Kevin Ferrick, API engine oil licensing and certification system manager, gave an interim report on the 2004 Aftermarket Audit Program. In early 2004, Pittsburgh Applied Research Corp. had been selected as the new sample collection lab and PerkinElmer, San Antonio, the new physical and chemical test laboratory, Ferrick reported. We had to modify the database to accommodate the new labs, and this delayed the analysis of test results. All 2004 samples have now been tested, a total of 611 separate marketplace oils, and necessary retesting is underway. Final 2004 program results will be available within two months.

In 2004 API licensed 529 companies in 52 countries, and 530 licenses in 53 countries had been issued through May 6, 2005. Although the number of licensees has plateaued for several years, the number of licensed products continues to increase, up from 6,700 in 2004 to 7,500 in the first four months of 2005. The increase reflects newly licensed API SM, ILSAC GF-4 and CI-4-Plus oils. In many cases, GF-3 oils remain licensed as API SL oils. Not included are 1,316 ILSAC GF-3 oils which became ineligible for licensing on May 1, 2005, and were removed from APIs licensed-product database on that date.

Under the audit program, four one-quart packages of engine oils are purchased for each audit samplefrom retail outlets, while bulk samples are obtained from quick lubes, new car dealers and service stations in one-gallon containers.

In 2004, 490 gasoline engine oil samples and 121 heavy duty diesel oil samples were collected for auditing. U.S. and Canadian licensees accounted for 82 percent of the total number, with the remainder coming from the other 50 countries.

Roughly 60 percent of the packaged samples were the principal gasoline engine oil viscosity grades SAE 5W-20 and -30, and 10W-30 and -40. About 20 percent were SAE 15W-40 grade, the major heavy-duty grade, and another 20 percent were not identified by viscosity grade.

In the bulk oil category, 78 percent of the samples were the three principal gasoline engine oil grades SAE 5W-20 and -30 and 10W-30. SAE 15W-40 products made up18 percent, with only 4 percent of other grades.

Productshave been found to be commingled in some of the bulk samples, Ferrick reported. However, the commingling did not seem to negatively affect the quality.

API legal counsel Doug Morris noted, Enforcement for bulk audits is limited and is more of a for-your-information process. Nonetheless, APIis targeting an increase inbulk samples to 30 percent of the total in 2005, from 20 percent in 2004.

No engine tests were conducted in 2004, during the process of bringing on-line new tests for GF-4. Just seven or eight engine tests are planned for 2005. The specific tests for 2005 had not yet been selected but would likely include the new Sequence IIIG and VG.

Ferrick reported that the 2004 sample collection uncovered significant nonconformance with two licensees. Each licensee agreed to complete additional requirements to remain licensed, including third-party physical and chemical testing of licensed oils. One of the licensees had met the additional criteria, and one did not. Its license was canceled. The companies were not identified, and no otheraudit results were reported.

Last fall API increased the flat fee for each licensee by $225, a 35 percent increase for API member companies and 27 percent for nonmember companies. At the same time it increased the volume-of-sales fee, which is based on the volume of sales of licensed products after the first million gallons. This fee went up 20 percent, from $0.00125 to $0.00150 per gallon.

This was APIs first effective licensing fee increase since the beginning of the program in 1994. In announcing the increases, API had said the price increase is necessary for EOLCS to continue fulfilling its important role in assuring engine oil quality worldwide. The new fees represent an average rate of increase of 2.6 percent if they had been increased annually starting in 1994. The fee increases bring APIs engine oil licensing programs fee income close to $2.5 million annually.