Reliance on the self-interest of strangers

Posted in: Comment, News and Updates

It came as rather a shock to find out that the UK no longer makes ammonia after CF Fertilisers’ decision last month to permanently close its ammonia production on Teeside.  MSM has the details.  Sadly, given its economic significance, there was no mainstream TV news coverage.

CF Fertilisers is the British subsidiary of the US-based CF Industries and remains the only domestic producer of ammonium nitrate fertiliser which it makes from ammonia.  It said that the decision was made in response to the UK’s high gas prices, which meant the plant could no longer be “cost-competitive”.  This is completely in line with the Ricardian principle of comparative advantage.  CF intends to continue to produce ammonium nitrate and nitric acid at the site, but will use ammonia imported from the USA or from anywhere where hydrogen is cheap(ish) to do this.

As all chemistry students know ammonia is produced by reacting hydrogen and nitrogen over a catalyst at a high temperature and pressure in the Haber Bosch process.  The nitrogen comes from the air, but the hydrogen comes from natural gas which is much more expensive here than in the US – or the Gulf.

So here we are, reliant on the self-interest of strangers once again to sell stuff to us.  But that’s capitalism for you, with self-interest lying at its very heart.  This is one of the reasons for capitalism's success its supporters say, often adding that self-interest can be more reliable in commerce than solidarity could ever be.

The decision by CF has implications for our carbon accounting and balance of payments.  The hydrogen CF used to make from North sea methane will no longer be accounted for here, but elsewhere, so we'll seem to be marginally more carbon-virtuous than before.  This is a small positive to offset the extra cost of all that imported ammonia which we're paying for in dollars.

Posted in: Comment, News and Updates


  • (we won't publish this)

Write a response