The low oil prices of the last couple of years are taking a toll on the economy of various countries, the US being one of them. Low oil prices might be good for motorists and certain industries but the US recycling industry (which is traditionally strong) is feeling the pinch, and many established recycling plants across the country are being forced to close down. As early as two thousand fourteen experts were already predicting that low oil and commodity prices will beat down hard on the recycling industry.
Where does the problem lie?
Basically, low energy (including oil) and commodity prices are undercutting the market for recycling of materials. Some basic understanding of economics and how the market works clearly indicate that financial subsidies which are the common policy for financing most of the recycling industry in the US no longer suffice. The major theories revolving around closed loop economies, cradle to cradle etc. are all based on government subsidies. Problem is that a falling energy and commodity market drags the recycling industry down with it. In most cases, government subsidies are no longer sufficient to underwrite the falling market.
Across the US, landfills are once again seeing a notable increase in waste deposited, which is not a good trend as only twelve months ago, a large portion of this waste was destined for recycling plants. This trend puts forth a number of important questions and issues which must be addressed by the government:
- Given the falling prices of energy and commodities, are landfills once again put on the map (even in developed countries such as United States)?
- Are waste to energy generators able to compete in the supply of energy at rates (requiring government subsidies) and remain viable in that industry segment?
- Will landfill operators be looking to increase their plants’ lifetime thus increasing the volume of waste deposited there?
- Are governments willing and able to underwrite the falling recycling industry with yet more subsidies (to counter effect the drop in value of recycled materials)?
- What is the current value of a circular economy, and what are the chances of linear economies coming back into fashion?
The answers
Unfortunately, the answers to these pressing questions are not yet available. As it appears in the US, one solution is to keep on closing down functioning recycling plants, with many of them having been opened as recently as twelve months ago. Expert say that the drop of oil and commodity prices is here to stay, which makes for long term suffering in the recycling industry. If no further subsidies are handed out by governments (not just in the US), then recycling industry may not be able to ride out the storm.
Below is a basic chart showing the dynamics of oil price during the last thirty years.
Analysts are predicting that the decline seen in twenty fifteen is here to stay and currently there are no projections for oil prices to go up dramatically, or back to their previous levels. The recycling industry was one of the secondary branches of the economy to struggle with the new oil prices.