Will Escalating Oil Prices Cause Laboratory Science Costs To Soar?

Suppliers of laboratory chemicals and plastics are already beginning to feel the pinch from rising crude oil prices in the wake of the worldwide embargo of Iraqi oil. But it's not clear when-or if-scientists will have to pay more for those products. Officials at some companies, like J.T. Baker Chemical Inc. of Phillipsburg, N.J., one of the country's largest suppliers of laboratory solvents and other chemicals, say they plan to pass the cost increases onto their distributors, who could try to recoup their higher costs from customers. Others, like Sigma Chemical Co. of St. Louis and Fisher Scientific of Pittsburgh, say they will swallow the costs themselves, at least for now. No one expects scientists to be paying more for essential chemicals and equipment anytime soon. And many company executives noted that the cost of oil is a minor component of the price tag for most products used in the laboratory. But many suppliers of such workhorses of the laboratory as solvents are nervous. Their products are essentially highly refined petrochemicals. Oil companies, which supply benzene, toluene, and other raw materials to them, have increased their prices by 30 to 40 percent since the Persian Gulf crisis began August 2, according to Peter Andugar, purchasing manager for Fisher Scientific, a Pittsburgh-based subsidiary of Eastman Kodak Co. "This is the biggest increase, in the shortest amount of time, I've ever seen," he says. Andugar's company produces laboratory research chemicals. "This makes us very nervous, because we have to set our prices for next year right now and no one knows what's going to happen," says Andugar. "We will have to swallow the prices for a while." "Our suppliers of [raw materials like] toluene and xylene have already increased their prices by 10 percent," says Daniel Mulholland, marketing director at J.T. Baker, which purifies and packages the chemicals. "We've notified our distributors [to labs and research institutes] to expect increases in the costs of lab chemicals." Ten percent to 20 percent increases were reported by many in the chemical industry. But the production of many plastics and of an increasing number of compounds known as specialty chemicals is so labor-intensive that the cost of materials is secondary, say company officials. Even a protracted increase in oil prices might have little effect on consumer prices, they say. "Any changes are pretty far down the pipeline," says David Halpern, president of Polysciences Inc. of Warrington, Pa. "The bulk of our lab chemicals are such specialty chemicals that more money goes into brain power than into supplies." "I don't see any direct result from the oil embargo other than from a general inflationary effect," says Burt Zabin, vice-president of the chemicals division at Bio-Rad Laboratories in Richmond, Calif. "Even in the case of solvents, I don't see this as a serious problem." Factors such as supply and demand, the size of company stockpiles, and existing contracts may outweigh a cost increase in materials. Moreover, the price research scientists must pay for their lab solvent is not simply the result of cause and effect, say industry representatives. The amount of money the scientist hands over is controlled by a complicated network of economic forces, and not simply the price of the raw materials. "Each time you process a chemical, the relative energy content goes down," explains Owen Kean of the Chemical Manufacturers Association, a trade group in Washington, D.C. "When you get far down the line, the cost represented by the oil is low and the cost of manufacturing is relatively high." When crude oil is pumped out of the ground it is refined many times before it reaches the laboratory as a reagent grade solvent. Even chemicals such as xylene and benzene, which can be skimmed directly from the oil, must be processed and purified. Though their essential chemical character is unchanged by the time they end up in the laboratory as solvents, he says, enormous numbers of dollars have been invested in refining them. "So when the lab buys the chemical, there are an awful lot of other costs," including packaging and shipping, that the scientist is paying for besides the original cost of the oil, says Kean. There are a number of other factors as well that may keep down the price of laboratory chemicals. Many chemical manufacturers have stockpiles of raw materials, which, they say, will keep them from raising prices for several months or even the next year. Even if their costs do rise, in many cases, existing contracts with their customers also prohibit them from raising prices. "In our case, our high volume [of purchases] gives us a lot of leverage in terms of keeping costs down," says Gary Barbarash, assistant director for small purchase policy and oversight at the National Institutes of Health. "On top of that, a contract is usually negotiated a year ahead of time and prices are fixed." Whatever effect the oil embargo has on laboratory chemicals, so far the scientific community seems unconcerned. "We haven't had a single person call since the oil crisis began," says Jody Florentine, a sales representative at Fisher Scientific, adding that usually scientists call if they're worried about price increases. It may just be too early for scientists to start worrying. "Most chemists haven't thought about it yet," believes Hank Hodgin, a researcher at Alcott Chromatography Inc. in Norcross, Ga. "When the purchasing agent comes back to the chemist and says the price of the solvent you want has gone up, only then will he realize what's happened."

Will Escalating Oil Prices Cause Laboratory Science Costs To Soar?

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