JobbersWorld is a Petroleum Trends International, Inc. Publication
JobbersWorld is a Petroleum Trends International, Inc. Publication

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One for the Record Books

While 2021 was one for the record books in terms of the number of lubricant price increases seen in a year, 2022 has already made its mark with the highest price increases recorded in the over two decades JobbersWorld has been monitoring price movements. 

In the most recent round of increases, a second in 2022, ExxonMobil, SOPUS, and HF Sinclair each announced increases of up to 25%, and while Chevron recalled the 15% increase it announced on February 24th, it announced another of up to 25% that took effect on March 28th. Other price increases in the second round for 2022 range from 15 to 20%.

To put these increases in perspective, consider that in the last 12 years, the only time we witnessed anything close to what we now see was in 2011. During that time there were four rounds of price increases (one bridged 2010/2011), and two moved prices up by 10 to 12%. These adjustments are less than half of what we are now seeing and were driven primarily by a run-up in the price of base oil. 


While increases in base oil cost most often underpin movements in lubricant prices and the run-up in base oil prices certainly helped drive up the price of lubricants in 2021/22, the rapid escalation in the price of additives, freight, packaging, labor and other input also contributed significantly to the number and magnitude of price increases seen. Although the cost of each of these inputs moved up significantly since the start of this year, the two increases in lubricant additive prices are particularly remarkable. Afton and Infineum each announced two increases of up to 15%, and Lubrizol announced one of up to 12%.

This contrast sharply with what has historically been seen in the industry where additive prices move up 1 to 2 times a year and the increases are in the range of 6 to 8%. And while significant hikes in the cost of the raw materials used to manufacture additives, as well as supply-chain woes are primarily responsible for the sharp increase in additive prices, demand for additives has significantly outpaced supply since the economy started to recover from the pandemic late in 2020.

In addition to the rapid bounce back in lubricant demand, the shortfall in additives is also due to a variety of challenges confronting lubricant additive manufactures in the last 18 months. According to blenders, while all additive manufacturers have had some difficulties ramping back up to meet demand after the pandemic, a return to normal has been especially difficult for Lubrizol. Because of this, some blenders have had to source additives from alternative suppliers and that in turn influences pricing dynamics.

In sum, the past 18 months have been one for the record books and, based on what lubricant blenders and distributors are saying, unless economic conditions rapidly improve and the kinks in the supply chain are ironed out, we are in for a wild ride into 2023.

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