Waste Management (WM) is Dis-Investing in Recycling as It Becomes Less Profitable

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NEW YORK (TheStreet) --  Recycling has become less profitable as a result of lower oil prices, Waste Management  (WM) CEO David Steiner said on CNBC's "Squawk Box" on Friday morning. 

"[Low oil prices] are good news for our fleet, but with recycling low energy prices, both oil and electricity is what drives fiber and plastics recycling. So when you have those low oil prices, you can't sell the materials for as much on the back-end, which means it becomes less profitable. Which means you dis-invest in it," he explained. 

About five years ago, recycling was 12% of Waste Management's business and it was investing $300 million to $400 million in it, Steiner said. Now, it's only about 8% of the company's business, with investments of under $20 million a year, Steiner said. 

For recycling to be profitable again, "you either need to draw down the processing cost or you need to drive up the price on the back-end," he claimed. "Hopefully both."

Recycling tends to have a three-to-four-year V-shaped curve, where it goes down quick and pops back up quick, Steiner said. And right now, we're in the fourth year of "basically a recycling recession," he said. 

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