Oil Price Instability
If you work in our industry or follow the news, you may have heard about the massive increase in base oil prices that have occurred over the past few months.
Late last year, several major and independent lubricant manufacturers announced there would be a finished lube price increase. ExxonMobil, Shell, Chevron and Phillips 66 said the increase would be up to 12 percent. Independent lubricant blenders’ increases were anywhere from 9-14 percent. There have been three price increases from January to March 2021 alone.
Why The Increases?
Some lubricant manufacturers cited increasing costs of raw materials used in production and delivery. Others blamed supply tightness and steady demand. Others said it was in response to rising costs of transportation and manufacturing.
But the hurricanes of last year—Hurricane Delta in October and Laura in August—impacted two major U.S. API Group II base oil producers in Port Arthur Texas and near Lake Charles, Louisiana. Since they both were in the hurricane’s path, they were completely shut down and it took some time to get them back up and running. Some of the power grids required a complete rebuild.
Adding insult to injury was some refineries perform maintenance in the fall, and others reduced their refinery capacity utilization percentage because demand had decreased, which resulted in a smaller supply.
What Happens When Oil Prices Rise
When the cost of fuel rises, carriers have to raise their prices and take losses. If it will cost more for the freight carrier to transport the freight, they are going to increase their charge to the shipper. Since the shipper has to pay more, they will charge the receiver more.
Increased oil prices will also affect how the freight is transported. If the cost of rail usage is low and fuel costs are high, it will be more economically feasible to transport freight via intermodal carriers than over the road trucks.
Ultimately, oil price increases have a domino effect and results in products sold to customers at higher rates.
What We’re Doing To Help You
STARFIRE lubricants, antifreeze and chemicals are designed to protect your machinery and maximize its efficiency at a more affordable cost than our competitors—even with the industry-wide oil price increases. Our lubricants cause less friction, which extends the life of the engine or the industrial equipment. Our products are also formulated to meet or exceed all OEM specifications at huge savings versus larger brands.
We ensure the highest level of customer service from the moment your order is placed until the day it arrives. We are committed to our customers’ utmost satisfaction.
We understand that no one likes to experience price increases, and we couldn’t agree more. We’re here to answer your questions about what is happening with the oil price increase and explain the trickle-down effect it’s having on all parts of our industry.
Please check out the vast variety of products on our website and contact us if you have any questions or would like to become a distributor. Stay in touch with us on Facebook, Twitter, Instagram and LinkedIn! Also take a look at our Starfire merchandise for T-shirts, koozies, bottle openers, glasses, water bottles, hats, hoodies and more.