The past couple of years of relatively cheap crude oil and natural gas has 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 money back 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 than 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 harder to find a new home.
Nationwide, around 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.
But not impossible.
Houston-based Waste Management is the largest trash-collecting company in America. About 10 percent of its business is recycling. And most of that has been what’s called “single-stream” — when a many kinds of potentially reusable material are dumped together, like in the household blue bins.
The company issued its second quarter earnings report this week. Recycling revenues were down about $5 million from a year ago. In the past year, Waste Management has renegotiated or lost contracts in many cities. Houston renegotiated and Dallas switched companies, with the change kicking in next year.
“We started calling it a crisis last year,” said Brent Bell, vice president of recycling for Waste Management.
And the commodities market has gotten no better since then. Two years ago, the price of domestic crude oil was above $100 a barrel. It was trickling below $42 a barrel this week.
Natural gas, an even more important precursor to a lot of plastic, was trading at around $4.80 per million BTU two years ago at the Henry Hub in Louisiana. The most recent price was around $2.80.
To read the full story, visit http://www.dallasnews.com/business/headlines/20160729-why-is-some-plastic-recycling-no-longer-cost-effective-blame-fracking.ece.