Plastics industry warns that prices will have to rise due to the high oil price

In his New Year message the Director General of the British Plastics Federation, Peter Davis, expressed concern about uncertain economic conditions in 2008 and fears that prices of plastic products will have to rise due to the high oil price.

The effect of oil prices and fuel duty

On January 2nd, 2008 on the Nymex Exchange in New York the oil price hit $100 a barrel for the first time and Brent Crude reached a record high of $98 a barrel in London.

Peter Davis said, “Inevitably this increases the cost of producing plastic products, which will have to be passed on to customers. It is essential plastic processors recover these increases to maintain profitability, investment and innovation.”

Davis added, “There is no shortage of oil, in fact reserves are plentiful. However, cold weather and speculation has driven the price to a record high. On the 12th of January last year Brent Crude was $51 a barrel.”

Peter Davis urged the Government to abandon its planned near 2p per litre increase in fuel duty this April. “The UK has the highest fuel duty in Western Europe. This further increase will harm the UK industry’s competitiveness. It should be abandoned.”

The economic outlook
On the plus side Peter Davis felt that, “the Bank of England is keeping inflation under control but they must cut interest rates again this month to help the manufacturing industry avoid problems from the credit crunch. Although a slowdown seems likely, a recession should be avoidable.”

Davis expressed concern about the UK’s, likely, record £60bn current account deficit in 2007, the worst deficit since the 80’s, accounting for 5.7% of GDP. He said, “This disastrous balance of payments deficit is a clear signal to Government that it must reverse its cuts in support for exporting and put trade development at the top of its priority list.”

ENDS . . . 

For further details on this press release please contact:
Philip Batten, British Plastics Federation, 6 Bath Place, Rivington Street, London, EC2A 3JE
Tel: 020 7457 5007
Email: [email protected] 

Notes for editors

1) British Plastics Federation (BPF) is the UK trade association for the plastics industry – representing the whole supply chain including polymer producers, distributors, additives suppliers, machinery manufacturers, processors and recyclers.