Why do we need to pay for oxygen if the air is free?

That’s actually an excellent question. Since I make oxygen for a living, I feel qualified to answer it.

Air separation is one of the few industries where your raw material is 100% free. It’s all around us, we can suck in as much air as we like and no one gives us a hard time.

Problem, though, is that separating it is actually pretty tricky.

The main resource we pay for when we separate oxygen (and nitrogen, and argon) is electricity. In order to separate the gasses, you first have to compress them, and the quantity of gasses you have to compress, and the pressures involved, mean it takes a lot of power.

There are a few other feedstocks you need to buy to run the process, but those are relatively minor. Really, other than the power, the costs of air separation are the costs of designing the process, purchasing and installing all the equipment, and then maintaining it as it runs around the clock. That requires people to run it, people to maintain it, people to monitor the equipment to make sure nothing blows up, and then people to manage and oversee all of those people. Such are the costs of doing business.

Now, all of that said, on a cubic foot by cubic foot basis, pure oxygen really isn’t that expensive when it’s first produced. But if you’re going to buy small amounts for retail sale, then you have the added costs of compressing down to where it can be transported, buying the high-pressure cylinders, transporting it, marketing it and selling it. If you’re not using cylinders, then you need to get the oxygen cold enough to turn it to liquid, and you have to transport it in specialized, highly insulated vehicles. In either case, you have to add on a series of safety controls to make sure this pure oxygen doesn’t cause fires or explosions that could kill someone.

All of those businesses involve more people, none of whom are doing this for fun, you have to pay all of them. And if you’re talking about medical-grade oxygen, you have additional levels of control that are required to make sure the oxygen is completely pure and uncontaminated with anything dangerous, and it has to be regulated and inspected by the FDA to be accordingly qualified.

All of that costs money. A great deal of money, in point of fact, and that money is paid for by selling the oxygen (and the nitrogen, and the argon).

Lest you think all those costs are trivial, you want to hear something crazy? Some air separation plants throw oxygen away. If a plant is installed principally to provide nitrogen, in large quantities, to a single customer, it will be built right next to the customer, so all of the nitrogen can be piped over directly without having to be stored or transported. In that case, if the customer has no use for the oxygen, it’s just vented back into the air. That may seem crazy, the first time you see it, but the reality is that establishing all of the facilities necessary to catch, purify, compress, store and transport that oxygen would be so expensive that you wouldn’t make your money back.

It’s actually an interesting case study. The cost of anything that’s manufactured is driven by the cost of the raw materials, and then the costs of processing it, packaging it, transporting it, marketing it and selling it. If you remove the cost of the raw materials, all of the other costs still remain. And the air separation business proves that. Even if a raw material is free, the final product won’t be, because you have to pay for all the work involved in turning one into the other.