calculating petroleum usage

According to the U.S Energy Information Administration, 5,577,090 barrels of petroleum are cracked per calendar day, that’s 234,237,780 gallons of petroleum!

In order to determine the “cost” of the petroleum being used here, we use a concept known as environmental externality, which refers to the environmental effects of production that aren’t compensated in the consumer cost. So let’s figure out what the environmental externality cost of all this petroleum is. Based on a government study that was conducted by the Western Regional Biomass Energy Program in 1994, the environmental externality cost per barrel of petroleum is $45. If we account for U.S. inflation, the environmental externality cost of petroleum would be roughly $83.58 per barrel in 2020, so the process of cracking costs $466,133,182.20 per day!

According to the American Chemistry Council 193,972,000 pounds of plastic is synthesized every day, so if we divide the externality cost of the barrels of petroleum processed across the pounds of plastic that gets made every day, we can estimate that each pound of plastic costs an additional $2.40.

Adding this externality cost to the current price of plastics leaves us with a roughly 130-470% price increase.

So imagine if a case of bottled water, which you could probably find at your local grocery store for about $4, cost $16 instead. Would you think twice about tossing each bottle straight into the garbage?