Base oil is the primary raw material that drives the cost of motor oil. Depending on the price of base oil at a given time over the past 15 years, it has accounted for roughly 60 percent to 80 percent of the cost of goods. The balance of the raw material cost is attributed to additives. But whereas the cost of base oil fluctuates significantly over time due to changes in the price of crude, supply and demand balances and other factors, the price of additives is comparably more stable. Further, although also influenced by the price of base oil (which makes up close to 40 or 50 percent of additive volume), there are many other inputs that drive additive costs and therefore their prices.
Because of these raw material costs, we have seen the price of additives move in only one direction over the years, and that direction is up-for good reasons.