Running a Shop

Making the Most From Used Motor Oil

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Upon taking over a Jiffy Lube franchise in Montana, Briggs Anderson says that managing waste oil wasn’t a “stated goal” of his enterprise.

That isn’t to say that waste wasn’t a big deal to Anderson and his wife, Niki Leffingwell, who co-own the franchise.

“My wife and I are pretty environmentally conscious and probably increasingly so,” Anderson says. “It’s something I definitely have at home, and that kind of inspired me an effort this past year.”

Anderson and Leffingwell took over a chain of western Montana Jiffy Lubes in 2017. They now run seven locations and were recently named as the company’s Franchisee of the Year.

They were recognized in part for their efforts to reduce waste, particularly with any quick lube shop’s biggest byproduct: used motor oil.

A part of that was already in place when Anderson took over.

“They were using waste oil heaters in several stores and having it picked up by a company that basically sells it,” he says.

All shops have to manage their used oil, though not in the same way. Some shops get paid for their waste oil while others pay someone to haul it away, but even that’s always changing.

When Anderson started, the shops paid for waste oil pickup. He’s flipped that and now gets paid for the service.

“We don't make any real money off it, but it has value, and we’re capturing a little bit of that,” he says.

 

Changing Market

Aside from heating your shop, used motor oil can go on to be used in fuel oil blends, asphalt production and as base lubricant for multiple industrial uses, including synthetic and semi-synthetic motor oil.

Most of that oil is set up for a second life by re-refiners, who will pay quick lube shops for the material when the market is right.

Crude oil prices can significantly affect the market for waste oil. In 2016, NOLN writer David Burbach reported that the industry would be prudent to budget for a $1 per gallon payment to dispose of used oil. That was on the heels of a price drop that sent a barrel of crude down to $29 early in that year. Cheap crude makes re-refined oil less attractive to lubricant manufacturers.

A rebound in crude prices has helped turn attention back to re-refined used oil and get shop owners paid, even just a bit. Anderson says that rising oil prices played into his negotiation.

Just 1 percent of shop owners in the National Oil and Lube operator survey were paid for their waste oil in 2017. A year later, 28 percent reported getting paid, and there was a correlating drop in the number of shops paying for disposal. The survey also showed that more shop owners are neutral on waste oil — neither getting paid nor paying for disposal.

The changing market makes the re-refining an engaging line of work for people like Jim Scott.

Scott is the vice president of supply chains for Universal Environmental Services, a re-refiner based in Peachtree City, Ga. Whatever the price pressures are, the re-refinery business touts itself as the environmentally sound option, because it reduces reliance on crude oil.

“If we look at it like this: It takes 42 gallons of crude oil but only 1 gallon of used oil to produce 2.5 quarts of new lubricating oil,” Scott says.

The company’s re-refinery can process 40 million gallons of waste motor oil annually, and a lot of that comes from quick lube shops. They take oil filters, too, which can be crushed and sent to steel recyclers.

If shop owners want to look more closely at their waste oil management, Scott says the first step is to investigate where it all ends up.

“I would encourage everyone to do a little homework on their current used oil collector,” he says. “Make sure that they have the proper insurance, not just to collect and transport used oil, but to make sure they do the due diligence to know ultimately what happens to the used oil that they generate.”

 

Best Practices

The waste oil heaters in Anderson’s shops worked well in the winter. But in the summer, he has to get rid of nearly all of his supply. He says he wanted to make sure it got re-refined.

To navigate the process, Anderson says he had a lot of support from Jiffy Lube’s association of franchisees, who gave him honest advice and help.

Another change he made was a switch to bulk oil storage instead of cardboard boxes. It came with some costs—not just from purchasing the tanks.

“That increases your working capital, because you have to store a little bit more oil and buy a little bit more to keep it on hand,” he says.

Ultimately, he says it saved shop space and even added to their service speed. 

There are steps shops can take to make their operations more attractive to re-refiners, too. Outfits like Universal Environmental Services handle most of their own pickup, and Scott says his drivers know which shops have the good used oil.

“Everything from maximizing their used oil capacities, which helps the collector and it helps us control our costs,” he says.

The most important step is not letting used oil storage become a catch-all. Keep used oil separated from other things like wastewater and antifreeze. Wastewater not only reduces a shop’s capacity for pure used oil, but Scott says that a smart driver will know to take the oil from the top of a storage container, leaving the shop with more and more wastewater over time.

“We put a lot of time and effort into training and into equipment that helps us identify where water is in the tanks,” he says.

 

Maximizing Reduction

Having a waste oil heater might have been the simplest way to decrease waste, Anderson says. But it may not have been the most effective. That came with the switch to bulk tanks.

“Our big waste reduction effort this past year was really focused on switching from eco-boxes to bulk oil,” he says. “And that’s where, I think, we really put a dent in our waste.”

Now he says he’s trying to maximize heat retention by thinking about how often his bay doors are open in the cold months.

He also invested in an oil filter crusher a while back, even if the main benefit is making things a bit easier down the line.

“I think we’ve tried to be mindful of that,” Anderson says. “We may not have to crush our filters, but that’s a smart thing to do. It gets a little more of the oil out, and if we take it to a recycler we know it doesn't have oil in it.”

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