Did you know that fracking and the oil glut affects recycling markets?

In the past 3-4 years the United States and Canada has seen tremendous growth in oil production. This in mainly the result of implementing new technologies, which include fracking and the recovery of oil from sands.

This technology has had various effects on the oil markets – creating a glut in supply, which has driven oil prices down. This has been great for the average consumer – now paying up to a $1.00 per gallon less at the pump. It has also lessened our demand on Far East oil – which is another good result.

This is NOT good for the plastics recycling markets.

The reason – plastics are a byproduct of oil. When oil prices decline – so does the value of these recyclable commodities. This results in price declines for recyclable water, milk, and soft drink containers.  It also affects industrial grade plastics such as PVC, (plastic strapping, pipe), HDPE, (plastic film), and many other grades of plastics.

This also has a dramatic effect on low grades and commingled plastics, which have little value when oil prices are strong. When you have low grade commodities and pricing declines by 30-50%, you have an item that has little or no value. Some of this material can no longer be recycling, and must be disposed of or handled for a charge.

What is the long term answer to recycling this type of material? We are not sure if there is one – other than hope oil prices recover – although this obviously is not the best scenario when you still have to fuel up your gas guzzling SUV you purchased when gasoline was dropping daily!

The public needs to be aware of these issues, and realize that the long term outlook may be a charge for recycling services. When the market value for the commodities in your recycling bin can’t support the cost of collection, separation, and processing – who should foot the bill?

In the age of tightening municipal budgets – the cost is likely to fall on the public, through increased fees and taxes.