Oil prices going down might seem like a good thing for most people. When oil prices start to decline, it means it will be cheaper to fill up your car and you’ll be saving money on your daily commute or other journeys. However, it’s not just the cost of fuel that oil prices affect. The price of oil is also linked to the price of plastic. Oil is one of the components of plastic, which means that if the cost of crude oil goes down, it has a knock-on effect for plastic too. This means that items made from plastic are cheaper, but recycling plastic is more expensive.
The Effect of Oil Prices on Plastic Recycling
The cost of oil and the cost of producing and recycling plastic are intrinsically linked. As the price of making plastic falls when the cost of oil falls, it poses a problem for the plastic recycling industry. If it’s cheaper to invest in new plastic than it is to buy recycled plastic, manufacturers will generally choose the least expensive option. Manufacturers will often prefer the cheaper product over the more environmentally-friendly one.
In January 2015, for example, the price of oil fell to around $50 per barrel. Just 12 months before it cost more than twice that. This meant that the cost of virgin plastics fell too, making it a more attractive prospect to manufacturers. Fewer companies purchase recycled plastic, making it difficult for recycling companies to survive. In fact, in 2014/15, Waste Management, the largest waste management company in the US, closed 20 centres across the country.
When the cost of oil is lower, it means manufacturing products from virgin plastic is cheaper. Lower manufacturing costs can have some benefits, but it’s generally not better for recycling. Recycled plastic used to be the cheaper option, but now there is a chance it can be the more expensive choice out of new and recycled plastics.
Further Impact of Low Oil Prices
It may not even be just the plastic recycling industry that is affected by oil prices declining. It can even affect different parts of the recycling industry too. Oil is such an influential commodity, that it can have a domino effect on other consumer products. Recycled products like paper or metal can become less attractive to consumers and businesses, meaning that overall recycling can fall because of lower oil prices.
What Could Change
Currently, oil prices still have a big effect on plastic recycling. However, there is a chance this could be different in the future. There are several reasons companies could choose recycled plastic over virgin plastic. Both businesses and consumers are becoming more environmentally-conscious and making efforts to care for the environment. There is also plenty of promotion of recycling and various schemes to make it easier to recycle. In the meantime, oil prices will continue to change and be influenced by different things, which will affect the price of plastic.