Chevron Products Co. and ConocoPhilllips announced price increases of up to 10 percent for finished lubricants the past few weeks. Their actions could signal the beginning of another round of markups in the U.S. market, offering cost relief to other blenders and continued pressure to installers and end users.
Chevron and ConocoPhillips both attributed their moves to rising costs for base oils, additives and packaging – the same drivers behind a relative flurry of hikes over the past two years. In a May 2 letter to distributors, Chevron said it will increase prices on all lubricating oils by between 6 percent and 10 percent, effective June 1. ConocoPhillips said Thursday that it will boost its prices approximately 5 percent to 10 percent June 12.
Sources said several of the industrys leading marketers – including Shell, ExxonMobil, Valvoline and Citgo – have not moved yet. Numerous smaller and independent suppliers have announced markups taking effect this month, although opinions differed on whether they moved ahead of the majors or were following the last round of increases, which began in March.
For example, Windward Petroleum raised its prices between 8 percent and 10 percent Monday, according to a letter obtained by Lube Report. Safety-Kleen is moving up by 28 to 48 cents per gallon May 29, while American Refining Group said it will add 5 percent to 9 percent the following day. Advanced Lubricating Specialties imposed an 18-cent hike after rescinding a previously announced 36-cent increase that had been scheduled for April 18.
Independent blenders said they would welcome price hikes from big marketers, which would allow them to raise their own prices and recover some of the steep cost increases they have incurred. But some also repeated a complaint – increasingly common the past couple years – that lube marketers with captive base oil supply are not raising finished lube prices as fast as base oils.
It would be great if all the majors went along with this, an independent blender said of the increases by Chevron and ConocoPhillips. But a bunch of companies that control base oils havent gone up yet. But they sure have raised their base oil prices. He spoke on condition of anonymity because of worries about reprisals from base oil suppliers.
Lube distributors said they encounter mixed reactions when passing price hikes onto customers.
They seem to fall into two groups, said Henry Spitzer, president of Topanga Oil Products, which is based in Sylmar, Calif. Some of them are just livid, and theyre shopping around looking for better prices anywhere they can find them. Others seem almost punch drunk. They just assume theres nothing they can do and accept them.