Just when you thought it couldn't get any worse
On top of the continuing struggles with Covid, the lubricants industry has had to deal with a barrage of extraordinary challenges in 2021. There has, and continues to be very tight supply of PCMO and HDEO additives, snug-to-tight supply of base oil and steep increases in the price, deep allocations of finished lubes, force majeures and allocations, wide spread supply line interruptions and major delays in shipments, driver shortages, significant increases in the cost of raw materials, a devesting fire at the Chemtool grease plant, and already six lubricant price increases. And now, just when you thought it couldn’t get any worse, Hurricane Ida is gaining strength and predicated to slam the Gulf Coast as a major hurricane on Sunday.
This is certainly not what anyone wants to hear or have to deal with at any time, let alone those in the lubricants industry who are currently working hard to keep their heads above water in the sea of other challenges they are dealing with at this time. But, as it looks now, the next storm is about to hit.
To the people of Louisiana and others in the path of the storm, it is JobbersWorld’s hope and prayer that the impact from Ida is minimal.
A hurricane watch is in effect from Cameron, La., to the Mississippi-Alabama border, including Lake Pontchartrain, Lake Maurepas and New Orleans. On Thursday Louisiana Gov. John Bel Edwards declared a state of emergency ahead of the storm and Plaquemines Parish Government has urged all citizens to prepare for mandatory evacuation. According to some forecasts, in addition to life-threating tidal surge and damaging winds, parts of Louisiana, Mississippi and Alabama could see Ida drop 8 to 16 inches of rain by Monday, with up to 20 inches in isolated areas.
While concern is first with the people and businesses in the path of the storm, this likely means more trouble for the lubricants industry since Louisiana is home to several petrochemical plants and refineries, including ExxonMobil, Citgo, Motiva, Total, Shell, Phillips 66, Dow, and Calumet, to name a few. In addition, Chevron’s Oronite additive plant in Belle Chasse, LA, and its base oil plant in Pascagoula, MS is in the current path of the storm. Further, some of the plants in the region are still recovering from interruptions cause by the record-setting winter storm Uri that hit the Gulf region in February of this year.
Plants in the projected path of the storm are already taking action to mitigate potential damages and supply line interruptions. According to Reuters, ExxonMobil said it was preparing its 520,000 barrel per day Baton Rouge, Louisiana refinery for severe weather, but operations were normal on Thursday, and Phillips 66 operations at refineries in Lake Charles and Alliance, Louisiana, “will be adjusted based on the storm’s progression.” In addition, some suppliers in the lubricant value chain have already notified customers that there will likely be supply line interruptions, particularly in transportation.
As seen in the past, the impact hurricanes in the Gulf Coast have on the lubricants business extend well beyond the geography of the storm. The most recent example of such reach was seen when the historic ice storm hit the region in February, 2021. The storm took a number of Gulf Coast refineries off line for an extended period of time and additive supply was globally disrupted.
Ida is rearing its head at a particularly vulnerable time for those in the lubricants business. This is because inventories of some additives and finished lubricants are currently at historic lows. They are so low, in fact, that even the majors are struggling to supply certain types and grades of lubricants. Further, at least one OEM has notified its new car dealers that a one-time substitution of the recommended viscosity grade is acceptable due to supply constraints on the primary viscosity grade recommended by that OEM.
While there seems to be growing inevitability that Ida will have a significant impact on the Gulf region, and this in turn will impact the already strained lubricant supply chain nationally, the extent of impact will remain unknown until after the sky clears. But one thing we do know is that the people in the Gulf region and those in the lubricants business have demonstrated amazing resilience in dealing with adversity, and what we have already seen in 2021 is just one example. There is no doubt we will see that same resiliency bring us through this newest challenge, and those to come.
Again, to the people of Louisiana and others in the path of the storm, it is JobbersWorld’s hope and prayer that the impact from Ida is minimal.
Related story: