PEP Review X-1-1
Ethylene and Coproducts, Value
Published: October 1974
An era of relatively stable prices for hydrocarbons ended around the close of 1970. The price of crude oil imported to the United States had increased from $3.00/barrel in 1970 to about $4.50/barrel by October 1973, and the OPEC raised prices again late in 1973 to $9.30/barrel. Furthermore, the Arab Oil embargo induced shortages that resulted in astronomical spot prices for certain petrochemicals.
Despite some price stabilization during the past few months, the prices of chemicals apparently can no longer be reliably projected from historical price trends. Therefore, the Process Economics Reviews often will include projections of the values of selected commodity chemicals. Particular emphasis is placed on the distinction between price and value. Value is defined herein as the total production cost plus an amount representing 20W/yr return on the fixed capital investment, before taxes. The production cost includes 10%/yr depreciation on the fixed capital investment. The selling price, of course, can be considerably higher or lower, depending on supply and demand.