Oil re-refiners blame GST for collapse

Press, 13 March 1987, Page 5

Oil re-refiners blame GST for collapse

By DAVID CLARKSON A huge pool of waste oil is building up in storage tanks in Christchurch with the virtual collapse of the oil re-refining industry. The storage tanks are almost overflowing and disposing of the waste oil presents a big problem. It cannot be dumped, and only a small amount can be burned as fuel oil. When oil prices were high, companies spent millions of dollars switching to coal-firing.

The market for re-re-fined oil has collapsed because the recycled product has lost the price advantage it had for many years. Glydol Oil, Ltd, in Waltham has been re-refining used oil for 30 years, but the managing director, Mr Neville Oetgen, said last evening he would have to lay off two of the five staff.

His company sold 20,000 litres of oil in February last year. Last

month, the figure was between 2000 and 3000 litres. Before GST new oil had a 20 per cent sales tax which gave the re-refined product a price advantage. Since then, the sales tax has gone, and GST has been put on recycled oil.

“As soon as GST arrived the slide started,” said Mr Oetgen. “The whole of the industry is hurting.” He said the Government had not listened to warnings from the industry before the tax changes, and had refused to give it protection. As his firm cannot sell the oil, it cannot continue re-refining. Now it is getting inquiries from the city’s big oil users as the storage problem worsens. The collection manager for Waste Oil Service, Ltd, Mr Peter Todd, said the firm was making only urgent pick-ups. Service stations had holding tanks

for the waste oil, but some were now full.

Disposal of waste oil was tightly controlled. It could not be dumped, and it could not be put into the sewerage system. Some could be burned as fuel oil, but the main users had switched to coal firing when oil prices were high, he said. Mr Todd suggested the Government should provide a subsidy for the recycled oil, to restore its price advantage and get re-refiners back in business.

Another approach would be to require by law that oil companies use a proportion of re-refined oil in the new oil.

Mr Oetgen believes the Government should tax new oil again, to solve the problem. “For 30 years we have been here, and the business has been building up very nicely,” he said.

“Then GST arrived, and that was the end of that.”