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Crashing Oil Prices: How It's Affecting Recycling Efforts Across The Globe

Posted by Emily Bellmore on 4/10/2015 to Public Education

Have you ever thought that oil prices and recycling could have a connection? Since recent oil prices have significantly dropped, it's putting a crunch on the recycling industry. As crude oil prices continue to crash, the result makes it cheaper for plastic companies to use new or virgin materials versus the goods you can recycle. Recycled plastics prices are extremely low, and for some waste management companies or local government affiliates, they are now having to pay to have their materials removed.

Tom Szaky, who is CEO of Terra Cycle, an international upcycling and recycling company that collects difficult-to-recycle packaging and products and repurposes the material into affordable, innovative products, had this to say about the connection between oil prices and the recycling industry. "The bottom line is that what is recycled and what is not is directly linked to oil. If the cost of collection and processing is greater than the material value, then the material becomes nonrecyclable. If it's less, then it's recyclable. It's that easy. And the material value is 100 percent dependent on oil prices as it's derived from oil."

The price of plastic has seen a 20 to 30 percent drop, compared to that of the year prior. Currently, polyethylene terephthlalate, or PET which is the most frequently type of recycled plastic, is used to make water bottles and soft drink containers. According to the Wall Street Journal, as of late March, the cost of new PET costs 67 cents a pound, or 7 percent less than the recycled variety, which is worth 72 cents a pound. One reason for these fluctuating costs, is because other types of plastics can't be recycled because recyclers are having a tough time searching for a market for them.

There are some key aspects to why the recycling industry is running into some problems. One reason is "more stable pricing" says Waste Management's Vice President Brent Bell. The Houston-based company, which is also the largest U.S. solid waste disposal company, "gets about 10 percent of its annual revenue, which claimed 14 billion dollars last year from its recycling." The Journal also notes that "In many parts of the northeastern U.S., scarce space for landfills makes garbage disposal much costlier than elsewhere, so local government in New Jersey and New York could still find it economical to recycle even if they have to pay for their plastic to be hauled away. Where dumping in landfills costs less, some critics might decide to forgo recycling."

Another issue in recycled glass, is finding buyers who want to purchase it. You can recycle clear glass, but colored glass, which is used in beer and wine bottles, ends up being harder to recycle. Finding bottlers who want recycled content is an important goal. So what's the end result for these recycling companies? A big part of that is waiting patiently for these oil prices to kick back. TerraCycle's Szaky says "Recyclers store the material for a while in hopes that oil will go up again. Then once their storage is full, they simply dispose of the material in landfills or incinerators vs. increasing the amount stored."

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