Greetings!
Welcome to the "Oil Insider"... Happy New Year to all!
Our monthly newsletter is full of valuable tips & industry specific solutions within the construction, aggregate, sand & gravel, mining, and cement industries. Our business is centered on the petroleum industry and how to manage your business to be successful in dealing within this industry.
National Price Increase Jan. 2008
The beginning of 2008 starts off with a thundering blow from the oil industry. Effective, January '08, the major oil companies have announced a price increase after a relatively calm 2007.
This increase, announced in December 2007, may have not been enough to cover cost escalations reported in late Dec, early January. Rumors are surfing within the industry of another increase possibly coming very soon.
These price increases have met little resistance as consumers have become numb to the market and left with little alternatives for supplier selection. One oil company leads with an increase and the whole market follows.
This increase comes as a turndown in the construction looks immenent. Consumers need to get creative in ways of saving money, real money by thinking outside of the box and working with their suppliers to evaluate programs to minimize cost. Some programs may include extending oil drain intervals (ODI) through progressive oil sampling programs. Others are looking at filtration as a method to increase oil drain intervals.
A word of caution when looking at extending oil drain intervals to reduce costs, one failure can whipe all of your well intentioned efforts in cost reduction. Also, the new oil specifications, specifically, 2008 CJ-4 engine oils, should be carefully evaluated when trying to extend oil drains. Although oil companies tout backwards compatibility and superior performance when compared to CI-4+ oils, keep in mind these oils are treated with less additive, and lower TBN, due to sulfated ash requirements for the new 2007 engines equipped with DPF (Diesel Particulate Filters). Even existing extended ODI programs should be re-evaluated if moving to CJ-4 oils.  |
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Supplier Evaluation
The slow season is officially here, with the bitter cold spell hitting the U.S. in January. Now is the perfect time to evaluate your oil supplier and take an objective look at the real value your supplier is providing.
Oil suppliers typically provide lubrication equipment on a lease basis at no charge to the you, the consumer, as long as you use their oil. Many consumers feel this lease agreement is a supply agreement...NOT TRUE! Don't let this be a deterent from evaluating pricing, and services provided. Many suppliers and distributors provide progressive solutions to help you streamline your maintenance practices and help you achieve maintenance cost reductions and objectives.
The market is making a shift to move most consumers to distributor paper. BP is most prominent in this effort as they have recently sold off their last 2 distribution facilities in Warminster, PA and Baltimore, MD last month. Customers not purchasing roughly 50,000 gallons per year will be moving to distributor paper, most likely with an increase in price.
Supplier evaluations should be led by a team of personnel within your company to provide true objectivity.
Remember, Spring is just around the corner, and the busy season will be here shortly. Taking a little time now can provide 10-25% savings in your oil spend for 2008.
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