Judging from the swiftness of last weeks round of price hikes, U.S. base oil suppliers agreed that the market was ripe for markups. But the increases have already renewed complaints about major oil companies putting the squeeze on independent lubricant blenders.
One small blender, who spoke on condition that his company not be identified,railed against what he described as anticompetitive practices by the big oil companies. As the individual noted, those companies supply base oil to independents even while competing with them in the sale of finished lubricants.
Last year, the individual said, oil companies raised base oil prices without raising their own prices for finished lubes, primarily motor oils. He expects similar inaction following last weeks increases.
It means that they are making it more expensive for the independents to make a finished product, but they are not allowing us to raise our prices, he said yesterday. They are trying to gouge the independents and it is anticompetitive.
Such complaints have been heard sporadically in the past. The anonymous source contended that many independents share his views but have not been willing to organize to protect themselves. He predicted that 40 to 50 percent of blender/compounder members of the Independent Lubricant Manufacturers Association will go out of business in the coming years.
Like many independents, the anonymous source said his companys motor oils are priced lower than competing products sold by major oil companies. He added, however, that the differential is eroding over time.
The price of crude oil on the New York Mercantile Exchange closed at $30.72 per barrel yesterday, down more than a dollar from a week earlier.
Historic U.S. posted base oil prices and WTI and Brent crude spot prices are available for purchase in Excel format.