How do you think that relates to the discussion? I don’t understand what point you’re trying to make. The deal is great for Iran because we had to agree to significant economic concessions (unfreezing Iranian assets and granting sanctions relief), and they didn’t have to give up anything other than returning the Strait to the status quo ante. What does the cost of plastics have to do with that?
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A lot of the resources China sources come through the Strait. It is major to China. It is very minor to us. We are negotiating China’s costs.
Al,
Contract law looks at who the parties are. This should not be a surprise to you that China is picking up the longer term costs. Frankly this is why I wont debate legal points with you. I am not prepared to and you ignore realities.
Al,
I see you typing. If you are going to argue legal points or contract thoughts, knock it off.
The industrial revolution shifted from steel and concrete to plastic. The US has a huge built in relative advantage over China.
This is where it is at…
Yes, China is heavily dependent on the Gulf nations for the resources needed to produce plastic. China relies on the region for approximately half of its crude oil and large quantities of key petrochemical feedstocks like naphtha, LPG, and methanol. [1, 2, 3, 4]
Specific areas where this dependence manifests include:
- The Backbone of Production: Nearly 70% of Asia’s naphtha is imported from the Middle East. Naphtha is the primary feedstock processed by Chinese crackers to create ethylene and propylene, which are the building blocks of everyday plastics like polyethylene and polypropylene.
- Methanol Imports: China’s Methanol-to-Olefins (MTO) plants, which produce roughly 20% of the country’s olefins, rely heavily on methanol imported from Iran and the Gulf Cooperation Council (GCC) countries.
- Vulnerability to Supply Shocks: Because the vast majority of these petrochemical and crude shipments must pass through the Strait of Hormuz, geopolitical conflicts and shipping blockades can immediately trigger massive spikes in Chinese plastic production costs and cause resin shortages. [2, 7]
To reduce this vulnerability, China is increasingly expanding its domestic production base and boosting coal-based methanol production to find alternatives to Gulf imports. [5, 8]
If you are interested, I can:
- Detail how China is buffering its strategic reserves to offset Middle Eastern supply disruptions.
- Explain how domestic coal-to-olefin production acts as an alternative feedstock.
- Compare China’s supply strategies with other Asian nations facing similar challenges. [9, 10]
Let me know how you would like to proceed.
AI responses may include mistakes.
[1] https://www.plasticstoday.com/materials/iran-war-exposing-the-gap-in-the-global-oil-supply-chain
[2] https://www.youtube.com/watch?v=KRq6-NDYEJA
[5] Middle East Turmoil Puts Asia’s Petrochemicals at Risk | Coface
[7] https://www.plasticstoday.com/resin-pricing/plastics-supply-chain-collateral-damage-in-iran-war
[9] China's Exposure To The Persian Gulf | Weekly Economic Commentary | Northern Trust
It is not minor to us, because oil is a fungible resource that is globally traded. Shortages in oil going to other parts of the world affect the global price of oil, and since oil is an input to so many industrial processes, a shortage of physical oil would precipitate a worldwide recession. The stuff going through the strait doesn’t just go to China - it’s a major direct source of oil for most countries in Asia, including our regional allies and trading partners like Japan and Taiwan. The latter is particularly important, because not only are about 70% of all Taiwan’s oil imports from the Gulf, they also rely on the Gulf for about 70% of all their helium imports. No helium, no chips. And we need Taiwan for our chips.
This is not about me ignoring realities. I just didn’t understand the point you were trying to make. The Strait is massively important to the United States, and that’s not really affected by the fact that China needs it for their plastic more than we do. If you actually spent some time explaining your thoughts, rather than just copy-pasting massive chunks of AI slop, you could have a discussion with someone.
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Oil is priced the same around the globe. We are the number one producer and exporter. If the price goes up? You think there is a problem?
Back to the industrial advantage.
Approximately 84% of US plastic and petrochemical production is located along the US Gulf Coast (primarily in Texas and Louisiana). [1]
The US industry is largely self-sufficient. Instead of depending on Persian Gulf nations for plastic manufacturing, American producers leverage abundant, domestic fracked natural gas. In fact, US plastics production often steps in to fill gaps when Middle Eastern supplies are constrained. [2, 3, 4]
I can help you explore this further if you would like to know:
- Which specific plastic resins are most concentrated in the Gulf Coast region?
- How international supply chain disruptions impact global plastic pricing?
Let me know how you’d like to proceed!
AI responses may include mistakes.
[1] https://www.responsiblealpha.com/us-plastics
[2] https://www.plasticstoday.com/resin-pricing/plastics-supply-chain-collateral-damage-in-iran-war
[3] Iran war boosts US plastics | Semafor
[4] Aftermath: Plastics Clogged in the Persian Gulf - The American Prospect
Stop over thinking it then, but really you are ignoring plainly printed materials.
Again we are negotiating China’s costs of production. We are not negotiating ours.
Yes. Oil is not just a product we produce - it is an input to a host of other processes and products. When oil and gas prices rises, consumers have less money for spending on other goods, the transportation costs of everything go up, and the end costs of goods that have high energy intensity in their manufacture rise. To say nothing of all the countries that don’t have our oil resources and find themselves slipping into recession.
We are not an autarky. We are deeply integrated into the global economy. Oil shocks hurt our economy.
We didn’t enter into this agreement because we are worried about China’s cost of production. We entered into this agreement because a worldwide shortage of physical oil would crater the global economy, shortages of key fertilizer and other agricultural inputs would cause serious food crises across the globe, and the inability of countries across Asia to access oil and gas and helium would directly damage key trading partners (especially on chips).
That’s why we cut this deal. We couldn’t handle the damage to our economy - because high oil prices will damage our economy even though we are a net exporter of oil. The world is a lot more complicated than what some AI LLM will tell you about Chinese plastic production.
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We are doing it more efficiently in the Gulf states than the Gulf Nations are doing it. China needs the gulf nations. Iran is placing a fee on bulk leaving the Strait.
In relative terms after that fee China is priced out of the market.
I can not make this simpler for you. It is insulting that you can not listen to me when it is a simple set of facts. Why? What is going on with you?
BTW NPR discusses plastic and other petrochemical production on the gulf coast. It is a dirty business and minorities either lived there first or bought in cheap to disaster properties. It is awful.
The upside for the country is huge. Like every industrial revolution it is messy pollution. The left needs to at once embrace and champion it while discussing saner cleaner ways of doing things. If the left with NPR is going to try to crush this the left is totally failed. It is junk being against production.
Because I don’t understand what you think these facts actually say.
No one disagrees that the U.S. is a major supplier of oil. But that doesn’t insulate us from the global economy. A global, macro shortage of oil, liquified natural gas, raw materials for fertilizer and agricultural inputs, and helium will precipitate a world-wide economic crisis. The outcome would be a global recession, both abroad and in the United States.
Moreover, since oil is a globally traded fungible product, a shortage in international markets will drive up prices in the U.S. as well - even though we are a net exporter of oil. It’s the law of one price. It doesn’t matter that we produce our own oil; a shortage in the global markets that the Gulf services ends up driving up prices here domestically.
All of that combines to mean that closing the Strait to the point of physical shortages in oil, gas, and other products is disastrous for the U.S. economy. I completely hear you when you say that we produce a lot of oil and that Chinese plastic prices have risen. But those facts don’t really affect the situation. Because our economy is interconnected with the global economy, an energy crisis in the global economy will damage our economy.
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This is simple
Is one of the two big payoffs for Iran putting fees on bulk coming through the Strait?
Will China end up paying those fees on a lot of bulk?
Will the US end up much less frequently paying those fees?
Is plastic the root of our consumer culture and therefore industrial production?
Is oil going to China as bulk also going to have those Iranian fees?
Will the US generally not pay nearly as much as China in these fees?
Does the US have the oil and plastic production in house?
Do the Chinese have it almost all in house?
Has Donald Trump declined a war over fees that China will be paying?
Yes.
China will buy from wherever is cheapest. If the toll prices elevate the oil price above other sources, then China won’t buy those and will buy others. Those others may include places from where we get out oil, so those prices will reflect a new reality.
The “tolled” oil will be sold to whoever wants to pay a higher price, which means other prices will likely rise to a certain degree to meet it, or people will do without. Since we know people won’t do without, prices will rise.
Your continuing mistake and inability to understand is that China is not locked into only buying oil that travels down the Strait, they will buy on the world market. They have used that oil because it was the cheapest to transport to them. If that turns out to no longer be true, then they will buy elsewhere, likely the same places we buy, and therefore there will be competition for scarce resources.
People say “oil is a world market” and you don’t seem to understand that.
“Chips” are a world market. Even though Apple designs, sources, and contracts its own chips, their prices are rising because of competition from data centers. They are not insulated, just as China and the US are not insulated from world economic forces.
Apple to Raise Prices
Apple to Raise Prices Due To Memory Chip Crunch
The CEO tells the Journal in an exclusive interview that soaring costs make price increases ‘unavoidable’
https://www.wsj.com/tech/apple-price-increases-memory-supply-199845b1
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That is right, finally something correct on your part.
China can buy plastic and oil from us.
Oops, they did it again
They closed down the strait, to foes and friends.
Oh baby, baby.
This is far from simple.
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Turn around for an hour and gosh!
So China is not Muslim…close the Strait.
England has a riot by Muslims and places a ban on protests…close the Strait.
American buys oil from arch rival SA…close the Strait.
Israel…the canary in the coalmine.
Do any of you believe it ends with Israel?
Do any of you believe it began with Israel? Thing about that is the Strait is not something Israel is closing. Iran is. So it starts and ends with Iran.
They just did. This is a major weakness of this deal. Israel wasn’t a part of it but Israel’s actions are conditional upon it succeeding.
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I know and I’m loving it.
I have hope either way.
There are lot of folks with a particular agenda pushing this narrative. Let us go back and review, Iran got its leadership wiped, bombed, their Oil infrastructure destroyed, and suffered heavy military damage. Well the regime itself didn’t collapse, but they suffered lot of damage.
OTOH, what is the cost paid by Israel? It is not the Israel paid any price for this war… but the world is paying the price for this war with demand destruction to economic hardship, serious civil unrest brewing underground.
So, I would like to understand why it is a bad deal for Israel?
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It’s not a bad deal for Israel.
Netanyahu has been trying to get US to go to war with Iran to fulfill his military ambitions for more than 20 years. Previous US Presidents have told BIbi to go “pound salt”.
It took a mentally compromised occupant of the office to fulfill Netanyahu’s dreams. And US taxpayers are paying the price for the current misadventure, and the fact that we haven’t pulled back US military aid from Israel over the years when they act in violation of US policy (e.g., Genocide in Gaza, land grab in Southern Lebanon, illegal Israeli settlements on the West Bank)
That’s what the bipartisan culture of corruption in Washington does for us.
intercst
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Absolutely. The US is by far the greater military and geopolitical power, and it isn’t remotely close. But “war is the continuation of politics by other means.”
This was a straight up fight which the US should have dominated, but failed to do so. And, as the fight is winding down, the US did not achieve any of the issues which it claimed were the reasons we why we needed to start the fight, including regime change, ending of Iran’s nuclear and ballistic missile programs, and end of Iran’s support of terrorism.
In exchange for us getting nothing, Iran has apparently received sanctions relief, had its assets unfrozen, gets to keep its nuclear and ballistic programs, AND Iran gets $300 billion in reparations.
Iran took some damage to be sure. But in exchange it won the politics in a stunning victory.
None of the victory conditions were achieved and Iran has emerged stronger. Anytime Israel retaliates in Lebanon, Iran can close the Strait, as they did today. That forces the US back to the table to make more concessions, and put pressure on Israel to act against their interests.
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