The oxidation of transformer oil begins as soon as the transformer is energized. A chemical reaction occurs when the oil is exposed to a combination of heat, oxygen, and core and coil components. As the process of oxidation progresses, acids and polar compounds are formed and in turn become sludge. This sludge will then coat heat transfer surfaces on the core/coil and the tank/radiators, reducing the heat transfer capacity of the system. The operational temperatures are increased, thus accelerating the degradation of the oil.