Why Oil Prices Affect the Production of rPET

For the Lazies - A 30-Second Summary

The production of recycled PET, also known as rPET, is closely tied to the price of oil. When oil prices drop, virgin plastic becomes cheaper to produce than recycled alternatives, making it harder for rPET to compete in the market. This can reduce demand for recycled materials, despite their significant environmental benefits. Understanding this connection helps explain the market challenges faced by rPET producers and why supporting recycling remains vital even when oil is cheap.

The Link Between Oil prices and Plastic (rPET)

Most plastics, including PET, are made from petrochemicals derived from crude oil. Virgin PET is produced using fossil fuels, while recycled PET is made by processing post-consumer plastic bottles. The key difference lies in energy use, emissions, and cost.

When oil prices are high, it becomes more expensive to produce virgin plastics. This makes rPET more financially attractive to manufacturers and brands. However, when oil prices fall, virgin plastic becomes cheaper, which can undercut the demand for recycled alternatives.

So when Trump says 'drill, baby, drill,' it could be good for your back pocket in terms of cheap petrol, but it means cheaper plastic production, making it less attractive to investors. What a double-edged sword.

Image Source: ABC Australia

Why This Matters for Sustainability

rPET offers clear environmental advantages. It uses less energy, generates fewer emissions, and helps divert waste from landfills. According to Science Direct, producing rPET requires up to 79 per cent less energy than virgin PET.

But rPET production is more complex. It involves the collection, sorting, cleaning, and reprocessing of used plastics. These additional steps increase costs, making rPET vulnerable to market shifts, especially when oil prices drop suddenly.

Impact on Recycling and Supply Chains

Low oil prices can discourage companies from buying rPET. This creates knock-on effects across the recycling supply chain. Collectors, processors, and recyclers may struggle to remain profitable. In some regions, this has even led to the stockpiling of collected plastics due to a lack of market demand.

In the long term, this undermines investment in recycling infrastructure. It also discourages innovation in the sustainable packaging and fashion industries, where rPET plays a growing role.

The Role of Government and Policy

Governments can help balance the economic playing field. Policies such as recycled content mandates, extended producer responsibility, and incentives for circular manufacturing can support the rPET industry even when oil prices drop.

In Australia, the National Plastics Plan encourages the use of recycled content across packaging and textiles. Local councils and state governments are also exploring initiatives to strengthen recycling supply chains and reduce dependence on virgin materials.

How Consumers and Brands Can Make a Difference

Supporting rPET is not just about economics; it is also about environmental responsibility. Consumers can favour brands that use recycled materials, even if prices vary slightly. Businesses can commit to long-term sustainability goals rather than fluctuating with market conditions.

At SevenC’s Recycling, we believe rPET is a critical part of WA’s sustainable future. While oil prices may shift, our commitment to reducing textile and plastic waste remains firm.

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