What Is the Profit Margin of Recycling Used Motor Oil into Base Oil or Diesel?

Recycling 1 ton of used motor oil into base oil or diesel can generate a substantial financial return, but the actual profit depends on product revenue and total operating costs.

Published financial data provides the following reference points:

• Base oil production: A published economic model reports approximately US$297 profit before tax per ton of used oil processed, with a pre-tax profit margin of approximately 38.5%.
• Diesel production: A used oil distillation supplier’s example, recalculated using its stated yields and selling prices, produces approximately US$293 per ton after the three listed costs, equivalent to 45.9% of sales revenue.
• Net profit margin: IMARC Group’s 2026 used oil recycling project estimate indicates a net profit margin of 7–14%. This is a general project benchmark, not a separately verified margin for either production route.

Profit Margin of Recycling Used Motor Oil into Base Oil

A 2017 economic study published by OAPEC, Re-Refining of Used Lubricating Oils and Its Economic and Environmental Implications, provides a detailed financial model for a used oil re-refining project.

The model includes feedstock, utilities, labor, depreciation, maintenance, laboratory expenses, insurance, and licensing costs.

Base Oil Production: Revenue and Profit per Ton

Financial Item	Amount (US$/ton)
Total product sales revenue	$771
Raw material	$330
Utilities	$20
Labor	$25
Depreciation	$46
Maintenance	$23
Laboratory expenses	$5
Insurance and licensing	$25
Total costs	$474
Pre-tax profit	$297
Pre-tax profit margin	38.5%

What Is the Net Profit of Base Oil Recycling?

The US$297 figure is profit before tax, not net profit after tax. The study does not disclose a separate after-tax net profit per ton.

For an additional industry reference, IMARC Group’s 2026 Used Oil Recycling Plant Project Report gives the following indicative margins:

• Gross profit margin: 20–28%
• Net profit margin: 7–14%

Profit Margin of Recycling Used Motor Oil into Diesel

A used oil distillation equipment supplier published a financial example based on processing one ton of used motor oil, with the following product output and selling prices.

Diesel Production: Revenue per Ton

Product	Output	Selling Price	Revenue
Diesel	850 kg	$720/ton	$612
Asphalt	130 kg	$200/ton	$26
Total	980 kg		$638

Diesel Production: Cost and Profit per Ton

Cost Item	Amount
Used oil collection	$280
Electricity, fuel and labor	$50
Catalyst	$15
Total listed costs	$345
Remaining surplus	$293
Margin on sales revenue	45.9%

Actual Profit per Ton: Base Oil vs. Diesel

Financial Indicator	Base Oil	Diesel
Sales revenue per ton	$771	$638
Total/listed costs	$474	$345
Profit before tax / remaining surplus	$297	$293
Calculated margin	38.5%	45.9%
Net profit per ton	Not disclosed	Not verified
Verified net profit margin	Not disclosed	Not verified

Important: The base oil figure is a historical project model’s profit before tax, whereas the diesel figure is a supplier example’s surplus after only three listed costs. Their margins are not directly comparable.

References

1. OAPEC (2017), Re-Refining of Used Lubricating Oils and Its Economic and Environmental Implications. Original report.