Several major lubricant manufacturers announced across-the-board price increases the past two weeks, reinforcing the rapid pace at which finished oil prices have risen over the past year.
This is shaping up as the fourth round of increases in 12 months – an extraordinarily high number for the market. As was the case with three rounds of markups last year, suppliers said the latest hikes are in reaction to rising costs for base oil, chemical additives, energy, transportation and packaging.
Everybody gripes when prices go up, so of course customers are complaining, said one independent blender, who spoke on condition of anonymity. But the thing people dont understand is that suppliers are not going to absorb [their] cost increases. It should be obvious that costs have gone up. If anyone thinks were gouging, were not.
Among those said to have announced markups are three of the biggest lube manufacturers in the United States: Valvoline, ChevronTexaco and ExxonMobil. Market sources said Valvoline served notice that it will raise prices on bulk deliveries by 40 cents per gallon and non-bulk by 60 cents per gallon, and that ChevronTexaco will mark up prices on various products by between 6 percent and 9 percent.
ExxonMobil was described alternately as preparing increases of 6 percent or 36 cents per gallon on conventional products and 4 percent or 64 cents on synthetic lubes. Increases for all three companies are slated to take effect in mid-May.
The same sources said there was no word yet of increases from two of the markets other top suppliers: BPs Castrol and Shell, also owner of the Pennzoil and Quaker State brands. But there was company for those that are raising prices. ConocoPhillips and Citgo were also said to have announced hikes of 6 percent to 9 percent, effective May 18 and 23, respectively. Numerous independent lube blenders have also announced increases.
Sources said at least one major lube producer tried to raise prices earlier this year, but later rescinded that increase, presumably because it feared losing market share. Observers said that is unlikely to happen with the most recently announced markups, especially if Shell and Castrol join in.
Its always the same any time you have increases, said a Midwestern distributor, who spoke on condition of anonymity. Your customers start calling around to other distributors looking for better prices. They try to hop around. But it doesnt look this time like theyre going to find sources that havent gone up.