Here’s how using more recycled plastic could ease the pain of oil shocks

As the crisis in the Middle East continues, much of the public focus has been on fuel prices and the cost of living. But there’s another oil-related product that often gets overlooked: plastic.

Most everyday plastics are made from “petrochemicals” that come from oil and gas. This means when energy markets fluctuate, companies that use plastic as a raw material also feel the impact.

When oil prices spike, producing “virgin” plastic becomes more expensive, though often with a delay, as higher raw material and transport costs move through the supply chain.

But what about recycling plastic? For years, this has been framed mainly as an environmental issue, and it still is. But that is no longer the whole story.

In a world increasingly shaped by volatile energy markets, geopolitical tension and supply chain shocks, recycled plastic offers something else: resilience.

From crude oil to coffee lid

Plastic is not a niche material. It is part of the hidden infrastructure of modern life. Australians use about 4 million tonnes of plastic each year.

Consider construction. Plastic is found in pipes, insulation, flooring, sealants and protective films. When the price goes up, the cost of building can increase as well. Or agriculture, which relies on plastics for irrigation lines, crop covers and chemical containers.

Packaging is even more obvious: plastic helps transport and protect food, beverages and consumer goods throughout the country.

Paying more for plastic

We can easily see sudden increases in fuel prices at the petrol station. But when plastic prices rise, the effects can extend to food packaging, building materials, farming supplies, medical products and household items.

Recent disruptions in global supply chains have highlighted how fragile this system can be. Many companies have learned the hard way that “just-in-time” global supply chains can easily turn into “too-late” supply chains when disruptions occur. That’s why even the threat of disruption can lift prices if traders anticipate shortages.

Australia is not immune. Many local manufacturers depend on imported raw plastics priced globally. If international prices spike, Australian businesses typically end up paying more. These higher costs can then spread across the whole economy.

This is where recycled plastic can help. This comes from used items that are collected, sorted, cleaned and processed into new materials. Since it makes use of local waste, it doesn’t depend on imported raw materials derived from fossil fuels.

Yet less than 10% of Australia’s plastic use is recycled back into the local supply, manufacturing and consumption chain. Much of the rest ends up in landfill.

Money in the bin

The fact it comes from waste doesn’t mean recycled plastic is automatically cheap. In fact, it’s more expensive than raw, virgin plastic often by 10% to 50% on average, depending on the plastic type and quality requirements.

Why? Collection systems cost money. Sorting mixed waste is technically difficult. Contamination lowers quality. Reprocessing plants need investment, energy and skilled workers.

But price is only one part of the story. Stability matters too. A manufacturer might prefer slightly higher-priced recycled materials if they provide a more dependable local supply and reduce exposure to sudden global disruptions.

This is especially crucial for businesses that plan their production months in advance. A reliable supply can be as valuable as a lower price.

We are already seeing some movement in this direction, but it is much too slow given the scale of the challenge. Despite years of talk about circular economy goals, many Australian manufacturers still see recycled plastic as a niche option for sustainability, not as a key raw material.