There are benefits and drawbacks to using oxygen instead of nitrogen and air. First, oxygen requires a much lower flow and pressure than nitrogen, meaning the consumption—and ultimately the costs—are lower. Also, at thicknesses of more than .08 inches, oxygen cuts faster.
Using oxygen as an assist gas also has its downsides—namely oxidation. The reaction from oxygen assist gas causes oxidation that can negatively affect surface quality, remove surface coatings and prevent the ability to paint finished workpieces. Oxide that is not cleaned off will chip away and cause surface corrosion. In general, the overall edge quality of workpieces cut with oxygen is inferior to that of workpieces cut with nitrogen.
Nitrogen provides a clean, precise cut without oxidation, since it doesn’t cause a reaction to increase heat and aid cutting, but rather serves only to remove the molten metal. Nitrogen is ideal for stainless steel and aluminum, and can cut mild steel much faster than oxygen when metal thicknesses are less than .08 inches (see figure 1). While nitrogen requires higher pressure and flow than oxygen when cutting thick metals, the amount of nitrogen required (and the pressure and flow) drops as metal thickness decreases.
In most situations, using nitrogen instead of oxygen comes with a much higher price tag. Also, except with very thin metals, nitrogen is the slowest assist gas. For this reason, it is typically only used for mild-steel cutting applications in which surface quality is extremely important.
Shop air can be a viable alternative in some applications, with the obvious bonus being that there are no direct consumption costs. The reaction air cutting causes creates plasma, an extremely effective heat conduit that allows the fastest speeds in mild-steel and aluminum laser cutting. While compressed air does leave behind oxide, it is less than straight oxygen; also, the edge quality of the resulting workpiece is not as high as with nitrogen.
While shop air can be cheap and effective for thinner metals (it works best with mild and stainless steel less than .06 inches thick and aluminum less than .08 inches thick) establishing a system that maintains proper air pressure and air filtration can be an obstacle for many manufacturers.