by David Z. Morris, Fortune.com
Hurricane Harvey has shut down more than half of U.S. production capacity for ethylene, a vital building block for basic plastics. The disruption is expected to have impacts across the U.S. economy, and recovery is likely to take months.
As detailed by Bloomberg, ethylene is a basic ingredient for final products ranging from plastic bottles to tires to polyester fabric. Industrial ethylene is derived from petroleum or natural gas, and many chemical plants producing ethylene are sited near the Gulf Coast’s concentration of petroleum facilities.
Now, thanks to Harvey, almost all of Texas’ ethylene producers have shut down. That’s causing what one analyst speaking to Bloomberg described as “havoc . . . on an unprecedented scale” for American chemical producers. Producers are already saying they won’t be able to fulfill orders for basic materials like PVC and polyethylene, and one estimate doesn’t see things fully returning to normal until November. In the meantime, prices for basic plastic materials are already beginning to rise.
The sudden ethylene crisis may be overshadowed by a parallel hike in the price of gasoline, whose producers were also battered by the storm. But both cases highlight the systemic disruptions of business and industry that might become more frequent as climate change leads to bigger and more damaging weather events.