When you can go out and buy a 5W-30 spec product right now for $3.40 a gallon, and all the majors are trying to still be in the $5 to mid-$5 range, its just ridiculous, this source told Lube Report. I think they see the business going to the independents right now, and theyre trying to recapture some of that.

I think theres still another price decrease on the horizon, he speculated. He noted that independent blenders whose volumes are down have also had to be aggressive to keep up with their fellow independents on pricing. The independents are eating each others young, he contended.

Citing recent base oil announcements in the marketplace, BP Lubricants in an April 23 letter informed customers it would reduce list prices by 40 cents per gallon on all passenger car, commercial and industrial engine oils and most ancillary products for bulk, tote, drum keg and pails effective May 4, and for case goods effective June 1. Orders received by BP on or after the effective dates will receive the new, lower price.

Chevron on April 30 told customers it would decrease finished lube prices by 4 to 6 percent for the majority of its bulk and packaged products effective May 22. In addition, from May 1 through May 21, a price adjustment, via a manual credit, in the same amount of the posted price decrease will be implemented, the company said in its letter. Chevron noted in its letter that several product lines and individual product/package types will not receive a decrease.

ExxonMobil in a May 1 letter notified customers it would decrease prices by up to 6 percent on ExxonMobil branded and unbranded lubricants and greases. A different price treatment may apply to selected products, the company said in its letter. The new prices went into effect for all pending (ordered, but not yet shipped) and new orders scheduled to ship on or after May 1.

ConocoPhillips in a May 4 letter to customers stated it would decrease posted prices for most lubricants products effective May 5 by 40 cents per gallon, depending on product-specific factors. Products exempted from the decrease include all industrial full synthetic products, low cost hydraulic fluids and discontinued products. The company issued a similar notification letter the same day to its Kendall and 76 brands customers.

According to an industry source, Citgo told customers that effective May 5, it would reduce prices 40 cents a gallon or 5 cents a pound, on most of its lubricant products. Exceptions included synthetics and fire-resistant hydraulic fluids, the source said.

Industry sources indicated Shell in essence decreased finished lube prices in April by issuing a new Shell Pennzoil/Quaker State price list but chose not to issue a notification letter to customers about it.

A Western blender described finished lubricants pricing as all over the place. In talking to customers, theyre getting all kinds of quotes, this source told Lube Report. Id say the spreads a couple of dollars per gallon.

The blender echoed the sentiment that the majors are still playing catch up with independents on pricing. I would certainly say the independents, if need be, are lowering their prices even further, he added.

As Tom Glenn of Metuchen, N.J.-based market research firm Petroleum Trends International noted in the May LubesnGreases, finished lubricant demand declined significantly over the past six months, particularly in the commercial and industrial market segments, where demand tumbled close to 20 percent in the last quarter of 2008 compared to 2007s fourth quarter. Preliminary indicators suggested double-digit declines in some segments in this years first quarter versus year-earlier figures.

Glenn pointed out that the first round of finished lube price decreases by majors starting last December shaved an average of close to 55 cents a gallon. Those cuts came after rapidly retreating base oil prices, which occurred after crude oil prices collapsed to just under $50 at the end of last year. Another round of finished lube price cuts by the majors in February ranged from about 48 to 72 cents per gallon.