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Plastics hit by oil price hikes, supply shortfalls

The impact of high oil prices doesn't stop at the petrol pump

CHRIS CLARK: Paying $1.10 for a litre of petrol is bad enough, but the impact of high oil prices doesn't stop there.

When oil goes up, so does the cost of another of life's essentials, as Stephen Long explains.

STEPHEN LONG: When it comes to rising oil prices, this is only part of the story.

Plastic comes from oil -- and plastic is everywhere.

You may think of plastic as cheap, but it's cheap no longer.

NOEL WILLIAMS, MANAGING DIRECTOR, DOW CHEMICAL: Prices of plastics have moved from maybe a year to 18 months ago from a $700 level up to $1,500 a tonne in US dollars and that's been across the board on just about all the plastics.

STEPHEN LONG: To make matters worse, demand for plastic is outstripping supply and industry heavyweights like Noel Williams say that will mean higher prices on the shop floor.

NOEL WILLIAMS: I would say over the next 12 months you will see that general consumer products will show that elevated price.

STEPHEN LONG: It's wall-to-wall plastic at the pharmacy and chemist Bob Grant is bracing for price hikes.

BOB GRANT: Oh, I think there's no doubt it would have a cost impact.

STEPHEN LONG: If you think above US$50 a barrel of oil is bad, try US$120.

That's what the world could be facing, if you believe some experts who say that production has either peaked now or will do within 10 years.

And the knock-on effects would flow on to plastics and many chemicals.

Greg Bourne has looked at fuel from both sides now.

He used to be the regional president of the energy giant BP and he's now the Australian head of the World Wildlife Fund.

He says society needs to begin conserving petroleum for essential products.

GREG BOURNE, WORLD WILDLIFE FUND: To me, it is an absolute certainty that we are heading into a carbon-constrained future and we need to be doing things about it now.

STEPHEN LONG: But it may take a little more 'price pain' before people ditch their big gas-guzzlers.

JOHN CONOMOS, CHAIRMAN, TOYOTA AUSTRALIA: Until they get to $1.20, sustainably around $1.20, we don't think there'll be change in buying pattern by consumers in the general sense.

STEPHEN LONG: Whether rising prices for plastics will stop people bending the plastic remains to be seen.

Editorial Notes: Though very brief, article does mention the case for supply peak, and controlling the use of resource, without going straight into 'balanced' denial. -LJ Original title: "The impact of high oil prices doesn't stop at the petrol pump".

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