Oil is Less Than $0 Per Barrel, Expect the Cost of Toys to Drop

The price of plastic toys is going to drop. I say this for two major reasons:

1.  The cost of petroleum is down to below $0 per barrel

Most toys are made from petroleum-based plastic. That means that the cost of toys is connected in large part to a barrel of oil.

In June of 2008, the price of a barrel of oil was $148.93 per barrel. Today, it is $0. Here is the headline from today’s (April 20, 2020) Houston Chronicle: “U.S. oil price collapses to less than $0 as storage fills up in coronavirus pandemic.” That means that the cost of storing oil is higher than its value, and oil producers will pay you to take it rather than hold on to it.

2.  The demand for all things plastic is down

Yes, we are selling lots of puzzles and games, but action figures, dolls, and other plastic toys are struggling. I predict that they will continue to struggle through the rest of the year as hourly-wage workers, when back to work,  will need every dollar they can make to put food on the table.

Things will correct but the price of oil will not go back up until producers clear out current stocks and demand rises. That will take us into 2021. In the meantime, it is going to be a buyers market.

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