The Downside To Low Oil Prices

AB 1005 (Gordon) and AB 2530 (Gordon) aim to incentivize in-state plastic recycling. AB 1005 will extend the Plastic Market Development program that supports in-state recyclers that process empty plastic beverage containers. AB 2530 will require plastic beverage containers to be labeled with their recycled content.

Two years ago, a barrel of crude oil cost over $100. Today it hovers in the mid-$30 range. While this break has been great for many Americans, the drop in crude oil prices comes with a drastic environmental cost: More plastic is produced and less in recycled.

This has left our recycling industry struggling to stay afloat.

Plastic is a petroleum-based product, and as oil prices fall, plastic productions costs fall as well. With low oil prices, product manufacturers (think Pepsi, Coca-Cola) can buy newly produced plastic at a lower cost than recycled plastic because the recycling process raises the price.

As a result, recyclers all across the country are suffering the effects of these low oil prices.  David Steiner, the CEO of Waste Management, the largest recycler in North America, recently said in an interview on CNBC, "When you look at our recycling business over the last three years when we really saw the downturn, it sort of fluctuated from slightly profitable to slightly unprofitable." Mr. Steiner says that Waste Management went from a profit margin of about 8% to less than 1%. 

To make matters worse, in California, the plastic we collect for recycling is mostly shipped overseas to China and other countries even though we have many in-state companies capable of recycling plastic. Why aren't these companies recycling our plastic? The market doesn't reward in-state plastic recycling.

To incentivize in-state recycling and reduce new plastic production, Californians Against Waste is pushing two bills through the legislature. The first, AB 1005 (Gordon), will extend the Plastic Market Development program that gives in-state recyclers money to recycle empty plastic beverage containers. Currently, only 50% on plastic collected in California is recycled in-state. The rest is shipped to China and other countries.

Second, AB 2530(Gordon), will require plastic beverage containers to be labeled with their recycling content. This will incentivize beverage companies to invest and buy recycled plastic content.  

California consumers buy green and environmentally minded products all the time, and these two bills will reward companies that go green and invest in recycling.