It is likely that every consumer in North America and around the world is aware of the ever increasing cost of crude oil and gasoline. The Organization of Petroleum Exporting Countries (OPEC) has failed to control the cost of crude oil through failure to follow basic economic rules of supply and demand. Also, the recent hurricanes in the Gulf of Mexico have reduced the critical output of refineries and caused significant concern of almost crisis proportions.
The cost of crude affects much of what we do in our daily lives. America’s economy relies on the products refined from crude and as the price continues to increase, the price to do simple tasks in our daily lives increases as well. Everything including air travel, gasoline and diesel, the cost to manufacture consumer goods, the costs to ship items and heat homes has and will continue to be affected by the cost of crude oil. More importantly, the cost of crude is deeply affecting the cost of lubricating oils around the world.
Figure 1 (Source: New York Mercantile Exchange)
The price of crude oil on the New York Mercantile Exchange has increased significantly in recent years. The cost of one barrel increased from just over $20 a barrel pre-9/11 to almost $70 a barrel post-Hurricane Katrina. Experts are contemplating where the price of a barrel of crude could go; some say that $100 per barrel may be a harsh possibility.
The cost of crude has a direct effect on the price of lubricating oils and greases. In the past year, for example, the cost of VGO 220 Paraffinic Group II base oil has climbed from $1.89 to $2.50 per gallon.
Based on the 32 percent increase in base oil costs, it is likely that the lubrication industry has evolved to handle and store lubricants accordingly. Right? Unfortunately, most will require more than a price increase for us to get serious about handling and storage. Regrettably, there is a much greater issue beyond handling and storage.
Now more than ever, oil consumption and consolidation are at the forefront of most lubrication programs. The simple fact is that management wants to cut costs and has wrongly identified lubricants as a great way to achieve this goal. But what are the root causes of excessive oil consumption? Some amount of lubrication can be expected to be consumed over the course of a year, but beyond the top-ups, most companies are literally throwing away money on tasks that add no value or simply from neglect.
Some root causes for excessive oil consumption are obvious. They include the following:
Overhauls and rebuilds
Time-based oil changes
Aside from leakage consuming volumes of lubricants, overhauls and rebuilds, time-based oil changes and overlubrication point to planned maintenance as the root cause of excessive oil consumption. It has been estimated that 50 percent of planned maintenance tasks have absolutely no value. Some, such as overlubrication, are potentially damaging to components.
Figure 2 (Source: Lube Report: Industry News from Lubes-n-Greases)
Drivers on the road have been programmed to change their vehicles’ oil and filter on a time-based or mileage-based interval. Without the aid of modern science, planned maintenance is practiced on an engine’s lubrication system, not knowing if this time-based or mileage-based interval is accurate or appropriate for the vehicle. Regrettably, this same practice has been applied in industry. It is common for facilities to change the oil in most of their oil sumps once a year without using oil analysis to confirm the condition of the lubricant.
But what is the real cost of changing oil in sumps and reservoirs? Aside from the apparent costs, the lubricant and the labor to change the oil, there are several less apparent costs that need to be recognized, including the cost of supervision, permits, oil disposal costs, etc. These collectively can account for up to 900 percent of the apparent costs.
Knowing that an oil change can cost up to 900 percent of the apparent cost should encourage companies to search for alternatives that add more value to a program. It is clear that oil analysis must be used and PM tasks be improved to reduce oil consumption.
Making the move from preventive planned maintenance to procedure-driven condition-based maintenance will help to capitalize on and provide substantial credit to a lubrication program. Significant savings can be realized almost immediately if the WIC method is followed in planning maintenance tasks. The WIC method combines the following techniques to minimize oil consumption and add value to a maintenance program:
Wear debris analysis to plan rebuilds and overhauls.
Implement a strategic precision lubrication program to effectively relubricate components.
Condition-based oil changes instead of time-based preventive oil changes.
It is a fact that the cost of oil will continue to increase as the demand increases beyond the supply. Our task is then to ensure our precision lubrication program is strategically aligned to realize all the benefits of oil analysis to help circumvent unnecessary costs related to lubricating operating equipment. Following strategic steps to plan lubrication maintenance more effectively helps to reduce the number of valueless tasks performed in a day, thus increasing the amount of time lube technicians can spend on value-added jobs instead.