A TECHNICAL AND ECONOMIC STUDY OF WASTE OIL RECOVERY. PART III: ECONOMIC, TECHNICAL AND INSTITUTIDNAL BARRIERS TO WASTE OIL RECOVERY
In order to understand the reasons for the decline of the re-refining industry, a study was made of the economics, structure and competitive aspects of the business. As a part of this analysis, interviews were conducted with 13 re-refining companies throughout the U.S. One aspect reviewed was waste oil collection. It was found that the degree to which re-refiners are able to secure adequate volumes of feedstock depends on the relative market prices of virgin lubricating oil and fuels. Higher fuel prices prices in relation to those for lubricating oil direct waste oils to the fuel market. Conversely, higher lubricating oil prices in relation to fuel enable re-refiners to compete successfully for scarce supplies of used oils. Another aspect reviewed was the re-refining process itself, which is primarily by acid-clay treatment. Based on interviews with the 13 re-refiners during the summer of 1973, average cost figures for each step in the re-refining of waste oils were obtained. Excluding taxes and administrative costs, the average total production cost for the firms interviewed was 17.5 cents per gallon. Depending on the product specifications, a variety of additives are blended with the re-refined base stock. Blending costs for high performance, top quality lubricating oils are as large as the total cost of re-refining. In reviewing the marketing of re-refined oils, two main marketing paths were found: final users such as industrial and commercial establishments who purchase high quality re-refined oils blended with additives, and independent jobbers who do their own packaging and distribution and purchase the unblended, re-refined oils in bulk. Sales to final users were found to be highly profitable, but those to independent jobbers, which account for the larger part of the total production sold, showed low rates of return. It was found that the failure of the re-refining industry to monitor the quality of its products and a Federal Trade Commission ruling which requires that re-refined oils sold in interstate commerce be labelled to indicate that they were produced from previously used oils have contributed to the public's lack of confidence in the quality of recycled lubricating aoils. As a result, consumers purchase re-refined oils based on their low price, making volume the key to success in this market. An examination was also made of specifications for lubricating oils, since uncertainty as to the quality of re-refined oils is the principal barrier to increased recycling of used lubricants. A closed-cycle experiment was described for resolving the question of the quality of re-refined oil and it was suggested that federal procurement and labelling policies be revised to reflect the quality of re-refined oils.
Teknekron Incorporated2118 Milvia Street
Berkeley, CA United States 94704
Institute of Public Administration,
- Cukor, P M
- Keaton, J
- Wilcox, G
- Publication Date: 1973-10
- Features: Appendices; Figures; References; Tables;
- Pagination: 143 p.
- TRT Terms: Costs; Economics; Energy; Land reclamation; Lubricating oils; Marketing; Quality control; Recycling; Refining; Specifications; Testing; Waste disposal; Wastes
- Uncontrolled Terms: Quality
- Old TRIS Terms: Reclamation
- Subject Areas: Economics; Energy; Environment; Finance; Geotechnology; Highways; Materials;
- Accession Number: 00097919
- Record Type: Publication
- Report/Paper Numbers: EPA/530-/SW-0-C.3 Final Rpt.
- Contract Numbers: 68-01-1806
- Files: TRIS
- Created Date: Jul 29 1975 12:00AM