Motiva Announces Increase in Base Oil Postings
Blenders got word this morning that Motiva will increase the posted price of base oil. The effective date of the adjustment is May 13, 2022. As shown in the chart below, this is the fourth price adjustment Motiva announced in 2022, and Motiva is not alone.
Although not of the same magnitude, Chevron and Excel Paralubes also recently announced a fourth increase. And these increases are on top of the unprecedented number of base oil prices increases seen in 2021.
There were five base oil price increases in 2021. When taken together, they moved the price of Group II base oil up by close to $2.00 a gallon, and Group III by just over $3.10 in 2021.
So, for the few who are still wondering why we have seen so many adjustments in the price of finished lubricants, consider that there were nine base oil increases from 2021 to date in 2022. In addition, there were four lubricant additive increases in 2021, and already two substantial additive increases in 2022.
In addition to the unprecedented number of base oil and additive price increases, blenders are also being hit with a barrage of increases in the cost of bottles, pails, drums, kegs, pallets, paperboard, and other materials. Further, transportation and labor costs have been skyrocketing,
The frequency and magnitude of these increases certainly make for challenging times for lubricant blenders and marketers. In the views of many that JobbersWorld speaks with, the business sounds like a game of Whack-a-Mole. The day they announce a lubricant price increase, there’re hit with another substantial jump in the cost of goods. On top of that, they are scrambling to manage product allocations, delayed shipments, cancelled orders, and other challenges that pop up at the most inopportune time.
While you can be sure the market will eventually settle down; many are of the belief that this wild ride will continue well into 2023. And during that ride, it will be exceedingly difficult, and critically important to keep pricing ahead of the continuing increases in costs.