While 2023 started with three announced decreases in the posted price of base oils (see graphic below), the Motiva and ExxonMobil adjustments are the second time this year when there has been an announced increase in prices. A first round of base oil price increases occurred last month when producers announced an increase in posted prices ranging from $0.20 to $0.50 a gallon, depending on type and grade.

Although it’s common to see finished lubricant prices respond to increases in base oil prices, there were no upward movements in finished lubricant prices observed since the base oil price increases seen last month. This was not surprising considering the soft demand and intense competition since the start of the year. Now, however, some will be facing tough decisions considering that this most recent increase will layer on another 20 to 30 cpg to the cost of base oil used in many finished lubricants, in just over a month.

Adding to the cost burden, U.S. inflation accelerated to 3.7% in August. The increase was primarily due to higher energy prices, including the fuel consumed by blenders and marketers for in- and outbound freight. Further, some blenders recently received word that the cost of packaging will be going up in October due to the higher cost of resin.

Related: Resin Price Report: Outages Along Gulf Coast Roil Resin Market