Outcry Greets Lube Price Hikes

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Most major oil companies have informed U.S. customers of finished lubricant price hikes in recent weeks that will take effect throughout September, and some marketers responded with skepticism and disgust.

The latest round follows three sets of increases earlier this year that went into effect from early February through early March, mid-April through early May, and mid-June through early July. Again, most cited increases in base oil and additives costs.

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  • Chevron will raise prices 3 to 6 percent on lubricating oils, gear lubes and greases effective Sept. 1.
  • ConocoPhillips will boost prices 5 to 8 percent on finished lubricant products, depending on product-specific factors, effective Sept. 16.
  • ExxonMobil will hike prices up to 5 percent on ExxonMobil branded and unbranded lubricants and greases effective Sept. 16.
  • Citgo will increase prices 4 to 6 percent on list and customer specific prices effective with shipments on and after Sept. 19. The change is applicable to Citgo, Mystik, Clarion, MileMaster branded and private label bulk and packaged finished lubricants, white oils and greases.
  • Shell will bump up prices for selected lubricants up to 5 percent effective Sept. 19.
  • Valvoline will increase prices up to 6 percent on lubricant products effective Sept. 19.
  • BP Castrol will raise prices up to 5 percent on all passenger car, motorcycle, commercial and ancillary products, including synthetics in all package types, effective Sept. 26.

Most of the notification letters included a variation on Citgos explanation to customers: This increase is driven by escalations in base oil, additive and packaging material costs that have occurred over the past several months. Others blamed increases in base oil and additive costs, or raw material costs in general.

The majority of notifications also said some prices will increase more or less than the general increase.

Theres never been an increase that is as unjustified as this one, a sales manager with a lubricant distributor told Lube Report. Finished lube prices are higher today than they were in 2008 when crude was $140 [per barrel] for a brief period of time. Id bet that every penny of this increase is going right to their bottom line. Big profit margins getting even bigger. In my opinion, all of the mergers among big oil have left us with a lubes market where theres not enough competition to make the free market work like it should.

Another source chimed in, We are greeting this fourth increase [in 2011] with disgusted resignation.

A territory manager with another distributor indicated there was initially some real, genuine talk about a hope this latest round of increases would be rescinded, acknowledging, unfortunately, it didnt turn out that way. This source pointed out that distributors are the ones who have to go in there and face the music. Everybody is looking at us, saying what are you talking about? They see the price of crude coming down, they see the price at the pump coming down, and naturally everyone thinks this stuff should come down too. It goes back to reeducation that this [lubricants] is one class of product, and thats another. Because the economy right now is in such a precarious state, this one [round of increases] is very, very sensitive.