#naphtha

The Perfect Storm (2000, Wolfgang Petersen)

Gas Rations? Use Naphtha!

During WWII, the U.S. Office of Price Administration (OPA) rationed gas to assist in the war effort. Massive gasoline shortages, combined with a desire to conserve rubber, led to a system in which gas cards and stickers were distributed to those who could justify a need. A-level card holders, the lowest priority, and the bulk of motorists, were entitled to 3 to 4 gallons of gasoline per week. Military industry workers, doctors, mail carriers, and other VIPs were granted larger rations.

Use of naphtha, a synthetic fuel, was also limited by the OPA, nevertheless, unrationed naphtha, an expensive and troublesome fuel source, was common. In 1945, Minneapolis filling stations were selling more stove naphtha than regular rationed gasoline--the naphtha going to motorists who resisted gas rationing. Though not intended for use in cars, the fuel could be used in cars “under the most advantageous conditions,” according to the OPA. 

One Minneapolis naphtha-burning motorist relayed his routine to the Morning Tribune: “When he leaves his car for any lengthy period, he removes the spark plugs, cleans them and puts them on a radiator. When he wants to start the car again he rushes the warm plugs back into their places. It’s a little messy, he admits, but better than walking to the corner grocery store or riding a streetcar downtown.” (Minneapolis Morning Tribune, February 4, 1945)

Gas rationing ended in states beginning in August, 1945.

Fresh military escalation between the United States and Iran has re-priced risk across the energy and petrochemical complex, and Indian polymer desks are directly in the transmission path. The trigger was a reported attack on three commercial vessels transiting the Strait of Hormuz, after which the US struck Iranian military and maritime targets near Sirik, Bandar Abbas and Qeshm; Iran retaliated against US-linked positions in Bahrain and Kuwait, with missile and drone alerts across parts of the Gulf. Oil flows through the strait averaged around 20.9 million barrels per day in the first half of 2025, roughly 20 per cent of global petroleum liquids consumption.

For India, the analysis worth holding on to is that the risk is volatility first, price second. A crude spike lifts naphtha, then ethylene, propylene, paraxylene and benzene, and only then PE, PP and PET — and that transmission is neither immediate nor uniform.

Why it matters

The PET chain carries dual exposure through PX-PTA and ethylene-MEG; notably, Indian MEG actually fell Rs 8.00/kg this week, underlining that domestic resin prices need feedstock or supply-side confirmation before a sustained rise.

For PE and PP the sharper channel is import parity: war-risk insurance premiums, freight and reduced vessel availability can raise CFR costs for Indian buyers before regional availability changes at all.

The details

One second-layer point, flagged for desk-check: if virgin resin rises while recyclate holds, the virgin-recycled spread widens in favour of India's recyclers — a group that features elsewhere in this edition.

Who is affected

Indian PE, PP and PET buyers face potential import-parity cost pressure through war-risk insurance and freight even before regional resin availability shifts.

Recyclers stand to benefit from a widening virgin-recycled spread if virgin resin prices rise while recyclate holds steady.

What's next

Watch whether the crude spike transmits through naphtha, ethylene, propylene, paraxylene and benzene into PE, PP and PET pricing over the coming weeks.

Continued monitoring of Gulf shipping and insurance costs will determine whether import-parity pressure on Indian polymer buyers intensifies.

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