Recycling does not pay

AP/Fuel Fix:

The past couple of years of relatively cheap crude oil and natural gas have upended the industry with the greenest image: recycling.

Yes, it’s still an advantage for many businesses and municipalities to recycle rather than have the junk hauled to a landfill.

But only a few years ago, there was plenty of cash in reselling that trash — paper, plastics and metal — to provide a nice profit for the recycling companies and give back money to the cities and companies producing the waste.

No longer. And if that doesn’t turn around, it may mean some people will pay relatively more for trash pickup than if the market for recycling were better.

The problem is not only about the cheap oil and gas made possible by fracking in America’s shale fields, and particularly in Texas. It’s also linked to a slump in the world demand for raw materials.

A used plastic water bottle that once might have been turned into a few threads of polyester in a pair of Chinese-made jeans, woven into a carpet or been part of another bottle is now struggling to find a new home.

Nationwide, about 200 of more than 7,000 scrap recycling companies have gone belly-up over the past couple of years, said Joe Pickard, chief economist for the Institute of Scrap Recycling Industries. Many others have throttled back operations, he said.

“The price volatility makes it really hard for our guys to do business,” he said.
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Natural gas, an even more important precursor to a lot of plastic, was trading at about $4.80 per million BTU two years ago at the Henry Hub in Louisiana. The most recent price was around $2.80.

“Our customers are telling us it is cheaper to buy virgin material than recycled content,” Bell said this week.
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Metal recycling is also down because of lower demand for oil field equipment.  The recycling business was always marginal and seemed to be structured around liberals feeling good about the way they handle their trash.

The metal still has some value, just not as much.  When I recently took a metal drafting table to the dump I did not have to pay them to take it.  A few years ago thieves were stealing wire out of  abandoned houses to sell it.