The impacts of a 70% reduction of single-use plastics on the petrochemical industry

December 11, 2025 (IEEFA) — As the oil and gas industry looks to diversify revenue streams, the industry is frequently looking to petrochemicals and the plastics made from them to bolster profits. A new report from the Institute for Energy Economics and Financial Analysis (IEEFA) lays bare how fragile relying on single-use plastics (SUP) is as a long-term plan.

On a global scale, the petrochemical industry is facing headwinds as weak economics and low demand translate to financial instability. The report out today examines what a reduction in single-use plastics would look like for the industry, and the results are stark: A 70% reduction in the production of SUP would result in a $138 billion loss. This reduction would avoid roughly 3.85 million barrels per day of oil consumption.

“Rather than relying on single-use plastics as part of their business model, industry leaders should prepare for the transition away from SUP production,” said Todd Leahy, IEEFA North American regional director and author of the report. “If a production cap on SUP was implemented or if the market continues to shrink, the petrochemical industry will continue its financial decline.”

The plastics industry has experienced consistent growth, with the global market valued at approximately $640 billion in 2024. However, the growth has occurred in tandem with chronic oversupply, particularly in commodity plastics. In an oversupplied environment, operating rates fall, margins compress, and global factors reduce demand. Individual project economics become sensitive to small global changes, increasing financial risk.

The report’s findings underscore a major transition for the petrochemical industry, assuming a 70% reduction, revealing a substantial impact on industry revenue, and a significant reduction in oil demand that highlights the shakiness of the industry. 

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