Which is better for the environment and gas prices - paper bags made from recycled paper or plastic bags?

Paper is better than plastic in terms of recycling. It can be recycled numerous times. Whereas plastic bags have limited recycling capabilities. The best thing overall is simply bringing your own bags. Some stores are actually offering discounts if you bring your own bags.

True that plastic bags can only be recycled into products such as insulation or park benches hence it's not indefinitely recyclable but paper can only be partially recycled as well as the wood fibers become shorter each time and new wood must be introduced to keep the quality of the paper up. However, recycling paper takes a lot more energy, consumes a lot of water and produces a lot of water pollution so in fact plastic bags are easier to recycle. Plastic bags also require a lot less energy to produce in the first place and a lot less energy to deliver as they occupy much less volume. The true difference is that paper is more easily collected for recycling as the consumer merely has to put it into their single stream recycling bin. Plastic bags cannot be collected with recyclables that are to be sorted by automated means such as in single stream recycling because they would wrap themselves around the rollers and jam the machines. The consumer must take the plastic bags back to the store where there are collection bins for recycling the plastic bags but very few people do this. Basically, plastic bags would be better for the environment and gas prices if people would simply bring them back to the store for recycling but that isn't going to happen. Of course, the best bag is the one that you reuse, provided that you've remembered to bring them with you and that isn't going to happen either. Note that plastic bags are made from natural gas which currently is considered a waste product due to the cost of a separate infrastructure to collect and bring the gas to market such that most natural gas are just burned in flares. There are efforts to produce portable gasifier and Fischer Tropsch reactors to convert natural gas to more valuable oils and waxes at the remote well site to be pumped to market along with the crude but till then, a lot of natural gas is just flared at the well head.