JobbersWorld Reaches Out to Over 10,000 Professionals in the Lubricants Business

More Price Increases - Round 3 

As many expected, the recent round of price increases in base oils might trigger another increase in the price of finished lubricants. Well it may have done just that.

Smitty's Supply Company announced it will increase its bulk oil lubricant prices by $0.60 a gallon effective May 2, 2011. It's grease will increase by $0.08 a pound. Smitty's says this increase is necessary due to the rising price of crude which in turn is driving up the cost of base oils. 

...and Smitty's is not alone. 

Warren Oil Company also announced a price increase yesterday. Its prices will go up by $0.50 a gallon on bulk and $0.60 a gallon on packaged lubricants, including motor oil, power steering fluid, gear oil, hydraulic oil, two cycle, and bar and chain oil. The price of its synthetic lubricants will increase $0.80 a gallon. Warren Oil's bulk price increase is effective May 1, 2011. Warren Oils packaged goods go up May 15th.   

CAM2 announced a price increase for its lubricants as follows:

 - Bulk (excluding synthetics) up $0.50/gallon

 - Bulk synthetics up $0.80/gallon

 - Packaged lubricants (excluding synthetics) up $0.80/gallon

 - Grease up $0.08/pound   

The effective date for CAM2's bulk and packaged increase is May 1, 2001.  

We are now looking at the third round of lubricant prices increase in 2011. For those unfamiliar with the business, that is a lot. In fact, there have been many years where there were only one or two price increases. But why so many price increase in such a short period of time in 2011? Well, there are several reasons for it.

The first, as discussed in the March 30, 2011 and April 4th issues of JobbersWorld, is the continuing rise in the price of crude. And when crude goes up, so does the price of base oil and consequently finished lubricants. But that's not the only reason.

In addition to the impact of higher crude prices, base oils have been in short supply since the beginning of the year. In fact, for some types and grades, base oil supply has been very tight and getting tighter. When this is taken together with higher crude oil prices, base oil producers pushed through what amounts to increases from $1.00 to $1.25 a gallon (depending on type and grade) since the start of the year.

Higher base oil prices, however, are not the only drivers responsible for the higher price of finished lubricants. In addition to escalating base oil prices, lubricants additive prices have also marched up since the start of the year. As noted in the April 4th issue of JobbersWorld, Lubrizol announced a 9% price increase for its additives, and other additive suppliers also moved up over the past few days. When these recent increases are taken together with others since the start of the year, lubricant additive price have increased by 15 to 20% in 2011.  

So add it up. What happens when you combine significantly higher base oil prices with significantly higher lubricant additive prices? Answer: You get significantly higher finished lubricant prices. And that is exactly what we have seen since the start of the year.

George Ristevski has joined Maxum Petroleum, Inc. as Senior Vice President and Chief Operating Officer reporting to E. Perot Bissell, CEO. Mr. Ristevski has assumed responsibility for Maxum's regional business unit divisions, sales, marketing and operations organizations where he will drive growth platforms, operational and productivity initiatives and overall operating results for the company.

Mr. Ristevski joins Maxum from Praxair, Inc. where he was most recently President of Praxair Distribution, Inc., its industrial and specialty packaged gases business in the United States and Canada. During his 15 years at Praxair, George also held roles as President of its healthcare business, Vice President and Corporate Controller and Director of Corporate Financial Planning and Analysis. Prior to joining Praxair, George worked at Electronic Data Systems and previously held a series of business-management, planning and finance positions with the BOC Group.

Mr. Ristevski holds a Bachelor of Science degree in Mechanical Engineering from Brown University and a Master's degree in Management from Northwestern University's Kellogg Graduate School of Management. He will be based in the company's corporate headquarters located in Greenwich, CT.

About Maxum Petroleum

Maxum Petroleum, Inc., based in Greenwich, CT, is a leading independent energy logistics company that markets and distributes a comprehensive offering of refined petroleum products and services to commercial and industrial customers in the Unites States and Panama. Launched in 2004, Maxum Petroleum is continuing a strategic growth and acquisition plan in the fragmented commercial fuel and lubricant distribution industry, and has completed 15 acquisitions to date.