Something you probably didn't know about the high price of oil

[RandomGuy]

I put this here as it is illustrative of a "gee whiz" bit I read in the Wall Street Journal some months back.

Did you know that the chemical industry consumes about as much oil in one year as all the cars in the US do?

The chemical industry makes fertilizers, and household cleansers and a LOT of other things you use and buy every day. The impact of this price hike WILL be felt a few months down the road.

In true sprustalk fashion, I'm sure the thread will go off on a tangent, and probably get moved to the politics forum where it will die a slow death, but I put it here to get this interesting bit a few more eyeballs than normal.

Regards,
RG


Dow: Country in "true energy crisis"; ups prices
By JAMES PRICHARD, AP Business Writer
2 hours, 33 minutes ago

Dow Chemical Co. will raise its prices by up to 20 percent almost immediately to offset the soaring cost of energy, and the CEO of the chemical giant lashed out at Washington on Wednesday for failing to develop a sound energy policy.

Dow supplies a broad swath of industries, from agriculture to health care, and any sizable price jump would likely affect almost all of them.

The price increases will take effect Sunday and will be based on a product's exposure to rising costs. Dow said it spent $8 billion on energy and hydrocarbon-based feedstock, or raw materials, in 2002 and that could climb fourfold to $32 billion this year.

"For years, Washington has failed to address the issue of rising energy costs and, as a result, the country now faces a true energy crisis, one that is causing serious harm to America's manufacturing sector and all consumers of energy," Chairman and Chief Executive Andrew Liveris said in a statement.

"The government's failure to develop a comprehensive energy policy is causing U.S. industry to lose ground when it comes to global competitiveness, and our own domestic markets are now starting to see demand destruction throughout the U.S."

Liveris said soaring costs for Dow are "forcing difficult discussions with customers."

Midland, Mich.-based Dow Chemical makes everything from the propylene glycols used in antifreeze, coolants, solvents, cosmetics and pharmaceuticals, to acrylic, acid-based products used in detergents, wastewater-treatment and disposable diapers.

It makes key ingredients used in paints, textiles, glass, packaging and cars.

Its products are sold in 160 countries.

The company last month reported a 3 percent drop in quarterly earnings, despite a 42 percent jump in feedstock and energy costs.

Dow shares rose 30 cents to $40.53 in early trading.

[RandomGuy]

Here they go for a second time: (http://news.yahoo.com/s/ap/20080624/ap_on_bi_ge/dow_chemical_prices)

MIDLAND, Mich. - Dow Chemical Co. announced its second comprehensive price hike in less than a month to offset the "relentless rise" in costs for energy and related raw materials.

The Midland-based chemical company announced Tuesday it will raise prices by as much as 25 percent next month. That follows price increases of up to 20 percent that took effect June 1.

Dow makes key ingredients used in paints, textiles, glass, packaging and cars.

Dow said it's also adding a freight surcharge for North American customers of $300 per shipment by truck and $600 per shipment by rail effective Aug. 1. The company said it will add the surcharges in other regions later this year.

Dow also announced it's moving ahead with plans to temporarily idle or cut production at a number of manufacturing plants. Cost cuts at Dow's automotive unit includes its work force and plants in light of a North American sales decline.

Chairman and Chief Executive Andrew Liveris said in a statement that the steps are "extremely unwelcome but entirely unavoidable" as global energy costs surge.

"The price increases we announced May 28 helped, but they were not enough to fully cover the additional costs we are now facing," he said.

"Even since our last announcement, the cost of hydrocarbons has continued to rise, and that trajectory shows no sign of changing. We must restore margins in our businesses, both through price increases and the reduction of operating costs at certain production facilities."

Dow Chemical makes everything from the propylene glycols used in antifreeze, coolants, solvents, cosmetics and pharmaceuticals, to acrylic acid-based products used in detergents, wastewater-treatment and disposable diapers.

Its products are sold in 160 countries.

The company in April reported a 3 percent drop in quarterly earnings. At the time, Dow said it considered that a strong showing in the face of a 42 percent jump in feedstock and energy costs.

Shares rose 43 cents to $38.05 in premarket trading.

[Extra Stout]

RG, this was incorrect the first time you posted it. The chemical industry uses 3% of US oil. Transportation uses 69%.

[Extra Stout]

RandomGuy is full of it (http://tonto.eia.doe.gov/dnav/pet/pet_cons_psup_dc_nus_mbblpd_a.htm)

Finished gasoline: 9,290,000 million barrels per day in 2007
Distillate fuel oil (diesel): 4,220,000 million barrels per day in 2007

Petrochemical feedstocks: 642,000 barrels per day in 2007

[thispego]

yes, we're fucked, old news, call me when there's something we can do about it

[remingtonbo2001]

I'm sure there's truth to this story.

How many items are made of plastic?

That's not even counting the use of cleaners.

Plastic is widely used in the United States.

Plastic bags, cell phones, car parts, medical parts, my laptop, ect.


There's a lot shit made of plastic.

EVERY DAY.

[Extra Stout]

The production of motor vehicle gasoline consumes over 14 times as much oil as the production of petrochemical feedstocks does.

[spurs_fan_in_exile]

Well you'll be glad to hear that my wife and I use reusable canvas grocery bags and will be using cloth diapers for our children. I don't really give a damn about the environment, just want you all to know that I am better than you in yet one more way.

[remingtonbo2001]

The production of motor vehicle gasoline consumes over 14 times as much oil as the production of petrochemical feedstocks does.

Wow, look at the pretty colors.

[peewee's lovechild]

will be using cloth diapers for our children.

You are brave.

Very brave.

[thispego]

and will be using cloth diapers for our children.

for real?!? :vomit:

im sorry but if i find something with shit in it it is going in the trash

[mrsmaalox]

Well you'll be glad to hear that my wife and I use reusable canvas grocery bags and will be using cloth diapers for our children. I don't really give a damn about the environment, just want you all to know that I am better than you in yet one more way.

:lol Famous last words! Hey if you can do it :toast

[angel_luv]

Well you'll be glad to hear that my wife and I use reusable canvas grocery bags and will be using cloth diapers for our children. I don't really give a damn about the environment, just want you all to know that I am better than you in yet one more way.

I hope you have triplets twice and have a blast making the rest of us look bad. :)

[CosmicCowboy]

http://www.businessinnovationinsider.com/Dustin%20Hoffman%20plastics.jpg

Mr. McGuire: I just want to say one word to you - just one word.
Ben: Yes sir.
Mr. McGuire: Are you listening?
Ben: Yes I am.
Mr. McGuire: 'Plastics.'
Ben: Exactly how do you mean?
Mr. McGuire: There's a great future in plastics. Think about it. Will you think about it?
Ben: Yes I will.
Mr. McGuire: Shh! Enough said. That's a deal.

[RandomGuy]

RG, this was incorrect the first time you posted it. The chemical industry uses 3% of US oil. Transportation uses 69%.

How much oil does the chemical industry use for fuel, and for the energy needed to make the chemicals? (http://online.wsj.com/public/article/SB119152216982649126-xT32hjsQXMurqsELGzssnPBYgvs_20071207.html)

I may have misremembered something I read in a newspaper article a few months ago, but my guess is that you are probably underestimating the amount of oil energy used by the chemical industry here.

[Extra Stout]

How much oil does the chemical industry use for fuel, and for the energy needed to make the chemicals? (http://online.wsj.com/public/article/SB119152216982649126-xT32hjsQXMurqsELGzssnPBYgvs_20071207.html)

I may have misremembered something I read in a newspaper article a few months ago, but my guess is that you are probably underestimating the amount of oil energy used by the chemical industry here.
No, I am not. The article doesn't even say what you think it says. It says that roughly half of Dow Chemical's operating costs are tied up in fossil fuels, not that roughly half of fossil fuel usage is in the chemical industry.

The notion that a chemical company would use more fossil fuels to transport its products than the volume of the products themselves is pretty ridiculous. The article you linked even goes so far as to refute that, as it does the notion that the energy to run the plants needs anywhere near the volume of fossil fuels.

The use of oil for electrical generation or steam generation is negligible in the United States anyway. Natural gas and coal are the dominant players there.

Please, just stop the madness and retract your ridiculous assertion.

[Extra Stout]

One misleading item in the wsj article:

It says that Dow uses "the equivalent" of one million barrels a day of oil.

Petrochemical oil demand in the entire United States in only 642,000 barrels a day.

To wit:

Dow uses large amounts of natural gas in its cracking units to make ethylene and propylene. Dow also uses natural gas in the gas turbines of its cogeneration units that provide steam and electricity to the plants. When these are considered as "equivalent" to barrels of oil, it distorts the reader's understanding of just how much oil Dow is using.

In addition, Dow is a worldwide company with manufacturing facilities all over the world, and the wsj number reflects that. Their petrochemical manufacturing in the United States is concentrated in Freeport, Texas.

(If you're wondering: no, I don't work for them.)

[E20]

I recycle, so I am helping in the long run.

[Don Quixote]

Then what is that check from Dow in your purse (I mean, bag)? It says, "Extra Stout" on it. And it's alot of $$.

[Extra Stout]

Then what is that check from Dow in your purse (I mean, bag)? It says, "Extra Stout" on it. And it's alot of $$.

That is not a purse. That is a man's bag. A man can have a bag! And that check is from my friend Glenn Dow.