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Barry Mandelbaum, veteran Phillips 66 Lubrication Engineer and certified grease expert, shares his thoughts on the lubrication industry. CLICK HERE    

 JobbersWorld NEWS!   

First Base Oil...  

On November 7th, Motiva announced a base oil price decrease of 25 to 38 cents a gallon, depending on grade. Then on November 8, Chevron announced a price decrease ranging from 25 to 38 cents a gallon for its base oils. On the same day, Phillips announced its base oil prices would decrease from 25 to 48 cents a gallon. Following right on the heels of these price decreases, Flint Hills announced on November 9th that it too is decreasing its base oil prices by 23 to 40 cents a gallon, again depending on grade. But if we focus on the work horse grades, these decreases amount to close to 40 cents a gallon.

Next up: Finished Lubricants

Although rare, whereas we have seen announced price decreases on base oils in the past, market dynamics around last week's decreases have some scratching their heads. This is because in less than a week after the announced price decreases on base oils, two majors announced price decreases on finished lubricants. That's a fast response to changes in base oil prices in light of the fact that historically it took roughly a month or two for majors to move finished lubricant prices in response to significant changes in base oil prices. Because of this, some believe it may be too fast of a response to conclude the two recently announced finished lubricant price decreases are driven by last week's base oil price decreases. Instead, they suspect the primary driver may be a very slow response to the 30 to 40 cent a gallon drop in base oil prices seen in July together with the base oil price decreases announced last week.   

Now for the interesting question lubricant makers and marketers are asking. Whereas many independent lubricant manufacturers decreased finished lubricant prices when base oil prices dropped in July, the majors did not (at least officially) announce price decreases at that time. So now what happens? Have the majors managed to side step one finished lubricant price decrease others felt it necessary to offered in 2012?  

Of equal interest, although many of the independent lubricant manufacturers gave back in July when base oil prices dropped, will they now be pressured to squeeze their margins even tighter by giving again?

Finally, another point to ponder is that whereas the spread between crude and base oil prices was $1.53 a gallon prior to last weeks announced base oil price decreases, now it's close to $1.20 a gallon. This suggests that base oil prices are reacting more to the supply and demand balances of base oil (supply being long) than they are to current crude oil prices.  And with base oil demand in the US and Europe falling, Chevron's Pascagoula plant gearing up, new re-refiners come on line, and GTL becoming a reality, you can bet we are looking at some interesting times ahead.    

Let JobbersWorld know what you think? Contact us at tom_glenn@jobbersworld.com

"There's nothing we value more at Total Transit than safety, sustainability and providing superior service to our customers," said Paul Kiszczak, West Valley Fleet Maintenance Manager for Total Transit. "Blending all three qualities in equal measure, ECO ULTRA was the right choice for Total Transit's needs. Specifically, the outstanding, reliable performance coupled with the environmental advantages associated with using lubricants made from re-refined base oil marks ECO ULTRA a win for our customers and, as such, a win for Total Transit."

ECO ULTRA is an American Petroleum Institute (API) licensed line of automotive and industrial lubricants that rely on used oil as feedstock to produce top quality re-refined base oil, then blended with state-of-the-art additives for high performance.  ECO ULTRA meets all Original Equipment Manufacturers' (OEM) specifications and Society of Automotive Engineers (SAE) requirements.

It Should also be noted that officials with the 2012 Automotive Aftermarket Products Expo (AAPEX) awarded Universal Lubricants® last week the 2012 New Packaging Award for Innovation for its ECO ULTRA® FlexPak™. The award was presented to Universal Lubricants during an AAPEX awards ceremony on Monday, October 29 in Las Vegas where the ECO ULTRA 1-quart FlexPak made its debut.