How do Oil Prices Impact Plastic Manufacturing?
How do Oil Prices Impact Plastic Manufacturing?
If you’re wondering what some of the broader implications of oil prices increasing might be, let’s take a look at how it impacts plastic manufacturing in this blog.
Headlines may showcase rising gas prices at the pump, expected shortages of motor oil, or daily fluctuations on negotiations in the Middle East, but that doesn’t quite explain the full scope of what producers and consumers are facing. Oil price increases impact a wide range of industries, and the plastic manufacturing industry is, perhaps surprisingly, one of the most highly impacted. Oil is used in every step of the process, from processing into raw material to shipping the finished goods to their final destination. Here’s a quick breakdown of how oil prices increasing can have an impact on plastic manufacturing, and some of the specific steps where the increase is felt by both producers and consumers.
Raw Materials
The first impact of oil is on raw material accessibility and pricing. Oil is the key component in the creation of plastic, and increased pricing can impact the availability and accessibility of raw materials. Turning crude oil into plastic via distillation and cracking is a time and energy intensive process. As the cost of crude oil rises, so does the cost to source and produce virgin plastic material. This increase in raw material can impact plastic manufacturers as pricing for previous projects may be based on now outdated numbers.
In addition, many companies may rely on external, international sources for raw goods, leading to further price increases as the cost to ship products increases. When costs for raw materials increase, businesses face pressure on pricing and revenue, and with current and future global pressures and geopolitical uncertainty, these pressures don’t have a clear end. Placon is uniquely positioned in these unprecedented times as we emphasize using recycled materials, allowing us to offset some of these external pressures and focus on using recycled product already here in the US.
Operating Costs
Operating large manufacturing facilities can use quite a large amount of energy, and with oil prices increasing the cost per kilowatt hour may go up, too. These increased operating costs can be a hidden way that the industry feels the impact of higher oil pricing and questions about economic stability. This is often called “double exposure;” essentially meaning that businesses not only face cost increases on raw materials, but are facing those increases when it comes to manufacturing or production, too. At Placon, we have invested in renewable, solar-powered energy, allowing us to rely on greener sources (and less volatile pricing) to help run our manufacturing facilities.
Shipping and Transport
Lastly, many have probably felt the price increases at the gas pump. This is certainly true for shipping and transport services as well, and may be the most unpredictable of these increased costs. Cost per mile or per pallet are increasing to keep pace with increased fuel charges and oil. This pricing can be incredibly volatile and may even change daily depending on current oil prices. These shipping costs are increasing at many stages of the process; from initial transport of raw materials to shipping plastic sheeting to final truckloads heading to food manufacturers or retailers, there are multiple points within the supply chain that rely on ground transport of items.
Shipping costs may be the most visible price increase to buyers and end consumers of products, too. Buyers may notice increases in shipping fees, or transport costs may be separated and highlighted depending on how your plastic supplier breaks down costs. As of right now, the geopolitical uncertainty and blockade in the Straight of Hormuz continues, so oil prices are not expected to drop any time soon.
What Does This All Mean?
Whether you’re reading this article as a producer, end consumer, or manufacturer that relies on plastic packaging for your products, the end result is the same: expect price increases. When costs to produce, manufacture, and ship increase, price increases may travel downstream and touch every industry that relies on plastic packaging, and eventually consumers will start to notice, too. It’s important to note that this is different from inflationary price increases, and may fluctuate based on the pricing of crude oil. If the current global relations improve and oil is exported at a higher rate or prices fall, costs of manufacturing may decrease as well.
The plastics industry and the impact of oil price volatility provide an interesting insight into the global supply chain, the connectivity of our world, and the far reaches geopolitics has on the economy.
These are just a few of the most important ways the current economic and political climate impact the plastic industry. For more in-depth analysis and reading, visit the links below, or visit our Placonomics blog for additional articles on the plastics industry.
Resources:
https://www.bpf.co.uk/plastipedia/how-is-plastic-made.aspx
https://fred.stlouisfed.org/series/PCU325211325211
https://www.barrons.com/articles/oil-plastic-prices-consumer-goods-d84cfdbf
https://www.theatlantic.com/science/2026/04/brace-plastic-price-hikes/686891/
ABOUT PLACON
Since 1966, Placon has been a leading designer and manufacturer of innovative and sustainable plastic packaging for medical, food, and consumer goods markets. Placon has manufacturing operations in Madison, WI; West Springfield, MA; Elkhart, IN; and Plymouth, MN, and is currently ranked in the Top 20 in Plastics News 2025 Thermoformers Rankings. Placon delivers packaging breakthroughs that inspire better engagement between people and products.
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