The Bulkbuy

John Baxter | June 03, 2011

Purchasing engine oil in large quantities offers good savings.

 

The do-it-yourself oil change is a standard for many owner-operators, especially those with their own authority. The dollars saved with DIY are modest for a one-truck operation, but many owners like to perform the operation partly for the satisfaction.

Significant savings are available if you’re running a small fleet and can justify buying oil in a 55-gallon drum or, better yet, having it delivered to your own bulk tank. Disposal is normally an associated cost, but if you live near an oil-recycling refinery, you might be able to sell your waste oil. As fleet size approaches 10 vehicles, it can pay for you to burn your own oil to heat your maintenance shop.

Major refiners often don’t handle distribution of bulk oil to the individual customer. They leave that to independent businesses willing to invest in storage and transportation equipment and sales and service staffing. A first step in determining whether buying bulk oil makes sense for you is to contact a local distributor and explore the pricing structure.

“The economics are there with bulk oil,” says Tim Genrich, division sales manager at North American Lubricants, “though with smaller fleets the big advantage to buying in 55-gallon drums may be convenience” when compared to running to the store for gallon jugs.

Genrich believes buying in bulk becomes profitable for fleets “in the three- to five-truck range. The minimum bulk delivery is typically in the 100- to 150-gallon range.” He says you might be able to save $1 or more per gallon when buying in 55-gallon drums oil that costs as low as $13-14 per gallon in gallon containers. Or you could get a quality 15W-40 engine oil at slightly more than $10 per gallon when having the product delivered in bulk to your tank. Genrich warns that buying in bulk requires handling cash flow carefully because you can easily “end up with a $2,000 invoice.”

Distributor Jay Gress Inc. “will provide the tank for the customer if he uses 1,000 gallons a year,” says Joe Dalesandro, a territory manager. “The tanks typically hold 250 gallons, so you end up with four to five deliveries a year.”

He says you can get one premium engine oil for about $8 per gallon in a 55-gallon drum, versus $12 to $13 at the best gallon jugs prices. Bulk oil would go for about $7 per gallon.

YEARLY COSTS

Fleet size                                   No. of changes/gallons            Gal. jugs             Drums           Bulk

                                                                                                            $13/gal.              $10/gal.        $8/gal.

  1 truck                                                    5 / 60 gal.                     $780                      $600

  3 trucks                                                 15 / 180 gal.                  2,340                       1,800

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