The cost of gasoline and petroleum has risen sharply since the start of President Donald Trump’s war with Iran, which has led to higher plastic prices.
Can companies that offer more earth-friendly products avoid some of the costs of the war or even see a boost in business?
Natur-Tec, based in Circle Pines, makes sustainable bio-based materials and products, such as compostable trash bags. Vineet Dalal, its vice president and director of global market development, joined Morning Edition to explain the economics his company is experiencing.
For the bioplastics maker, production cost increases are coming from increased transportation and logistics costs due to higher diesel prices, but the overall immediate costs are lower than those of conventional plastic manufacturers. Bloomberg reports that Dow Inc., Exxon Mobile Corp. and Nova Chemicals Corp. are also raising their plastic prices as a result of the war and shuttered shipping out of the Strait of Hormuz.
Fertilizer prices are also higher because the war is slowing the nitrogen supply chain, right in time for the Midwest’s planting season. While Natur-Tec is avoiding some additional costs right now, Dalal believes secondary tolls could hit in the coming months since his products are derived from corn.
“Some crops, like corn, are more nitrogen intensive, and so if the farmer says, instead of planting corn this year, I'm going to switch to soybeans, that's less corn that's going to be planted. Or even if they do decide to plant corn, they might use less nitrogen, and that might result in lower yields,” Dalal explained. “I suspect over the next eight to 12 months, there might be some impact on feedstock pricing as far as corn is concerned. Even though bioplastics are plant-based and not directly impacted by the higher energy prices, I think this is a lesson for us that the war in the Middle East will affect all aspects of the economy.”
Listen to the full conversation by clicking the player button above.
