I would say washing off the peanut oil. Paper cups can take longer to biodegrade, depending on what they are made of. Washing off peanut oil is the least of your worries – of course, it depends on what kind of soap you use. You can find all kinds of environmentally friendly dish soaps. I also recommend buying Twist sponges.
Some companies are actually creating lines of paper cups that are biodegradable. Originally I would work against the use of paper cups but utilizing the green technology coming out today sends a message to the companies that we want more products like these on the market. You can also use silicon cups for baking muffins as well.
Definitely washing off the peanut oil: there is no way it will take up as many natural resources and energy to wash the pan by hand than to continuously apply one-time-use paper. Think about it: each package of paper cups, enclosed in plastic, transported from a dozen different places on a regular basis as you make muffins. The amount of fossil fuel that goes into that process is staggering.
On the other hand, you could use an all-natural, homemade cleaner (see link below for very easy, and very cheap, recipes) to clean your pans, which would go along way by cutting out commercial cleaning product as well.
In short: the less you have to consume, the better for the environment. To push, in the name of the environment, for further consumption – in one way or the other, towards cups or toward cleaning product – is completely paradoxical.
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