Global demand, inexpensive natural gas are increasing domestic plastic production

Low U.S. natural gas prices have helped increase domestic plastic production after a decline from the 2008 recession. Because many U.S. plastic manufacturers use natural gas as their primary fuel source and natural gas-sourced liquids as a feedstock, continued low prices for those resources could boost raw plastic exports, given higher foreign energy prices.

The United States supplies raw plastics, sometimes called resins, to domestic makers of plastic products, such as food packaging and toys. Raw plastics are also exported. During the economic downturn in 2008 and 2009, U.S. production of plastic products declined further than raw plastic production, and has been slower to recover. Demand for raw plastic from other parts of the world, such as China, remained strong, keeping U.S. plastic resin production from falling further and enabling it to recover faster. Given the inexpensive and versatile nature of polyethylene and polypropylene plastics, demand for these plastics grew rapidly since the late 1990s, both domestically and abroad.

The plastics industry includes the production of bulk plastic resin (often as pellets) as well as the production of plastic products that are sold commercially, such as milk jugs and toys. Plastic resin production is one of the largest energy consumers in the manufacturing sector, estimated to consume almost a quadrillion British thermal units (Btu) in 2010 for fuel and non-fuel uses, and providing nearly $84 billion of shipments in the U.S. economy in 2011. The energy required to make plastics has decreased markedly since 2002, suggesting some efficiency improvements in plastic production, along with structural changes, such as new products or technological advances.

Principal contributor: Elizabeth Sendich