2012 Archives

Companies are removing oil from their products to cut costs

Excerpt

The following ran in the May 29, 2012, edition of the Los Angeles Times. Bruce Bullock, director of the Maguire Energy Institute at SMU's Cox School of Business, provided expertise for this story.

June 7, 2012

By Ronald D. White

With crude prices bouncing around above $90 a barrel, many companies are trying to wring the oil out of their operations.

Ford Motor Co.is using soybean foam in its upholstery.McDonald's Corp.is testing paper cups for hot drinks in place of polystyrene containers, which start out as petroleum.Coca-Cola Co.andPepsiCo Inc.are becoming bioplastic bottlers. And a California cleaning products manufacturer has set out to eliminate diesel from its fleet.

"When oil was cheap, it became pervasive throughout our economy in hundreds and hundreds of invisible ways, as a raw material," said Daniel Yergin, an energy consultant who wrotea Pulitzer Prize-winninghistory of the oil industry. "Now there are accelerating efforts to squeeze oil out and find ways to substitute for it. That is the power of price."

In 2012, the Energy Department expects U.S. benchmark West Texas Intermediate crude to set a record average above $105 a barrel. U.S. oil imports based on the price of Brent North Sea oil have been averaging more than $117 a barrel this year.

"When a company's raw materials come from oil, it's a double whammy," said Bruce Bullock, executive director of the Maguire Energy Institute at Southern Methodist University. "The long-term trajectory of oil is up. It makes sense to get as much oil as possible out of a company's raw materials stream."...