Oil operators spend billions of dollars each year on oilfield equipment. Some of the products purchase consists of casing, tubing, pump jack, oil rig, rotary tables, block, truck mounted rigs, jack up rigs. There are hundreds of company that sell equipment. Just Google the word and view all the listings, in addition to all the published info out there. To further understand the buying process, here are some of the questions I would like to answer. Where do most company buy their products? Where do these company's buy their products form? How can they save money like any other industry?

Let start with where companies buy there products from. Most oil operators will purchase their goods from a local dealer. Let me give an example of this. Company A needs to purchase some pipe. They need 10,000 feet for a well once a month. They purchase 10,000 feet of 5 ½ 15lb casing at $15.00 per foot. Their total price is $150,000 on the pipe from the dealer. That dealer probably bought that pipe from a dealer and that dealer then purchased from a dealer.

The actual price form the manufacture was probably around $75,000. So by the time that pipe gets to the oil operator it has easily doubled. If the oil operator just purchased direct form the manufacture, they could easily save about $75,000 per month. Total for the year on saving buying direct is $900,000 per year on this one product. Image what the savings would be on all the products they need.

Most other industry have this construction company's for example. In other industry's is is revered to a buying club. A buying club is where multiple companies come together to bulk purchase direct from the manufacture. This save company's billions of dollars each year. This allows the small company to be able to compete with the large companies. In these hard economic times everyone is trying to cut cost. That is why buying direct from the manufacture makes so much sense.