Independents Knock GF-4


The next passenger car motor oil upgrade is on its home stretch toward adoption, but independent lubricant blenders still arent satisfied with it.

The Independent Lubricant Manufacturers Association sent a letter to the ILSAC/Oil committee Dec. 4 saying it continues to have concerns about the GF-4 specification that the committee has drafted – and which is scheduled to hit the market next summer. The association repeated past complaints that its members may be locked out of the GF-4 business both because of undersupply of Group II base oils and because of a short phase-in period for the new standard. In the letter, ILMA Executive Director Celeste M. Powersalso reiterated a warning that, contrary to one of the stated goals for the specification, GF-4 will lead to increased auto emissions.

ILMA officials said they do not necessarily expect their complaints to bring about any actions by ILSAC/Oil, which includes representatives from the auto, oil and additive industries. But they said they will continue to press the associations case on a variety of stages, one of them being before the federal government.

Im not optimistic that they are going to take the actions that we would like them to take, Legal Counsel Jeffrey L. Leiter said. But we will certainly continue to express our views. These issues are not going to go away.

ILSAC/Oil Chairman Robert M. Olree, of General Motors, could not be reached for comment.

The committee, which began drafting GF-4 in 2001, has scheduled a Dec. 17 meeting to wrap up its work. The next day ILSAC plans topromptly issue the specification, which is scheduled for commercial introduction next July. Automakers have described the standard as a significant step forward, saying oils that meet it will have improved oxidative stability, will better protect engines and improve fuel economy, and will allow reductions in air pollution.

Most industry observers agree that GF-4 will at least increase the amount of Group II base oils needed in motor oil formulations, with a few going so far as to say that Group I oils may be excluded altogether. ILMA has had an ongoing concern that the increased demand for Group II will exceed production capacity and that its members will be left without supply. According to the Dec. 4 letter, those concerns remain, despite projections by Kline and Co. consultants that Group II supply will exceed demand through 2010. The association disagreed with several underlying assumptions in a presentation that Klines William Downey made to ILSAC/Oil Oct. 22.

First, the association contended that Klines projection of base oil supply should have included only base oils that are used in motor oils, such as 100 through 300 viscosity grades. Excluding other grades would reduce supply projections by 20 percent, the association said, roughly equal to the size of the surplus that Kline forecasts for 2010.

The association also argued that Kline over-estimated supply by assuming base oil plants will operate at 90 percent of capacity; the association said historical rates are closer to 85 percent. It also said that Kline over-estimated the amount of Group I that oil companies will use in their own finished lubricants and that the consultants failed to take into account that some Group II goes to white oils.

Downey could not be reached for comment.

Leiter said during a telephone interview yesterday that the association has an additional concern not mentioned in the Dec. 4 letter: It remains skeptical about claims that blenders will be able to use significant amounts of Group I.

We still havent found anyone who can show us an acceptable demonstration oil that uses Group I, Leiter said. And even if it ends up that it is possible to use Group I in some grades, it is almost certain that it will not be possible in others. Were concerned that this will be a specification that requires only a certain kind of base oil and that not everyone is going to have access to that supply. Certainly we do not think that would be fair.

ILMAs letter also contends that ILSAC/Oil has understated the time crunch confronting independent lube blenders by stating they will have 19 months to transition from GF-3 to GF-4 formulations. Additive companies go through extensive testing to qualify motor oil formulations and typically work first with large oil companies when new standards are adopted. Smaller independents are left to wait their turn and therefore worry about old standards being phased out before they can qualify new products.

Leiter noted that the American Petroleum Institute is expected to stop registering GF-3 formulations April 1, 2005, less than nine months after the commercial introduction of GF-4. In addition, ILMAs Dec. 4 letter said automakers told EPA that GF-4 oils will replace all GF-3 oils by spring of 2005 – about nine months after API is scheduled to begin licensing oils.

If the automobile manufacturers intend to keep their promise to EPA, then it will require marketing tactics with dealers and others that may be restraints of trade, wrote Powers.

That strikes us as a situation that could lead to some less-than-competitive business practices, Leiter said. For example, he suggested, automakers could try to effect a quick switch to GF-4 oils by having their dealers advise customers to use the new oils – even before independents have had a chance to qualify their own products.

ILMAs letter said ILSAC/Oil has failed to respond to its concern that GF-4, by requiring oils with lighter viscosity, will lead to increased oil leakage and increased air emissions with older vehicles. Lowering air emissions was one of the main goals of GF-4.

A performance specificationto improve emissions control and fuel economy should not be the excuse for automobilemanufacturers to enhance their revenues from another product code and for a small group of oil companies with control over Group II base oil supplies to take market sharethrough an unrealistic approval period they set, ILMAs letter charged.

Leiter said he would not be surprised if ILMAs latest complaints fail to bring about any late changes in the GF-4 specification.

I would like to believe [ILSAC/Oil is] following a process and as part of it they fully and fairly consider these things, he said. On the other hand, my sense is that they want to get this over with.

He added, however, that EPA plans to host a meeting on GF-4 early next year and that ILMA plans to raise its concerns there. He also noted an Illinois congressman asked the U.S. Federal Trade Commission last month to investigate whether base oil supply in the United States is so concentrated as to discourage competition.

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