Reading the PulsePoint bulletin from the Independent Lubricant Manufacturers Association recently, I was stunned to see the following: California Senate Environmental Quality Committee Approves Measure Affecting Engine Oils.
Over strong industry objections, the news item said, the California Senates Environmental Quality Committee had approved Senate Bill No. 778, covering all engine oils sold in the state. The panel voted in favor in mid-May, with four yeas, one nay, and one abstention.
Introduced by State Sen. Ben Allen and amended on April 20, SB 778 was labeled as a used oil source-reduction measure to protect Californias water supplies affected by the ongoing drought. According to the proposed law:
On and after January 1, 2018, all automotive oil sold in this state shall be certified by the oil manufacturer to achieve a minimum useful life of 10,000 miles when used in accordance with the automobile manufacturers recommendations, and to meet current automotive industry standards.
This measure is necessary, the bill argued, because about 40 percent of automotive oil used in California can never be collected for recycling because it is lost in use, either burned in the combustion chamber or dripped onto streets and parking lots. The solution, it added, is to source-reduce the volumes of engine oils used. A violation of the bill would be a crime.
Now there are some passenger car engine oils in the marketplace that offer drain intervals of 10,000 miles and beyond. Several that come immediately to mind are Amsoils synthetic lineup, Castrol Edge Extended Performance, and Mobil 1 Extended Performance. But these all have arisen from oil company formulating prowess and marketing strategy – not by legal or regulatory mandate. Obviously legislation like this is a major issue for the oil industry, so I started checking with various groups to see where they stood on the matter.
My first stop was with the American Petroleum Institute, since they represent the engine oil manufacturers who are specifically called out by the bill as the guarantors of the 10K-mile certification. API went to work with the Western States Petroleum Association to coordinate a response. Several major oil companies also got involved with the WSPA in this effort.
APIs position is as follows: Senator Allens desire to encourage the recycling of oil is commendable. Used oil is a valuable resource that should be properly recycled and reused. However, the method proposed in Senate Bill 778 (SB 778) is unlikely to provide any real benefit because it makes references to industry standards that do not address oil-change intervals.
The current consensus-based engine oil standards published by API do not include a minimum useful life performance requirement. To APIs knowledge, no performance standard, whether published by a standards development organization or an original equipment manufacturer, includes such a requirement.
WSPAs letter to the California Senate Appropriations Committee highlighted the following four reasons why SB 778 is incompatible with industry practice:
1. Auto makers set minimum oil change intervals, not motor oil manufacturers.
2. Minimum mileage certification would require extensive reformulation and testing of existing products.
3. SB 778 will significantly increase state and local government motor oil procurement costs.
4. SB 778 will increase costs for California motorists.
The groups first point is pretty obvious. Original equipment manufacturers set oil change intervals – not the oil marketers. Vehicle owner manuals have gone from recommending the classic 3,000-mile/3-month interval to todays on-board oil life monitoring systems. Would it be possible to set all the oil life monitors for a 10,000-mile minimum? Thats up to each OEM to decide, but its not likely in my view, since driving habits and duty cycles vary so much.
I also asked a contact at a major Detroit automaker to give an opinion on SB 778. This really benefits the OEMs – at least the portion of the language requiring oils to be formulated to last 10,000 miles, came the reply. In the language, SB 778 is not mandating OEMs to change their oil drain intervals; it is just requesting that these oil companies get with the times and come up with technologies capable of lasting 10,000 miles. The source added that this would help OEMs who wish to move towards 10,000-mile drain intervals in the United States.
I cant say as I disagree. More robust oil certainly will give the OEMs further protection against lubricant-related failures, and so would removing substandard oils from the marketplace. And it wouldnt cost the OEMs a nickel. However, the cost to achieve is going to be extremely high, which leads us to Point 2 on WSPAs list: reformulating and testing of products.
Take for example the cost to develop API SP and ILSAC GF-6, the next passenger car engine oil upgrade. So far, the automotive, additive and oil industries together with the independent test laboratories have spent in excess of $10 million on developing GF-6, and were not done yet. The costs include test development, test precision and referencing. Other testing is also required to facilitate base oil interchange and viscosity grade read-across. This effort will take two more years, and as yet doesnt include any measurement of extended drain intervals. To assure 10K-mile performance, current and future oil tests would have to be made much more stringent, and not merely longer.
This brings to mind how at one point it became popular to run double-length engine sequence tests to claim improved engine oil performance. The rationale was that double-length test runs meant double-length performance. This assumption was shot down in a case involving Pennzoil and Castrol, heard in 2000 by the Council of Better Business Bureaus National Advertising Division. Running a double-length test did not demonstrate that an oil can go twice as long or twice the miles, the NAD ruled. Claims of longer oil life should not be made on the basis of non-standard industry tests.
Finally, the cost of finished engine oil formulations would be much greater than current products if SB 778 were to pass into law. In fact, WSPA indicated that synthetic oils – which typically cost twice or more than conventional ones – would be required. Additional additive chemistry would undoubtedly be needed as well.
To put this into some perspective, Gabriela Wheelers weekly column in Lube Report on North American base oil prices shows an approximately $2/gallon difference between API Group II and Group III (synthetic) base oils. The alternatives, such as Group IV synthetic base oils (polyalphaolefins), cost even more, and will also be in greater demand.
Of course you know there might not be sufficient synthetic base oil in place to meet California demand by January 2018. Meanwhile, the advanced chemistry required to achieve a guaranteed 10K-mile oil would result in a substantial cost increase for additive suppliers. Not surprisingly, the American Chemistry Council, which represents the chemical additive industry, signed on with WSPA to challenge this legislation.
Heres another issue that must be addressed: Californians are huge buyers of automotive lubricants, consuming 10 percent of the engine oil sold in the United States, according to government data. So oil marketers would have to decide whether to carry a dedicated brand or formulation for the Golden State alone, or simply upgrade across the board.
The introduction of an entirely new brand raises complexity and associated logistics issues. Adding a separate brand for California means a new set of labels as well as packaging decisions. The product would likely have to be blended in California or nearby states to manage logistics. While this would lessen the up-front cost impact, the likelihood is very high that other states would follow suit, and then everyone would have to scurry to comply.
The alternative – embracing an across-the-board upgrade – puts a lot more pressure on raw materials. The rush would then be on to create more Group III and Group IV production capacity. Component availability would become even more difficult, and changes feedstock production as well as driving the additive industry to construct new component capacity.
That brings us back to Points 3 and 4. Who will pay the price? The consumer, of course. Yet, with the increased oil life and the increased costs, oil suppliers will see their markets and revenues shrink. Additive and base oil suppliers, especially the marginal ones, will also lose volume and revenue.
New technology brings new challenges and new opportunities. Legislation is one force for change; better processes and materials are others. Changes in engine design also bring new technological challenges. For the most part, I like to think that new technologies and processes can push changes in engine oil formulations.
Im a lot less comfortable with legislation that tries to drag technology along with it. Too often, the result is those darned unintended consequences. For me the best example is the 2007 legislation that authorized the use of up to 10 percent ethanol in gasoline. The intention was to extend gasoline supplies in a tight crude oil market. It was a noble idea – until fracking and the 2009 economic downturn upset the whole ethanol applecart.
The bottom line is this: Its a good idea from the OEM point of view that engine oils should perform satisfactorily for 10,000 miles. With no out-of-pocket cost themselves, theyll get engine oils that will protect their hardware.
From the oil industrys viewpoint, its not such a good idea because oil companies dont specify or control drain intervals, or how people drive their cars. Suppliers also would have some big decisions to make about product mix, production and their geographic footprint. Retailers such as fast-lube stores also will be squeezed by the reduction in daily car counts and volume sales.
Nor is SB 778 a good idea from the perspective of the additive industry and base oil manufacturers. It means large cost increases in additive components and base oil refining. It also means that up and down the chain the volume of product sold will go down, and with it the loss of revenues, margins and potentially jobs.
Lets let technology and raw material supply progress to the point where engines and oils can reasonably meet the 10K-mile requirement, before we pass laws that mandate it. At least lets get close!
Postscript: As of May 29, the California Senate Appropriations Committee held SB 778. That essentially means the legislation is dead for this year. However, if I know California legislators, this isnt the last well hear on this subject.
Industry consultant Steve Swedberg has over 40 years experience in lubricants, most notably with Pennzoil and Chevron Oronite. He is a longtime member of the American Chemical Society and SAE International, where he was chairman of Technical Committee 1 on automotive engine oils. He can be reached at steve
swedberg@cox.net.