The Economics of Plastics
Why Plastic Is So Cheap
How low oil and gas prices, economies of scale and unpriced pollution costs make plastic cheaper than alternatives, and what it would cost if its harms were priced.
Plastic is cheap. Why?
Low input costs
- Made from oil and gas by-products.
- Refinery integration keeps feedstock costs low.
Scale
Huge petrochemical plants produce plastic at massive scale, lowering cost per kilogram.
Unpriced costs
- The price of plastic doesn’t include the cost of pollution, clean-up or health harms.
- These are externalities borne by society.
True cost
Studies have estimated the hidden costs of plastic, including pollution and emissions, may be several times its market price.
Economic solutions
- Taxes on plastic, like the UK’s plastic packaging tax (2022).
- Deposits on bottles.
- EPR: making producers pay for collection.
Why it matters
When plastic is artificially cheap, people overuse it.
The free bag
A shop gives away plastic bags because they cost almost nothing. The cost of cleaning them from drains falls on the city.
Thinking plastic's low price reflects its true cost
Pollution costs aren't included in the price.
Key takeaways
- Plastic is made from cheap oil and gas by-products.
- Scale lowers costs further.
- Pollution costs aren't in the price.
- Taxes, deposits and EPR can correct prices.
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