Please be advised that Chevron Lubricants has revised its previously announced general price increase effective July 12, 2021, of 12% to a new effective date of July 26, 2021, to up to 18% on all lubricating oils and greases. This price increase is now in effect, and in certain instances, specific products may increase in amounts that are outside of this range.
Like many years prior, base oil has been one of the primary drivers responsible for rising prices of finished lubricants. In addition, supply and demand imbalances are largely responsible for the increases seen to date this year.
The increases began last year when the rising price of crude oil lifted base oil prices. But before some of the price adjustments took effect, COVID-19 hit. With that, the price of crude dropped and demand for lubricants tumbled. As demand dropped, base oil and additive producers pulled back production accordingly.
In short, base and crude oil prices are higher, and supply of lubricants is tighter due to the cascade of events that started with the pandemic. In addition to the impacts of COVID-19, historic ice storms in the Texas Gulf Coast region, the cutback in vacuum gas oil (the feed for base oil) production, the reopening of the US economy, and other issues have rocked the lubricant supply chain.
Other significant contributors to the finished lubricant price run-up include additive price increases, higher costs for plastic resin and corrugate used for bottles, pails, totes, drums, caps, and other packaging as well as increased freight, manufacturing, and insurance costs.
Adding to the cost burdens, it has been very challenging for blenders to source base oil and additives due to weather related force majeures and other issues. As a result, some lubricant manufacturers have placed distributors on allocation. These actions also influence the price of lubricants.
Although our supply chain partners are very strong, no one in the lubricants industry is immune from the current conditions. We are dealing with much longer lead times and difficulties securing haulers to transfer product. Through all of this, we are still committed to reliably supply the lubricants you need to keep your business moving.
This year is showing us just how important a perfect storm of base oil supply and demand imbalance, weather, and unforeseen factors like the pandemic and other events can be in driving the costs of all inputs that drive the price of lubricants.
As always, we greatly appreciate your continued business and partnership. Greg’s Petroleum Service continues to deliver quality products and valuable service at competitive prices. For questions on this price increase, please contact your Greg’s Petroleum Service sales rep today.