Oil Prices Should Prompt Materials Rethink

Recent developments in the Middle East and their effects on oil prices could prove a turning point in the battle against harmful synthetic materials. And sportswear brands have unique and entirely self-inflicted exposure.

A large proportion of the textiles and fibres used to make sportswear products are derived from oil. This is a dependency the industry chose, and one it could choose to abandon.

Nike chief executive Elliott Hill seemed confident about the future during the company's recent earnings call. But a factor he admitted he couldn't predict was the impact the Iran war would have on the brand's business.

"We are controlling what we can control," Hill said. That clearly does not include the price of oil.

One part of the solution to this problem is, of course, obvious: Leather.

When planning future production there are some basic things to bear in mind. According to Simeon Siegel, senior managing director at Guggenheim, they are: “supply, cost of shipping and then, uncertainty's impact on demand." These things become far more predicable when manufacturing materials come from a well-established, regionally distributed non-petroleum supply chain, such as leather’s.

Nike isn't the only company searching for a path forward. But the irony is that the path has always been there. For generations, athletic footwear, gloves and performance gear were crafted from leather because it is durable, breathable, biodegradable and oil-independent. The industry all but abandoned these materials in pursuit of cheap synthetics, and now finds itself held hostage to geopolitical instability in the Middle East.

Some brands are already preparing to raise prices to offset costs. Asics President Mitsuyuki Tominaga told Nikkei recently that if the war continues, the company "will naturally need to consider" raising its prices. Those price increases, passed directly to consumers, are the hidden tax of synthetic dependency. Leather goods, by contrast, are largely insulated from oil price shocks.

A majority of the textiles used to create sports products are derived from oil. Polyester, nylon, spandex and synthetic rubber are all petroleum-based plastics. The modern sportswear product is, essentially, wearable oil. The price of synthetic rubber is up 33 percent since the war began. Polyethylene has risen by 28 percent. Leather prices have remained stable.

The case for a return to natural materials has never been stronger. Leather is sourced from livestock farming, an industry with a resilient supply chain that exists on every inhabited continent. It requires no passage through the Strait of Hormuz. It is not subject to the volatility of crude futures. And unlike polyester, which sheds microplastics into waterways and remains in landfills for centuries, leather is a natural, biodegradable material with a centuries-long track record of performance.

Critics will argue that leather cannot replace synthetics in high-performance applications. But this undersells the material's remarkable versatility. Leather has been used in mountaineering boots, boxing gloves, cycling saddles and football boots for well over a century. Modern tanning and finishing techniques have produced leathers that are lighter, more supple and more moisture-resistant than ever before. The idea that a petroleum-derived fabric is inherently superior to one of nature's most sophisticated materials is a marketing assumption, not a technical fact.

It is also worth examining the argument, increasingly made in certain circles, that rising oil prices hurt leather too by driving up the cost of cattle farming and agriculture more broadly. There is something to this, but the picture is considerably more nuanced than leather's critics suggest.

It is true that fertilizer production is heavily dependent on natural gas and oil. Nitrogen-based fertilisers, which underpin the productivity of modern arable farming, are manufactured through the Haber-Bosch process, which requires large volumes of natural gas as both a feedstock and an energy source. As oil and gas prices rise in the wake of the Iran war, fertiliser costs have climbed sharply, placing pressure on American farmers growing feed crops, corn and soy in particular, that support cattle production. It is worth noting that although cattle manure is not as efficient at delivering nutrients as manufactured fertilizers, it is the most widely used soil amendment in the US and an important nutrient worldwide.

Every food system, every fiber system, and every consumer goods supply chain ultimately sits on an agricultural base that is touched by energy prices. The difference is one of degree and of resilience. The US cattle industry is deeply embedded in the American landscape, backed by powerful domestic infrastructure and supported by a producer base that has weathered commodity cycles for generations. It is not going anywhere.

Synthetic materials, by contrast, have no such depth. When oil prices rise, petroleum-derived fabrics do not simply become more expensive, their entire production logic is called into question. There is no synthetic rubber tree to fall back on, no alternative feedstock waiting in the wings. The supply chain for polyester begins and ends with crude oil.

Leather's supply chain, by comparison, is diversified by nature. American cattlemen are already adapting to higher input costs through precision agriculture, improved grazing management and feed efficiency technologies that reduce reliance on expensive commodity crops. The hides that become leather are a byproduct of the beef and dairy industries and their supply is not contingent on any single input cost remaining stable. Even in a world of elevated fertiliser prices, cattle will be raised, beef will be consumed and hides will be available.

This is a difficult situation with no easy answers. But the sportswear industry's current crisis is, in large part, a crisis of its own making. It is the result of decades of decisions that prioritised cheapness and scalability over resilience and craft. A move back to natural materials, and leather in particular, would not only reduce exposure to oil price volatility; it would reconnect brands with a tradition of quality and durability that consumers increasingly value.