Odd Lots - Why the Price of Plastic Is Crashing After a Record Surge

Episode Date: December 26, 2022

Plastic is in almost everything and prices of polypropylene, polyethylene and a host of other polymers went nuts in 2021, surging to record highs. Now they've come crashing back down to Earth and have reached a two-year low. So what happened to send the price of plastics surging, and why are they falling now? Were plastics a perhaps under-appreciated source of inflation given that they go into practically everything? And where does plastic come from anyway? On this episode of the Odd Lots podcast, we speak to Bank of America Commodities Strategist Warren Russell about the wild ride for plastics over the past couple of years, and what it means for the future of the petrochemicals industry.See omnystudio.com/listener for privacy information.

Thanks for listening to Odd Lots. Follow the show on Amazon Music for more future episodes or just ask. Alexa, play the Odd Lots podcast on Amazon Music. Hello and welcome to another episode of the Odd Lots podcast. I'm Tracy Alloway. And I'm Joe Wisenthal. Joe, do you know what a nerdal is? No. Is that like something related to Wordle? Uh, no. Sounds like it. A nerdy or wordle?

A nerdle is, it's like that tiny little pellet or bee. of plastic, which is used to make bigger plastic items. Yeah, I had no idea. Yeah, it's one of my favorite words. And this episode is really just an excuse for me to say Nerdle several times. But today we are going to be talking about the plastics market, which I kind of think is an underappreciated thing in global supply chains, but also potentially in inflation. Yeah, it's super interesting because plastics are obviously huge.

They're in everything. They package everything. they're omnipresent. But I feel like we don't actually talk about plastics very much. I don't, we've never done a plastics episode. And by and large, like, when you like read the news, you know, read about commodities or things like that, I don't think there's actually much discussion about the plastics industry. Right. So I wrote a tiny bit about it in 2021. It was based off of this great Bank of America note talking about how there was this huge arbitrage opportunity that had opened up between U.S. and European and Asian plastics markets. And,

the price of plastic at the time was just going absolutely nuts, like everything at that time. Since then, it has come crashing down. So we've flipped from record high plastic prices to, I think, a two-year low. So it's kind of similar to what we've seen with a lot of commodities, a lot of different types of consumer goods, which means that we need to check in on what's going on with the market. Let's do it because, like I said, I'm kind of starting from scratch. I don't know anything. I don't know what a nerd all is, but more importantly, I really don't know anything about it, about the plastics industry at all, which is kind of indefensible for such an important part of our lives. We'll just keep saying nerdals. Okay, well, we have the perfect guest to discuss this.

We are going to be speaking with the author of that analyst report that I just mentioned. We're going to be speaking with Warren Russell. He is a commodity strategist at Bank of America, and he's going to give us the lowdown on nerds and what's going on in the plastic market right now. So, Warren, thank you so much for coming on all thoughts. Thanks for having me. So maybe just to begin with a very basic question, but when we talk about the price of plastic, what are the sort of ingredients or factors that go into that? Sure.

So, you know, the primary feedstock for this comes from oil. So when we think about the fundamental pricing of plastic, it comes down to a large degree with what's happening with oil, but there are a lot of other nuances as well with regards to capacity within the plastic space. the ability to meet demand. So is there enough capacity to meet demand? And obviously, during the last few years, we've had a bit of a challenge doing that. And so you've seen some disconnects in price between what oil is doing and what some of the plastics are doing. So talk to us a little bit more. First of all, within the broader world of petroleum consumption, you know, we think about cars,

we think about jet fuel. How big is plastics? And then talk to us about that refuel. refining component. Again, we talk about gasoline refining and we talk about diesel and all that. But in terms of the process for turning oil, petroleum into plastics, what do we talk about in terms of capacity, spare capacity? How tight is that got? Sure. So I guess I should just start with where this is all coming from. So when you drill a well, right, you've got, most people just think of gas and oil, but you actually have a broad spectrum of what we call hydrocarbons coming out of the ground. And so you'll have the very heavy viscous stuff that looks like or feels like peanut butter. And then you've got the very light stuff, which is pretty much natural gas or methane. And in between, you've got just after methane, we call it. hydrocarbon chain. So you start with methane with with one C, two C is ethane, three C is propane, and up the stream. The plastics come from the light ends of that. So you you drill a well, you're producing oil, you're producing what we call wet gas, that wet gas is separate out into different streams so you're gonna split out most of the natural gas. There'll be some ethane in that, but

it recovers some methane. That is in the U.S. is used heavily in our petcum industry. You're also producing propane and butane and what we call C5s as well. You, you know, that is a large component of the feedstock for the pet chem sector. You're also producing some of these feedstocks from the refinery, too. So, you know, you can pull those other streams. Napda, to a large degree, comes from refining, too. Can you talk to us about the types of plastics? Because there are. a bunch of different types, but they all kind of sound similar and have similar acronyms, which is a little confusing. No, I think we have, you know, a larger focus is on what we call

the poly, or at least in our mark, it's polyethylene, polypropylene. So you have these acronyms like HDPE, which is high density polyethylene. You've got low density polyethylene, LDPE. You've got linear low density. That sort of rounds out the polyethylene space. Then you've got polypropylene. which, you know, that's a polymer version of propylene, which you can talk about further. And then you've got PET, which is what we see a lot of plastic bottles made out of. That is polyethylene tarythallate. That's not how I would have pronounced that. I learned something new.

Okay. Well, I think you've got PVC, which I think most people are familiar with a polyvinyl chloride And naturally what else, polystyrene. Yeah, sure. I mean, and then there's all sorts of. And so just to be clear, all of these different acronyms, different polis, et cetera, it's just slightly different purposes. So there's, you know, you might have a plastic bottle for like a Diet Coke or something.

And then like, I don't know, what would be like the clamshell plastic like at a baker. Yeah, I mean, you can make that from one of the. blow mold, polyethylene type. This would be a good game, too. Like, just throw out items for you. Tell us what class. I think that there are. What about like my daughter's toys,

like a dollhouse or something made out of place? I guess it depends. But, you know, you can, you can pull in all sorts of things. For example, with polypropylene, you know, that goes into automotives. It goes into what we call the white glove, big ticket items. that consume these plastics that are primarily used in packaging. So the polyethylene, polypropylene, PET are largely consumed

by plastic packaging, maybe 50% or more. And then you sort of branch out into like PVC, which is heavily used in construction. Right. So the pipes in one, I think. Okay, but whether it's HDPE or LDPE or PET, or PVC or whatever. Like, it comes from hydrocarbons in the ground,

and then it gets refined into plastics. And then presumably there's, like, a storage and transportation cost on top of that. Talk to us about what happened in 2021 with plastics prices. Because this is where I was first introduced to your work. We saw plastics really going gangbusters and lots of interesting things happening in the market. Yeah, I mean, there were a lot of things happening sort of all at once.

the point that I was making earlier on capacity became an issue where the U.S. sector specifically is susceptible to storms. So we had hurricanes which can take down these plants. We had the deep freeze, if you remember in 2021. That also took down plants for a long time. And, you know, that really, the market was already sort of tight into that. meaning we didn't have a whole lot of incremental supply at that time. And these facilities went down. The U.S. market got very tight at the same time as the government was stimulating and people were spending their checks on everything plastic.

And so, you know, that was one thing that really, you know, helped drive plastics up to these levels that we haven't seen. You know, those plastic prices were trading at levels where we would have expected them with oil over $100 a barrel, at least. You know, in a way, it feels like old news, but maybe it's not. I don't think we actually ever did an episode where we talked about the supply chain impacts of that Texas freeze last March 2021. But it seems like it has come up a number of times in reading things.

Like I think there was something with like insulation for like homes got really disrupted. Can you talk about like how big of a deal was that? Because I actually think it might be kind of relevant now and we think about normalization, we think inflation as sort of like one of the under discussed supply chain disruptions of 2021 of the last year. How long lasting were the impacts of that Texas free? I mean, it took a long, in the pet cam space, it took a while for the U.S. market to really several months to start to normalize, even into 2022. Wow.

Then we, you know, in the U.S., we do have a lot of capacity that's been coming online over the years. we've never really managed to run it all at full. We do struggle to balance the exports and the domestic consumption. But it took a while to get back up. And now just in the last few months, we've gotten up to sort of record high inventories of PE. And that's come down a little bit in the last two months, but still is at very high level.

So it did take a while. You know, another dynamic that people may or may not have mentioned is the end consumer or the company that's making the bottles or any of the other material with those. plastic pellets was, you know, in an oh crap moment where they're realizing maybe we should hold more of this on hand. Right. Inventories. Exactly.

So you had sort of just in time in inventory situation sort of globally moving more towards a just in case. The unfortunate thing about that was that the just in case time came when they really wasn't a whole lot of supplies. So people were sort of disregarding price and just buying at all cost. So sounds familiar. news doesn't stop on the weekends. Context changes constantly. And now Bloomberg is the place to stay on top of it all. Hi, I'm David Gurra. Join us every Saturday and Sunday for the new Bloomberg this weekend.

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Make us part of your week. and routine on Bloomberg television, radio, and wherever you get your podcasts. So just going back to market structure for plastics, you know, in 2021, you were writing about this arbitrage opportunity. And it was a big arbitrage opportunity, but it was big because it was actually difficult to do. And it kind of had to do with the different market prices between the U.S., Europe, and Asia, which kind of begs the question of, is there no, like, global standard for plastics prices in the same way that we have like Brent versus WTI. Right. I mean, this is very regional, very regional pricing. There's also pricing that you

don't really see that transparently either. There's a spot market and then there's a contract market. And so, you know, a large chunk of the plastic volume in the U.S. will be on contract. And that's a price that's agreed upon between the producers of the plastic and the consumers of the plastic. And there's obviously a lot of give and take there. And sometimes there's questions around why prices are, what they are based on what you think are the broader fundamentals. But it's very regionalized from that regard. It's also, you know, it's not like we have the same fungibility that you do with oil. The consumers of plastic may be set up on a rail line or, you know,

you know, next to a facility. And so there's synergies there that are hard to arb away. So you can't have like a pipeline for nerdals? Shooting, shooting pellets. Well, no, I was going to ask because like, right, with oil, like there are a diffusion of prices, but it's kind of like they all move together. Whereas we know that with natural gas, it's not like that at all where you can just have completely different movements in different directions. And the reason is obviously the sort of fungibility and the,

this sort of like the nature of the global distribution network is much more fragmented. So with plastics, what does that look like such that you can have such persistent wide variations? So I think the issue they had in 2020 and 2021 was obviously the freight congestion. So the wide arbs on paper looked wide, partly because freight was so high. I think another issue that you had there is that, again, if I'm set up to buy pellets a certain way, I may not actually be able to take advantage of inbound pellets from the global market. Don't get me wrong, this market is there's a lot of trade. But if you're talking about incremental buying, if you need, for example, to buy polyethylene

from the U.S. Gulf Coast, and you're buying it in what they call super sacks, which are basically these polypropylene sacks that you put those in. container ship and send them. Wait, are they full of nerdles or something else? The pellets. Plattes. Just to be clear, in sort of a quote unquote normal time, like say 2019, is there more of a one global price for plastic?

Or is it always going to be this kind of thing where it's not like oil in terms of the spreads? No, I think that you will definitely see the, I mean, you are seeing the ARBs come in. So the issue that we have right now is that this market is overcapacity. We've been talking about a market that looked like it should have been an over-supply since maybe 2019. 2020 was sort of 2020-2020 were these years where you had sort of extra demand for goods, which, you know, when you line up demand for polyethylene and polypropylene, they typically track, you know, directionally with GDP. Okay. those demand for those plastics increased or was flat when GDP was down what 3.3 or whatever percent it was and so you know that was that was sort of a one-off dynamic now I think we're starting to

come full cycle on economic expectations with a downturn expected for next year you have with with that China reopening arguably more broadly you have decongestion in the global supply chain. So you don't have quite the same congestion at ports and, you know, the box, the ability to procure containers was a big issue back two years ago. That's definitely not something that you hear as much of a problem now. So sort of decongesting all of that should help facilitate narrower spreads between the regions. And so, and you are starting to see, you know, European prices are still high, but people are moving volumes into Europe to try to capitalize on that. So talk to us about the capacity outlook then, because you've mentioned that

a number of times. And I remember when I was based in Hong Kong, there were some stories about China purposely building out. It's polypropylene capacity and things like that. Is that something that's going to impact the market? I think that's something that has been catching up over the last few years and has now starting to rear its head. I think when you look at both polyethylene and polypropylene capacity growth still looks fairly robust over the next year or two. So you sort of juxtapose that with what we expect to happen with GDP and actual demand. Now that the stimulus checks are fizzling out people are not buying as much online, that demand for plastics is sort of like potentially could come in a little worse than normal trend at a time when capacity is ramping up. So this is a situation.

where you may be in an environment where capacity rationalization is required to help sort of shore up the balances. So just on that note, one of the pet theories, pet. Hmm. Good one. Yeah, thank you. One of the pet theories about plastics is that it has been this underappreciated force in widespread inflation because plastic packaging goes into almost.

And, you know, if the dial on plastics is moving up, like, relative to the price of the good, it can be quite significant. Is that something that you're aware of or that you would, like, buy into as a commodity strategist? Yeah, I definitely buy into that. I think it's all relative, though, if you're talking about a low value product, like a bottle of water, right? Yeah. You know, you're going to see a lot more. That's like all the bottle. Like the plastic, I assume is basically the whole thing.

Yeah. Yeah. I mean, I don't know what the margins look like for selling plastic water bottle. but arguably the plastic is a much larger input cost there than it would be for, let's say, some sort of healthcare product that's something that maybe cost $70 a bottle. You know, the rise in plastic price. It could go up, you know, 100 X and you may not even notice. So I think the cost pass-through for those low value items is probably more likely than something

that's more of a premium product. So explain, you know, one of the first. themes that's come up in our show a lot is this idea of like, okay, we had this pretty dismal growth in the wake of the great financial crisis and many areas even going into the pandemic. It's seen underinvestment, underbuilt. But you were saying that in 2019, there was already talk then of too much capacity of a, of a, so can you talk about what was the, what were the conditions in 2019? that people were worried about over capacity and gluts. And then, like, what's now? Like, how much,

how serious and severe is it for the plastics manufacturers? Like, well, they could lose pricing power? Like, talk to us a little bit more about the economics. Yeah. So, so in 2019, I should say, looking at capacity additions, there was a wall of capacity additions. Okay. Both polyethylene, polypropylene, kicking in 2020, 2021, and beyond. So. Mostly in Asia? A lot of that in Asia. Some in the U.S. We've been building out polyethylene capacity in the U.S. for the last few years on the back of the Shale revolution. But, you know, you've seen Asia sort of grinding along at very low margins. They saw some margin improvement during the COVID period, but things are back to sort of negative or neutral margin territory right now.

And that's a symptom of the capacity that's coming online there. and the fact that China was in lockdown. So you, you know, in some instances, I just had China who's usually a big buyer, potentially being a seller of some of those commodities. So one thing I've been wondering about is if the plastics industry experiences the kind of same existential concerns that the oil industry does in terms of investment and building out capacity. Because I think most countries, or I should say many countries at this point have said that they want to move away from one-use plastics.

And we all know that nerdles aren't very good for the environment and they get in like fish lungs and stuff like that. But if there's a stated goal to move away from plastic production, does that start to impact decisions on whether or not to build out refining capacity? Yeah, absolutely. It's been interesting, actually, over the last few years, the solution to oil's sort of demand concerns long term was, well, we'll just focus on the petcan space. So we'll build up more pet can capacity. Obviously, that's a big risk going forward.

You are seeing traction on plastics use reduction. I think it really depends on what you're reducing the use of it. The most obvious cases, packaging things that you see most visibly floating in the water in all these sort of terrible images that you see. That is sort of the low-hanging fruit, I would say, the one-use plastics. You know, what are the alternatives? That's the tricky thing. Are you talking about going back to glass, going back to aluminum? Paper straws, oh, my God, the worst.

Not a fan. No, but in all seriousness, there's also bioplastics. So bioplastics, you sort of spot. into two categories. One is you're using biomaterial to create a sort of a look-alike chemical structure that basically replaces plastic. Arguably, that is not very easy to biodegrade, but you also have the biodegradable design plastic, which can either degrade sort of in normal environment or in a compost environment. And that maybe has a little bit more traction. There's a lot of growth there in that space, but it's very small as a percentage of the global market.

It's, you know, I would say 1% or maybe less than 1% right now of sort of total plastics. This brings me into something else I wanted to ask, which is how much of our current plastic supply comes from recycled plastic? That is a good question. You know, we don't recycle a lot of plastic, to be honest. There's all sorts of figures out there. most of them seem to sort of center around 10% plastics recycled. You know, the waste of plastic relative to total use is, I don't know,

somewhere around I'm just ballparking 75% on an annual basis. So you do get like in a market that's, you know, the total market's probably around 450 to 500 million tons or ballpark. the stuff that you're recycling is the PET. Or the plastic bottles that may be HDPE. And it's a lot harder to recycle these computer screens or this chair. So there's real barriers to sort of recycling the broader. You know, you talk about replacing plastics.

The low-hanging for it is the stuff that we dispose of after single-use. I think the hard part about dealing with that is you need to make an environment where it's economic to collect, economic, to either mechanically or chemically recycle that and sort of, you know, make it, make it more of a closed loop environment. We're way, way, a ways away from that today. And it's going to cost, I think, a lot to get there. But that's what really people need to come to grips with is that, you know, it's going to come down to diligence from people, you know, as we walk out of this room, making sure we're putting our plastic cup or in a recyclable container.

Beyond that, it's making sure that the, you know, the plastic recycler can actually recycle it. So is it like a clear shot there or is it going to be something where they're going to spend a lot of money sorting it? And then ultimately, you know, at the end of the day, they don't break. On April 4th, 23, around 2 in the morning, a man was found stabbed multiple times on a sidewalk in downtown San Francisco. Hey, who did this to you? What happened next turned the story into a political firestorm. Reports have identified the victim as Bob Lee, the founder of Cash App.

From Bloomberg Podcasts, this is Foundering, the Killing of Bob Lee, beginning April 16. You know, just before, I just realized what is the sort of, if someone said, what's the price of plastic? And I get the whole, we've been talking, there's no one plastic and there's no one global price. Is there like a number that you would say that's like a rough, like, benchmark that you in the industry use? I mean, I typically sort of default to like a polyethylene price or high density polyethylene or a polypropylene price. But like, you're talking around $1,000 a ton. And where did that, you know, what was that pre-crisis and where did it get to at its peak in 2021, roughly? Sure. So again, this comes down to where we are with oil prices because that's going to dictate on the margin what people can actually operate at.

So they need the end product to sell at a certain price to actually keep the margins at a level that allows them to operate. So, you know, we've seen plastics prices above $1,000 a ton for a while. They got up to upwards of $2,000 a ton during sort of the chaos of 2021. Now they're sort of back down to those levels. Oil prices are obviously a lot higher today. Well, I should say marginally higher today, but they were a lot higher earlier this year relative to sort of where they were in history. So this is not really a unseen territory to where we are today.

Could I ask, you know, you touched on China reopening. What impact would you expect that to have on the plastics market? Because like it feels like it could affect it in various ways. So on the one hand, you know, maybe you have, well, exports from China to the U.S. have already been falling a little bit. But maybe you have more domestic consumption because people, are going out and buying things, or maybe they're not because they were buying things online while they were stuck at home. You could have capacity ramped up if more people are out and going to factories.

How are you sort of parsing that development? I think there's definitely several moving pieces here. I think the one that you touched on, the big sort of elephant in the room is the fact that people, when they reopen, they may not be buying as much online. So you're not going to have that sort of support for plastics demand. In China, I would expect, you know, single-use plastics eating out that type of plastic use to go back up. I think there's questions around, obviously, China's real estate market and what construction is going to look like going forward. That's going to have an impact on your construction plastics like PVC. So, you know, you may see even when they reopen that some of this plastics demand isn't what it used to be.

during prior years. So what's your outlook overall? Well, I think, again, it comes back to how much capacity we have coming online. We have, you know, five to seven percent of capacity growth in the polyethylene polypropylene space. You know, you look at GDP growth expectations, and obviously they range from anywhere in the low ones to maybe two and a half next year. So real glut potential.

I think that there's definitely room for further margin contraction here. Ultimately, you know, margin contraction tells you one thing, but, you know, oil prices at the end of the day will sort of be your lower bound for some of this stuff. So just on that note, this might be a slightly odd question. But like, given that a lot of plastics comes from oil and given that like a lot of plastic consumption is dependent on economic growth and oil is also sort of a play on economic growth, Can plastics be like a leading indicator for what people are expecting for the overall economy? I think so. I would say you're sort of shrouded a little bit now with the capacity that we're trying to sort of work through today.

But certainly you're very sort of high up the value chain with plastics. It goes into everything, again, that we use. So you start to see demand for plastics pick up and margins there pick up. then ultimately, I think that may be a nice way to sort of signal, hey, a turnaround is coming. So definitely worth keeping an eye on those margins. I just want to just real quickly, you know, go bet. We talked to, you mentioned it, the concerns about single-use plastics, the images of huge plastic blobs in the sea. How much teeth, you know, when you look at what governments around the world are attempting

to do on this, how significant is it? Is it a lot of press releases that won't really amount to much? Or are there some real curbs? And in terms of, you know, when you think about, I don't know, the medium term growth of the industry, are some of these environmental ESG concerns going to curtail it in a meaningful way? I think that there is room. You sort of extend the timeline out long enough and there will be room for some meaningful reductions. The issue, when you look at what drives plastics demand, it's obviously, I think,

population growth is one, but also income per capita is one. You know, over the last 50 years, the plastics industry is sort of like found its way into sort of every nook and cranny of everyday life. But now plastics demand sort of grows at GDP because, you know, there's no more. There's no more nooks and crannies. Plastic is filled every nooks and crannies that are out there. Yeah. The meatballs are everywhere.

Right. And so to the extent that, you know, getting rid of plastics, you have to ask. how do we get here in the first place? Part of it is because they're incredibly dynamic materials, and they're usually fairly low cost. And so you have to sort of get around that to make inroads for either replacement or just reduction of use in general.

But I guess the other thing that I'd point out is that it comes also down to human behavior and our ability to, you know, want to make this a closed loop or closer to a closed loop, we need to do our part to actually spend the time recycling and we need to build out the recycling capacity and all sorts of other things down the supply chain to make that work. I have one last question, and it's for like my own future educational efforts to learn more about plastics.

You know, when I think about oil, I have like a handful of companies in my mind. I understand there's like the big mega oil companies and the pipeline providers, upstream, downstream drillers, all that. Who are like, what is the ecosystem with, what is the equivalent ecosystem when we're talking about plastics? And like, who would be company, like, whose conference call should I start reading to start learning more? No, it's a good question.

I would first say that the space, depending on where you're looking, is heavily integrated with refining. So some of the refineries that you may be reading the transcripts on are also the ones that are producing the plastic. I think there's a lot of, and I don't know if I should name names here, but large chemical companies, you name them. Like a DuPont or something? Is that who we're talking about? Yeah, or like a Dow.

Adnock. I mean, when I was in Abu Dhabi, Adnock made its big move into petro chemicals for exactly the reasons we've been talking about. Yeah. And then are there separate companies that then like take some sort of like rock, like specialize in the mold? Like are the molding of a specific plastic into like a toy? I don't know, like, what's the next step? Yeah, so you're, exactly, you're taking the buyer of those ballots who's then making a bottle or a clamshell or sort of you name it. That's, I think, a little less integrated than the upstream.

Right. But there are plenty of companies out there that sort of sit in that bucket, but that are sort of plastics or packaging specialists. Right. All right. Well, Warren, thank you so much for kicking off our education on plastics. I'm sure there's going to be more to come, but really appreciate that. That was great. Thank you for your time.

Thank you so much. Joe, I think I have a new ambition in life. Oh, yeah? I want to build a nerdal pipeline. You can make a fortune. You just like a nerdal pipeline from, you know, I don't know, where's the, in which direction? How do you take advantage of it? You know, since I'm dreaming big, I'm just going to say around the world.

Around the world. It'll go everywhere. No, but I thought that was a fascinating conversation. And I do think that this might end up being an unappreciated aspect of consumer goods inflation overall. And also just the idea of looking at the plastics market as sort of an early read potentially on the economy and economic growth. That seems interesting too. Yeah. I mean, there were a bunch of interesting things.

You know, I do think like, you know, the disruption of that Texas freeze was probably underappreciated. When we talk about a literal storm contributing to the perfect storm. The perfect storm. The perfect storm. created a perfect storm? It was a perfect storm that contributed to the broader perfect storm. And so how long that took to fade? And then just this idea that like, okay, you know, we might be in this situation where there's

a lot more capacity coming online than there was growth. So it's sort of like this wall of plastic capacity is kind of an interesting theme. And again, whether that inflation turns to disinflation over the course of 2023. Well, that kind of gets back to the like existential questions facing the energy industry as well, which we've been discussing on the podcast, because a lot of oil producers went into petrochemical refining in order to sort of diversify away from just drilling and pulling hydrocarbons out of the ground. But if everyone does that at the same time, is it actually going to be profitable or work? The other thing that I thought was interesting was, you know, the talk about recycling. And I think

it was in October that we had Greenpeace basically come out and say that plastics recycling doesn't work and we need to find another solution. I'm a recycling skeptic. That's fair. I should point out that the plastic cups featured in this episode are in fact recyclable, whether or not anyone is actually making money recycling them and reusing them is an open question. All right. Shall we leave it there?

Let's leave it there. Okay. This has been another episode of the All Thoughts podcast. I'm Tracy Alloy. You can follow me on Twitter at Tracy Alloy. And I'm Joe Wisenthall. You can follow me on Twitter at the story. stalwart. Follow our producers on Twitter, Carmen Rodriguez at Carmen Armin and Dash Bennett at

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