Low oil prices may come as a relief at the pump, but they’ve had a damaging effect on the waste and recycling industry. As oil prices continue to bounce along at their lowest levels in more than a decade, the cost of virgin materials has dropped below that of recycled materials, which is decreasing demand by manufacturers for recycled goods.

“The price of oil has dropped before, but this is a unique drop because it comes at a deflationary time in our economy,” says Joe Fusco, vice president of Rutland, Vt.-based Casella Waste Systems Inc. “We have seen the markets react to it, and several weeks ago Wall Street reacted to the drop of oil prices with a bit of a panic. This particular drop in oil prices is probably related to the fact that both the global and local economy is not as strong as we’ve seen in the past. It gives with one hand, but takes with another.”

Many waste and recycling companies are feeling the effect of the slump in oil prices and are working to adjust to ensure operations run smoothly. Tactics include implementing fees and sliding scales, staff reductions and redeployments and other measures.

Sliding Scales

To keep its business more consistent in the face of economic headwinds, Casella has developed a sustainability recycling adjustment. The SRA is a fee added to customers’ bills that rises and falls in line with global commodity prices and the investments that Casella is making in recycling infrastructure.

“In times of low commodities prices when recycling is challenged, the effect is reflected in the costs of the services provided in order to make recycling economically strong,” says Fusco. “When commodity markets are better, the fee is smaller and can even go as low as zero. This system allows customers to benefit in a strong commodities market.”

Casella discussed its success implementing the SRA fee during its fourth quarter earnings call.

Clean Harbors Environmental Services Inc.