Low crude oil prices, decreased demand from industrial burners and growth in rerefining capacity have been the three major contributors to the rerefining industrys trend away from pay-for-oil toward charge-to-collect, Vertex Energy CEO Ben Cowart told attendees of the ICIS Pan American Base Oils and Lubricants Conference on Dec. 4 in Jersey City, N.J.
Rerefiners are one of three major markets for the 1.3 billion gallons of used motor oil generated in the U.S. each year, Cowart reported, along with industrial burners and export blenders. The burner fuel markets, which make up half of the used oil market today, are contracting rather quickly, he said, as many large burners have switched to cheaper natural gas. The export market is also shrinking. Combined with rapid growth in rerefining capacity between 2010 and 2014 – from 323 million gallons then to 435 million now – rerefiners are feeling the pressure.