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How The Price Of Oil Caused A Downturn In The Recycling Business


If you live in a place that picks up your recycling, it's easy to think they're doing it to save the earth. In fact, companies make money off recycling - lots of money. It's a $100 billion business. And as Stacey Vanek Smith from our Planet Money team explains, that business has fallen on hard times.

STACEY VANEK SMITH, BYLINE: I followed my old newspapers and yogurt containers to my neighborhood recycling center, a place in Brooklyn called Sims.

My garbage comes here - or my recycling - sorry.

TOM OUTERBRIDGE: Yeah, your...

SMITH: Is that bad to call it garbage?

OUTERBRIDGE: Well, we'll don't call it garbage because we're not really in the garbage business. People make that mistake all the time.

SMITH: Sorry.


SMITH: Tom Outerbridge runs this place. He sells my newspapers and yogurt containers for a profit, and he shows me where it all goes.

There is a huge crane and giant magnets and conveyor belts going in every direction. It's like Willy Wonka except for garbage - recycling.

OUTERBRIDGE: This is just the beginning of the sorting system here.

SMITH: My yogurt container will probably end up in China turned into carpet, a toothbrush, a fleece jacket. But China's getting pickier about what it will buy, like this stuff.

We've got, like, bubble wrap and a Target bag and a Dunkin' Donuts bag.

Plastic bags used to be a valuable commodity, but recently they haven't been selling very well, and it's for a surprising reason.

OUTERBRIDGE: It is primarily due to the drop in oil prices.

SMITH: The price of oil has dropped 50 percent in the last year. Plastic is a petroleum product. When oil gets cheap, it makes more sense for companies to buy freshly made plastic than recycled plastic. The freshly made stuff is cheaper.

OUTERBRIDGE: We can't afford to put a lot of time and money into trying to recycle it.

SMITH: And so then what happens to the plastic bags if you can't sell them?

OUTERBRIDGE: Well, you can get to the point where these are going to the landfill.

SMITH: That's the bad news for plastic, but what about my giant stacks of newspapers? That's always been a big profit center for recyclers in the U.S.

BILL MOORE: We're the Saudi Arabia of recovered paper.

SMITH: This is Bill Moore. He's a recycling consultant. He says like the plastic, a lot of newspaper is headed off to China.

MOORE: They don't have many softwood trees so all their capacity to make boxes and newspaper is all 100 percent recycled fiber.

SMITH: But these days, China is buying less of our paper and this time the culprit is not oil prices, but the strength of the U.S. dollar. China can buy used newspaper from anywhere in the world. The dollar's been getting stronger; the euro's been getting weaker. So an old copy of Le Monde is a much better deal for the Chinese than a crumpled up New York Times. So what do you do if you're the CEO of a huge recycling business like Waste Management? David Steiner says he's been shutting down plants.

DAVID STEINER: I don't think crisis is too strong of a word in the recycling industry throughout the United States.

SMITH: So you're seeing recycling companies go out of business.

STEINER: Left and right - we really are.

SMITH: Steiner says a one-ton bale of recycled paper used to go for $150. These days he's getting less than half that - 50 or 60 bucks. At my recycling center, Tom Outerbridge says buyers are literally nickeling and diming him.

OUTERBRIDGE: You're negotiating around a penny or a halfpenny a pound.

SMITH: Outerbridge doesn't want to give up, not even on plastic bags. He's hired a picker to make sure only good plastic bags get through, so he can sell them for a higher price. If that doesn't work, he won't be able to recycle plastic bags anymore. And there is a word for a recyclable that is no longer profitable - it's called trash. Stacey Vanek Smith, NPR News. Transcript provided by NPR, Copyright NPR.

Stacey Vanek Smith is the co-host of NPR's The Indicator from Planet Money. She's also a correspondent for Planet Money, where she covers business and economics. In this role, Smith has followed economic stories down the muddy back roads of Oklahoma to buy 100 barrels of oil; she's traveled to Pune, India, to track down the man who pitched the country's dramatic currency devaluation to the prime minister; and she's spoken with a North Korean woman who made a small fortune smuggling artificial sweetener in from China.