The [rerefining] industry on its own has not found it economical to expand, said Maury Lappinen, of TMS Inc., a Gaithersburg, Md.,technology and management services firm whichassisted the departments Office of Fossil Energy in compiling the study.

The report, Used Oil Re-refining Study to Address Energy Policy Act of 2005 Section 1838, was released in July. As suggested by the title, it was ordered by the Energy Policy Act as part of a broader search for ways to conserve energy and reduce air pollution.

The studys authors prefaced their findings by noting that they had too little time for original research and relied upon existing data, some of it dated. For example, statistics on U.S. rerefining rates came from a 1995 report pegging annual lubricant demand at 2.4 billion gallons and estimating that 1.4 billion of those gallons are available for recovery after subtracting volumes consumed in use. The same report indicated that 945 million gallons are recovered – 69 percent – and estimated that 88 percent of that amount is burned as fuel oil, while only 12 percent, or 165 million gallons, is rerefined into base oil for reuse in lubricants.

But the study suggested that U.S. numbers have not changeda great deal and it saidthat the European Union earns much better grades for recycling. It cited 2002 figures that the union recovered 80 percent of available used lubricants. The region also has three times as much rerefining capacity as the United States.

As a practical matter, the study said, it is possible for the United States to rerefine much more oil than it does today. However, it concluded that this is unlikely to happen for several reasons. First, rising performance standards for many types of lubricants create a need for high-quality base oils andconsequently for hydrotreating as part of rerefining processes. The cost of these facilities is too high to justify investment in new capacity, the study said.

At the other end of the equation, prices for rerefined base oil are too low, especially in relation to prices for fuel oil – the competinguse for used oil.

The study listed several possible steps that could increase rerefining rates in the United States. First, is saidthey could receive a boost if governmentand industry shared more information about collection programs. Rural areas especially have room to collect more used oil, it said. It also advised that government could reduce the raw material cost of rerefining by adopting regulations that prohibit or discourage burning of used oil in space heaters. (Such action would also have environmental benefits since space heaters generate more pollutants than many industrial burners, the study said.) Reducing or eliminating this demand would increase the volume of used oil available for rerefining and lower its cost.

The studys authors did not explicitly advise that governments subsidize rerefining, but it noted that many European countries do.

One of the major reasons that rerefining is more predominant in Europe is that many of the host governments sponsor financial assistance programs for the rerefining industry, said Art Hartstein, a program manager with the Office of Fossil Energy. This suggests that the European governments believe that the rerefining business is not self-sustaining and that government financial subsidies enhance business viability.

Hopes for more rerefining do not rest solely on government. The study said rates could rise if industry developed cheaper technologies to provide the quality of base stock demanded by the lubricant industry. Research is under way by several companies.

The study is online and can be viewed at http://www.fe.doe.gov/epact/used_oil_report.pdf