How can there be any profit in making plastic?

Plastic is made of oil, which is very expensive. Plastic is so cheap that everything disposable is made of it. This makes absolutely no sense to me.

I believe that plastics are made from some of what is left over after one refines gasoline from crude oil.

Oil isn’t very expensive - it’s cheap.
$100/barrel = $2.30/gallon.
If plastic was 100% oil, the oil cost would be a few dollars a pound.

HDPE is $6.60/pound in bulk, so there is a factor of 3 difference between the price of plastic and the price of oil…

Oil costs $100 per barrel, or somewhere thereabouts. How much oil you use for each little plastic part determines how much of that barrel of oil you spend. You might be able to make 10,000 tiny parts out of that barrel of oil, or only 1,000 larger parts. The oil cost in each plastic part would be 1 cent for the tiny one and 10 cents for the larger one. That’s pretty cheap.

It is all relative. Oil is hovering around $100 per barrel - about 42 US gallons = 159 litres. As a very rough approximation call it a dollar per kilogram. 40 cents per pound. Oil is, compared to just about anything else, dirt cheap. It is just that we use a lot of it.

However plastics are an interesting issue. When we refine crude oil, mostly to get the alkanes, to make car gasoline and diesel, we are left with some residues. Just what depends upon the well, but when the oil gets cooked up, the various components are free to hook up carbon chains with all sorts of shapes and lengths. Ranging from gas, petrol, diesel, fuel oil, bunker oil, we burn a lot of them. But at lot of them are not so good to try to burn. But these residues sometimes have useful properties. Some of these we make plastic from. Plastic feedstocks are made from the waste. It would be a toxic disposal problem otherwise.

Gasoline is only expensive when you buy it 20 gallons at a time. That’ll cost you about $80 here in Oregon. But if you only want a shot glass full, that’s about 5 cents. It’s reasonable to assume that the crude oil that went into making that shot glass full of gasoline probably only cost 3 cents. So you could make a rather large hollow plastic toy for 3 cents worth of crude oil.

The wide variety of plastics we have can be made from a very wide variety of feedstocks. We are using waste from oil and gas refining precisely because it’s a cheap source, as noted. If we wanted to, we could make it from a variety of other things, such as biomass sources:

http://en.wikipedia.org/wiki/Bioplastic

If we ever do move away from fossil fuels for transport, the economics for plastic manufacture may change. There probably will continue to be cheap feedstocks from somewhere though.

This is a big thing with Heinz these days. Lots of their ketchup bottles are plastic made from biomass. Just how “green” the whole process is is open to quite a bit of debate.

There are a lot of implicit assumptions in this question. I’ll try my best to clear some up :

  1. Plastics are cheap : this maybe true for plastics like PVC or polyethylene but not true for a range of other plastics. Like the ones used for making tires, car body parts, cell phone parts, fabrics, etc.

  2. All Plastics are made from oil : not true either. The film and photo reel plastics in the USA were made from coal. See Eastman chemical. Today coal is the major feedstock for plastics in china.

  3. All parts of an Oil Barrel are equally valuable : not true either. The real heavy parts of oil that end up as asphalt or pet coke are not as valuable. Similarly the lighter parts like naphtha is less valuable and is used to make the bulk plastics.

If you’d like more details, we can go into them.