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April
17,
2012
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Looks like the Start of Another Round of Price Increases
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Shell Bumps Up Lube Prices
Shell announced a general price increase for its lubricants of 4%. This increase is effective May 19, 2012. Shell says the increase is due in part to increasing costs of raw materials used in production and delivery of its products.
Warren Oil Also Moves up...
Warren Oil announced a price increase of $0.30 a gallon on bulk effective May 7, 2012. It will also increase packaged oil prices by $0.35 a gallon on May 21 and grease prices by $0.05 a pound.
CAM2 Moves Prices
CAM2 announced a price increase on bulk orders placed after April 27, 2012 and packaged orders placed after May 4. Its bulk lubricant prices will increase by $0.30 a gallon and packaged lubricants will move up $0.35 a gallon. In addition, CAM2's prices on grease will increase by $0.05 a pound.
Smitty's Also Bumps up Prices
Smitty's Supply announced an increase of $0.35 a gallon for both bulk and packaged lubricants and $0.05 a pound on grease. These increases are effective May 1, 2012. Smitty's attributes these increases to increases in the cost of raw materials.
Add the Delfin Group to the List
Effective May 1, 2012, the Delfin Group announced it will increase the price of its lubricants by $0.25 a gallon.
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March
30,
2012
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Retail Prices Can be Telling
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The price of engine oil on the retail shelves can be very telling about a number of issues. One in particular is how the market is tiered. As shown below, there are currently three price tiers. The highest priced (top-tier) PCMOs are synthetic engine oils. The average price of PCMOs in this tier at the leading retailer of PCMO is currently at $7.13 a quart
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Click graph for larger image
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Engine oil formulated for use in vehicles with high mileage represent the second, or mid- price tier. The price of these engine oils average $4.48 a quart at the same leading retail chain. And although it appears to be too early to tell if they will stay there, the pricing of some of the re-refined (green) engine oils are making a showing in the middle tier.
The third price tier comprise what many in our industry refer to as conventional engine oil. Although today most of these so called conventional oils contain some level of Group III base oil (thus making them synthetic blends), most do not market them as such. Instead, they are positioned and priced as conventional products. The average price of these PCMOs at the leading retail chain is $3.97 a quart.
Of interest in looking at the retail prices is how the mid-tier has compressed over time.
As most in our industry may recall, the mid-tier space used to include a much wider range of products. There were engine oils designed for SUVs, new cars, old cars, 4x4s, and others. But here we are today, only about 10 years from those days, and the mid-tier space is populated with primarily engine oils formulated for use in vehicles with high mileage.
In addition to the number of product types in the mid-tier space compressing, the price of products in this tier are also showing signs of compression as they move closer to the price of conventional PCMO. These events suggest the first and second tiers may be merging. Assuming this is true, we may be moving back to a market where there are really only two choices; the good and the best.
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Chevron Introduces Delo 400 NG SAE 15W-40
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 Chevron Lubricants, maker of the Delo® brand of technologically advanced engine oils, lubricants and coolants, today introduced the latest member of its product family, Delo® 400 NG SAE 15W-40. The new product, formulated with Chevron's ISOSYNTM Technology, is a premium oil for use in compressed natural gas (CNG) and liquefied natural gas (LNG) and liquefied petroleum gas (LPG) engines.
Delo 400 NG is formulated to deliver outstanding protection and long drain performance in a wide variety of CNG and LNG engines. It has demonstrated excellent field performance and has the capability to help customers minimize operating costs in operations such as municipal bus services, linehaul and delivery truck services, waste truck operations, and off-road equipment.
"There are numerous factors driving the adoption of natural gas vehicles, including significant domestic supply availability, lower fueling costs, reduced environmental impact, and growing CNG/LNG refueling support infrastructure," said Jim Gambill, North America Delo brand manager. "As more fleets look to alternative fuel solutions to help reduce their carbon footprint and boost their bottom line, we felt it was important to offer an engine oil specifically designed to meet their needs. With Delo 400 NG, there is now a premium oil, designed specifically for heavy-duty natural gas vehicle engines, that will deliver the engine durability and reliability, extended oil drain performance, and long life protection our customers require to successfully operate today."
Key benefits of Delo 400 NG SAE 15W-40 include:
 | Alternative fuel performance: Delivers great performance for medium and heavy-duty vehicles using CNG, LNG, or LPG. |
| Superb oil oxidation/nitration control - Minimizes main and connecting rod bearing corrosive wear |
| Low wear performance: Offers excellent tappet and liner wear performance alternative fuel engines |
| Excellent engine cleanliness - Excellent ratings for sludge control; and valve or piston deposits in field trials and engine tests. |
| Extended oil drain performance: Delivers long drain performance protection despite higher stress of CNG combustion |
Delo 400 NG meets the performance requirements of key OEM specifications including Cummins (CES 20074) and Detroit Diesel (93K216) and is suitable for service in Daimler MB226.9, Volvo CNG, Renault RGD, Mack CNG, Isuzu CNG, Hino CNG, and Hyundai CNG engines.
In addition, Chevron has successfully tested Delo 400 NG SAE 15W-40 in Cummins ISL G series CNG engines in delivery truck service and has achieved oil drain intervals of 33% longer* than the Cummins recommended drain interval for this engine in this type of service.
Delo 400 NG SAE 15W-40 will be available across North America in June 2012.
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First Quaker State Cash Back Program Recipient of 2012 Receives $3,000 for Holding onto His Vehicle for More than 300,000 Miles
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Louisville, Kentucky Man rewarded for reaching Mileage Milestone with Quaker State Motor Oil
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Paul King of Louisville, Kentucky
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The makers of Quaker State®, the motor oil well known for providing durable protection, have announced the first Quaker State Cash Back Program recipient of 2012. Honored for his dedication to the brand and its products, Paul King of Louisville, Kentucky, has been awarded $3,000, the maximum payout amount under the program, for his commitment to Quaker State motor oil. Plus, he gets to keep his truck! Paul qualified by regularly using Quaker State motor oil at his vehicle's manufacturer-recommended service intervals and hitting 300,000 miles on his 2000 Chevrolet Silverado.
Launched in June 2011, the Quaker State Cash Back Program is designed to reward consumers who use specialty Quaker State motor oils to reach 300,000 miles with theKelley Blue Book® Trade-In Value for their vehicle as listed in "Good" condition up to $3,000, subject to certain terms and conditions-and recipients get to keep their vehicles. Specialty Quaker State motor oils include Quaker State® Ultimate Durability full synthetic motor oil, Quaker State® Enhanced Durability synthetic blend motor oil or Quaker State® Higher Mileage Engine™ motor oil. In 2011, Adam Warne was the first loyal Quaker State motor oil user rewarded under the program.
"I am excited to get a reward under the Quaker State Cash Back program. Having been a dedicated Quaker State motor oil user and loyal Jeffersonville Qik Lube customer, it's a cool bonus when a company recognizes consumer loyalty by paying out cash...in my case, $3,000," said Paul King, Quaker State Cash Back Program recipient. "I am a great example of how Quaker State motor oil provides serious durability that can help protect vehicles' engines."
The Quaker State Cash Back Program was released last year in conjunction with the updated Quaker State Lubrication Limited Warranty program, one of the easiest to use, longest running and most comprehensive motor oil warranties available to motorists. The Quaker State Lubrication Limited Warranty is one of the first lubricant manufacturer programs to follow the vehicle manufacturers' recommended oil drain intervals.
"For over 20 years now, the Quaker State Lubrication Limited Warranty has been one of the best motor oil warranty programs on the market," said Chris Hayek, Quaker State Global Brand Manager. "People are keeping their vehicles longer to maximize the value of what may be their second largest investment, and the Cash Back Program is a way to provide an incentive to them for reaching 300,000 miles with the help of Quaker State specialty motor oil."
As the average age of a vehicle on America's roadways rises to 10.8 years old, more and more Americans are paying close attention to the costs for upkeep and mandatory maintenance of their vehicle. The Quaker State Lubrication Limited Warranty protects 15 engine parts from lubricant-related failure and provides motorists' vehicles with coverage for up to 10 years or 300,000 miles, whichever is first. The Quaker State Lubrication Limited Warranty is free to qualifying consumers who use Quaker State motor oil products. To qualify, consumers' vehicles must have been manufactured within the last 72 months and have been driven 75,000 miles or less at the time of enrollment. Qualifying consumers can enroll in the Quaker State Lubrication Limited Warranty program at www.quakerstate.com.
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BIS Issues Order Temporarily Denying The Delfin Group and Its President Export Privileges
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The Bureau of Industry and Security, U.S. Department of Commerce, through its Office of Export Enforcement (OEE), issued an Order temporarily denying the Delfin Group USA LLC, and it's president, Markos Baghdasarian , for a period of 180 days, the export privileges under the Export Administration Regulations. The Order was effective February 25, 2012.
According to the BIS Order, the OEE presented evidence that beginning in or about mid-2010, and continuing thereafter, Delfin Group USA LLC and its president, Markos Baghdasarian, conspired with multiple entities and individuals, including entities and individuals located in the United Arab Emirates (UEA) to export U.S.-origin items subject to the Regulations from the United States to Iran, via transshipment through the UAE, without obtaining the required authorization from the U.S. Government.
In addition, the Order says the OEE presented evidence that Delfin and Baghdasarian used Bagdel Corporation, a freight forwarding company, to facilitate the export and attempted export of the items-polymers and lubricating oils or oil additives, including aviation engine lubricating oils-from the United States to Iran via the UAE. Baghdasarian is also the chief executive officer of Bagdel.
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March
27,
20120
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Chevron First to Move on Group II
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Chevron announced it will increase its base oil prices by $0.20 to $0.25 a gallon. This increase is effective March 28.
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Base Oil Price Outlook
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So here we go in what appears to be another round of base oil price increases. It started with naphthenic base oil, then Group I, and now we are looking at Chevron as the first to move in Group IIs.
What does it mean, where are prices heading? Well if history helps predict the future, we have a good deal to draw from. To start, although there have been some asperities in base oil pricing trends, as shown below, the trend line is up.
The chart below forecasts base oil prices looking at historic data from 8/2004 to 3/2012. This time period includes the significant run up and down of base oil prices occurring in 2008 to 2009.
Whereas the chart above may be helpful in predicting base oil prices, more instructive could be the trend in prices prior to the significant rise and fall of base oil prices in 2008/09.
Based on a linear regression of prices from 8/2004 to 3/2008, one would have predicted in 2008 that the price of base oil in March 2012 would be at $4.60 a gallon. That prediction would be about $0.05 a gallon off from the actual price today. Assuming this trend line continues as a good predictor of future prices, base oil price (Group II 100) will reach $5.45 a gallon in Jan 2015, and close to $7.00 a gallon by 2018.
At the same time, it should be noted that base oil prices may have established a new trend line following the unusual run up and run down in prices that occurred in 2008/09. Since that time, the trend line has inclined. Assuming this is the new trend line, we could be looking at the price of API Group II base oil at $8.00 a gallon by the start of 2015, and just under $11.00 a gallon by 2018.
Forecasting the price of base oil can also be predicted by looking at a polynomial regression from 2004 to current. This analysis draws a smooth line in price progression that takes into account the peaks and valleys along with the linear changes in pricing.
Based on this analysis, Group II 100 base oil prices are forecast to reach $8.00 a gallon by 2015, and skyrocket to $11.00 a gallon by 2018.
But no matter how one looks at it, all the data points to a continuing rise in the price of base oils, and therefore, finished lubricants. True, we may see a decline in prices when the expected new capacity comes on stream. And you can be sure intermaterial competition between Groups I, II, III and others will help shape pricing by driving the price of some types and grades up and others down. But if history has taught us anything, these may prove to be no more than bumps in the long road up for base oil prices.
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ConocoPhillips Lubricants Introduces New Wireline Lubricant
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 ConocoPhillips, one of the largest U.S. lubricants suppliers, recently announced the availability of its new Wireline Lubricant. ConocoPhillips' Wireline Lubricant, or grease, is designed to maintain a seal and prevent the escape of wellbore fluids during wireline operations in oil and gas completion services. The new Wireline Lubricant is a specialized, clear formulation designed specifically for high-pressure, high-temperature wireline environments.
"After consulting with industry experts, we are pleased to offer this impressive wireline product that is so versatile," said Sunny Lopez, Director, Industrial Lubricants at ConocoPhillips. "In addition to its excellent sealing properties and resistance to degradation due to wellbore fluids, it has the added benefits of a unique clear color and resistance to slingage, which help minimize environmental impact. It truly is a "clear choice" over products available in the market today."
 ConocoPhillips Lubricants' Wireline Lubricant was developed specifically for high-pressure wireline operations including cased-hole logging, pipe recovery service, production loggings and reservoir analysis.
Wireline Lubricant is available in eight viscosity grades to optimize performance in winter, mid-season and summer operating conditions. These viscosity grades include ISO 68, ISO 220, ISO 460, ISO 680, ISO 1500, ISO 5000, ISO 7500 and ISO 10000.
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Rob Kress Has Joined Chemlube International as Vice President
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 Rob will concentrate his efforts on expanding Chemlube's domestic base oil and finished lube business, particularly at CL's Savannah blending and terminaling facility, as well as contributing to all aspects of Chemlube's growing business.
He brings over 30 years experience in the Base Oil and Lubricants industry having worked for Coastal Corporation, CITGO Petroleum Corporation and most recently Lubricating Specialties Company. He has held management positions both domestically and internationally in Technology, Sales and Marketing. Rob will work out of the Chemlube office in Harrison, New York.
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Holly Ups Paraffinic Base Oil Prices
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Holly announced an across the board price increase on paraffinic base oils of $0.30 a gallon. The increase is effective March 22. Holly is an API Group I base oil producer.
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Nynas Raises Pale Oil Prices by $0.35 a gallon
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Nynas announced an increase in the price of its pale oils by $0.35 a gallon. The increase is effective March 15, 2012.
This increase is one in a list of recently announced increases in naphthenic base oil prices. Others include:
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San Joaquin Refining - up $0.20 to $0.25 a gallon
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Calumet - up %0.25 a gallon
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Cross Oil - up $0.25 a $0.35 a gallon
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Ergon - up 0.28 a gallon
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Base Oil Spreads
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Although there are many factors a base oil manufacture takes into account prior to announcing a price increase, one of the most visible is the spread between the price of crude oil and base oil. When the spreads are large, there is typically little impetus to increase base oil prices. When the spread contracts, however, there is often pressure to push through price increases.
Understanding Holly was the first to move paraffinic base oil prices up in over six months, it's interesting to see that the spread over the last few weeks has been below the average since the start of 2011. In addition, the spread is nearing levels seen when base oil suppliers announced their last round of price increases.
Again, where there are many factors that drive decisions to increase base oil prices, the crude/base spread can be very telling.
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March
13,
2012
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NOCO Energy Corporation Expands Operations into Pennsylvania and West Virginia
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NOCO acquires warehouse facilities of Windward Petroleum Distribution
 NOCO Distribution, LLC, a wholly owned business unit of NOCO Inc., announced today that it has acquired three lubricant distribution warehouses, located in Youngwood, Erie, and Ridgeway, Pennsylvania from Windward Petroleum, Inc. Customers in Western Pennsylvania and northern West Virginia are served from the facilities. All former Windward employees have joined the NOCO Distribution team.
"This acquisition is strategically important to NOCO as our lubricant distribution footprint now extends from Ottawa, Ontario in the North, Pittsburgh in the South, Buffalo in the West, and Vermont in the East," said James D. Newman, President of NOCO Energy Corp. "We look forward to providing our new customers with the outstanding service and products NOCO has been known for since its inception in 1933."
NOCO offers a wide range of passenger vehicle, commercial vehicle, and industrial lubricants, including Exxon Mobil, Petro Can, and its own private trade label. The company intends to expand its fuels, natural gas and electric, and recovery services offerings in the newly acquired geography along with the established lubricants business.
"We are thrilled with the opportunities this acquisition gives our business and look forward to providing outstanding products and service as we grow and expand our market share in the United States and Canada," said Fred Giese, General Manager, NOCO Distribution, LLC.
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Sun Coast Resources Inc. Acquires The Branded Fuel and Lubricant Distribution Business of Ada Resources, Inc.
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Sun Coast Resources, Inc. ("Sun Coast") announced the completion of an acquisition in Houston, Texas to further expand its branded and unbranded fuel and lubricant distribution business.
Dating back to 1946, ADA supplies and delivers branded ConocoPhillips and CITGO fuels to independently owned convenience stores in Harris County.
In addition ADA supplies ConocoPhillips; BP, 76 and Castrol branded lubricants to municipalities and commercial end users, and operates a fleet of fuel and lubricant transportation trucks from Old Ocean and Houston, Texas. ADA employs nearly 50 experienced and dedicated fuel and lubricant personnel who have joined Sun Coast to continue to operate the acquired assets and business from both the Old Ocean and Sun Coast facilities in Houston.
"ADA has one of the longest standing reputations for quality products and customer service in our industry, and we are pleased to welcome Jim Smith and his team to Sun Coast", said Kathy Lehne, founder and President of Sun Coast Resources, Inc.
About Sun Coast
Sun Coast Resources, Inc.: Founded in Houston, Texas by Kathy Lehne in 1985, Sun Coast operates in 35 states, and from 14 locations in Texas, and currently has nearly 1,200 employees. It is the 11th largest privately held company in Houston.
In addition, Sun Coast delivers nearly 1 billion gallons of fuels, lubricants and condensate annually, and is one of the largest distributors of Chevron lubrication products in the United States. Sun Coast has more than 750 delivery and service vehicles, plus nearly 7,000 fuel and lubricant storage tanks.
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March
7,
2012
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Silogram Lubricants Files Suit Against Everclear
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Silogram Lubricants, a New York Corporation with a manufacturing and distribution facility in Bayonne, NJ filed a $25 million breach of contract suit against Everclear of Ohio, Ltd. on March 1, 2012.
Silogram alleges the 10W-30 engine oil it purchased from Everclear for resale to Silogram's customers from late 2010 to early 2012 was defective and improper for use in automobiles. As such, it damaged passenger cars and trucks where it was intended for use and caused damage to Silogram's business and reputation.
The Silogram suit claims they were purchasing the Everclear engine oil at a rate of approximately 1 million gallons a year.
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Chevron raises the bar with its 1st Source Elite Marketers
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 Whereas Chevron set the bar high with its Signature Class marketer requirements, it moved the bar even higher this year when it announced its new 1st Source Elite Marketers.
In short, Chevron says 1st Source Elite Marketers are those with a passion to win and commit to the Chevron brand. To wear the badge of a 1st Source Elite Marketer and enjoy the benefits, Chevron marketers must meet certain volume requirements. One such requirement is the purchase of 75% of their lubricant and coolants from Chevron (inclusive of branded and private label); and meet a minimum volume commitment of 750 thousand gallons a year. Then there is growth. 1st Source Elite Marketers are required to post a minimum of 1% growth in premium products from 2011 to 2012 and 5% growth in coolant volume over the same period.
In addition to volume commitments, 1st Source Elite Marketers are required to satisfactorily complete PI reviews and education programs in value-added marketing, have safety programs in place, and a documented business plan. Chevron also requires they have capable management teams in place that participate in quarterly business reviews that include sharing sales pipelines and plans, and assure the plans align with Chevron's focus.
Chevron makes no bones about it when it says, "Only a small percentage of its lubricant marketers will meet the most stringent requirements in the market to qualify as a Chevron 1st Source Elite marketer." At the same time, they say 1st Source Marketers are much more than lubricant distributors. Instead, they are Chevron partners willing and able to contribute to its customer's long-term profitability and growth. And in return, Chevron says, both Chevron and its marketers will also enjoy long term growth.
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More on Shell Closing Lubricant Blend Plant in Wood River
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As noted in last week's edition of JobbersWorld, Shell Oil Co. plans to close its lubricant blending and packaging plant in Roxana/Wood River, IL where Shell began operations in 1918. In addition to closing the Wood River plant, Shell also announced it will close its St. Louis and Leetsdale regional distribution centers (RDC).
Following JobbersWorld's publication of this news, we now hear Shell plans to open a single, high-capacity distribution center located somewhere between St. Louis and Pittsburgh later this year. |
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