Parkland Fuel Corp. Enters Agreement to Acquire Rhinehart Oil Co.

Parkland Fuel Corporation’s Acquisition of Rhinehart Oil Co., Inc. Expected to Double its U.S. Operations

The acquisition provides a key platform for expansion of Parkland’s business and operations in the United States

Parkland Fuel Corporation Canada’s largest and one of North America’s fastest growing independent marketers of fuel and petroleum products and a leading convenience store operator, is pleased to announce that Parkland through its U.S. based subsidiaries (collectively, “Parkland USA”), has entered into an agreement to acquire all of the issued and outstanding equity interests of Rhinehart Oil Co., Inc. and its affiliates (collectively, “Rhinehart”), a retail, commercial and lubricants business with operations in Utah, Colorado, Wyoming and New Mexico, (the “Acquisition”).

haugh on floor 4 (1)

Doug Haugh, President of Parkland USA

Rhinehart is headquartered in American Fork, Utah and transports, distributes and markets a full range of fuels, lubricants and chemical products in addition to providing equipment and one-stop shop servicing to its customers in the region. Rhinehart operates and supplies four cardlock facilities, nine retail sites and markets and distributes fuels, lubricants and specialties through ten distribution facilities. Rhinehart distributes approximately 72 million gallons of fuel and lubricants per year.

“The Rhinehart Acquisition represents a significant expansion for Parkland,” said Bob Espey, President and Chief Executive Officer of Parkland. “Rhinehart has an excellent business and asset base that will serve as a platform for growth in Utah, Colorado and neighboring states. We are excited to welcome Dave and John Jardine from the Rhinehart leadership team and the rest of the Rhinehart employees to the Parkland team.”

“Rhinehart is a prominent fuel distributor and a well scaled and respected ExxonMobil lubricants distributor,” said Doug Haugh, President of Parkland USA. “The addition of Rhinehart to the Parkland USA team provides us with the talented staff and scalable infrastructure we need to establish our Regional Operations Center (“ROC”) for the Rocky Mountain tributary. This ROC will be the operating platform that drives organic growth and enables further acquisitions across the region that can leverage substantial existing capacity within their current rail hubs, bulk storage terminals, and warehouses.”

The Acquisition is expected to close on or about August 27, 2018 and is expected to be funded with cash flows and capacity under Parkland’s existing credit facility. The Acquisition is subject to customary closing conditions.

About Parkland Fuel Corporation
Parkland is Canada’s largest and one of North America’s fastest growing independent suppliers and marketers of fuel and petroleum products and a leading convenience store operator. Parkland services customers through three channels: Retail, Commercial and Wholesale. Parkland optimizes its fuel supply across these three channels by operating the Parkland Burnaby Refinery, and leveraging a growing portfolio of supply relationships and storage infrastructure. Parkland provides trusted and locally relevant fuel brands and convenience store offerings, including its On the Run/Marché Express banners, in the communities it serves.

Parkland creates value for shareholders by focusing on its proven strategy of growing organically, realizing a supply advantage and acquiring prudently and integrating successfully. At the core of our strategy are our people, as well as our values of safety, integrity, community and respect, which are embraced across our organization.

U.S. Judge Authorizes Seizure of Venezuela’s CITGO

U.S. Judge Authorizes Seizure of Venezuela’s CITGO

To the surprise of many in our industry, it was announced today that a US Federal Judge Leonard P. Stark of the U.S. District Court in Wilmington, Delaware, authorized the seizure of Houston-based CITGO Petroleum Corporation.

The order was issued to satisfy a Venezuelan government debt. Adding to this, the U.S. State Department ordered that Asdrúbal Chávez, who headed CITGO, surrender his U.S. visa. It is speculated that this could result in Petroleos de Venezuela, S.A. (PDVSA) losing control of CITGO.

CITGO is one of PDVSA’s largest foreign assets, and with CITGO’s three refineries in the U.S., the Venezuelan government is the largest foreign owner of domestic refinery capacity. CITGO’s refineries account for close to 4% of U.S. fuel capacity, including gasoline, diesel, and jet fuel. In addition, although its lubricant sales volume in the U.S. has waned over the years from close to 150 million gallons at its peak at the turn of the millennium, it remains a major player in the lubricants business.

It will be interesting to see how this plays out. Whereas some in our industry feel it could have a negative impact on CITGO’s lubricant sales by reminding buyers about its connection to Venezuela and bring back memories of President Hugo Chávez’s infamous “the Devil” speech before the United Nations General Assembly in 2006, others speculate that a severance of ties to Venezuela, should it occur, could bolster CITGO’s lubricant sales.

North Carolina Issues a Stop-Sale Order On “303” Tractor Hydraulic Fluid

As reported by the Petroleum Quality Institute of America on Wednesday of this week, the North Carolina Department of Agriculture and Consumer Services (NCDA&CS) issued a stop-sale order for tractor hydraulic fluid (THF) products labeled, claimed or implied as meeting THF 303, which has no known specifications available.

The NCDA&CS order requires that, manufacturers and distributors will have six months to remove these products from retail locations. These products may be relabeled to either remove the J303 specification or include a more recent John Deere specification it does meet. Online sales shall include a note that these products are not legal in North Carolina. CLICK FOR MORE

Source: The Petroleum Quality Institute of America

Warren Distribution in Midst of $10 Million Investment to Enhance Packaging Capabilities

Rather than speculating on why these large investments are made, JobbersWorld went right to the source for answers.

Warren Distribution has recently made some major investments to enhance its packaging offering and capacity. This year alone, it implemented investments totaling $10 Million that impact all three of its packaging plants. The projects include:

  • Increasing capability and flexibility across all high-speed quart filling lines to accommodate wide-mouth bottles/caps, as well as pressure-sensitive labels. Conversion of lines are completed in Alabama and Iowa; the West Virginia conversion is in progress and will be completed by the end of Q3.
  • Substantially increasing quart blow-molding capacity by going to dual-parison mold on wheel blow molder in West Virginia. New capacity will be in place by Q4 of this year.
  • Almost doubling company-wide multi-quart bottle (gallon and 5-quart) blow-molding capacity with purchase of new blow molder in Iowa. New capacity will be in place by Q2 2019.

WDQuote81020182These investments by Warren Distribution are in addition to those recently reported by JobbersWorld, including the new blend plant in Houston and warehouse expansion in Iowa. Following JobbersWorld’s story about these investments, we fielded a number of questions from readers asking, why a blender would invest so heavily in an industry where demand has been relatively flat. Rather than speculating, JobbersWorld went right to the source for answers and here is what Warren Distribution was willing to share from our discussions.

The first important take away, and a large part of the reason for Warren Distribution’s investments, speaks to changes in the marketplace.

“While the pace of change in the lubricants industry is not nearly as fast as that seen in consumer electronics, retail, food service, and others, significant changes have and continue to occur in the lubricants business that requires some hand-wringing strategic decisions by key players,” says Curt Knapp, Warren Distribution’s Chief Operating Officer. These decisions are typically based on thoughtful and thorough analysis of both cyclical and systemic market dynamics. And in today’s environment, they include the fact that although cyclical changes in the economy (i.e. the current booming economy) has spurred demand, the systemic reality is that the demand for lubricants in the North American market is generally considered to be on a path of low-to-declining growth in volume.

Another important consideration for those in the automotive lubricants segment is that over the past two decades, the Do-It-Yourself (DIY) class of trade has steadily declined as an increasing number of consumers drove their cars to Do-It-For-Me (DIFM) outlets for service. Adding to this, Knapp says, “As the consumers shifted away from DIY, retailers’ private-label lubricants have grabbed substantial market share at the expense of the major brands. The result has been robust growth in demand volume for retailer brands. And in their pitched battle to continue to grab Majors’ market share, retailers are demanding packaging with a premium appearance to help close the gap in perceived quality. Similarly, even in the DIFM market, automotive wholesalers are selling much more of their private label packaged lubricants into the automotive service market, displacing Majors’ brands.”

While these and other changes taking place favor suppliers that invest in their business, the decision to do so requires a high level of strategic planning and recognition that changes typically bring a new set of challenges that must be anticipated, and when possible, proactively addressed. To this point, Bob Schlott, Warren Distribution’s owner and CEO, says, “Decisions to make these large investments are not easy, especially in a market that has seen margins contract.” But, Schlott adds, “Our decision to make the investments was ultimately driven by our commitment to continue to provide a high level of service for our customers as we try to keep ahead of the growth we are enjoying, plus we need to satisfy changing market demands, because we are in this for the long-haul.”

“Doing all of these projects in a short time frame while servicing a large and growing business has been a massive, once-in-a-lifetime challenge,” said Curt Knapp, and… “Although we make every effort to anticipate and address the challenges driven by change, we also understand how change can be challenging for our customers, and appreciate their understanding and support as we work through the process.” But at the end of the day, Knapp adds, “We are confident the investments we have and continue to make in the business will further strengthen Warren Distribution’s position in the market and put us in a better position to serve its customers for the long-term.”

Editor’s Note: JobbersWorld’s discussions with Warren Distribution reminded us of a quote made famous by Jamie Dimon, President and CEO of JPMorgan Chase, when he said, “Companies that grow for the sake of growth or that expand into areas outside their core business strategy often stumble. On the other hand, companies that build scale for the benefit of their customers and shareholders more often succeed over time.” Based on the growth Warren Distribution has enjoyed over the years, it was clear from our discussions with Warren Distribution that the fundamentals of its investments are based on pursuit of the latter.

About Warren Distribution:
Warren Distribution is a family-owned business that was founded over 97 years ago in 1922 by the grandfather of Robert Schlott, the current Chairman and CEO. Now, it’s the largest private label blender and one of the largest independent motor oil, lubricants and automotive chemicals manufacturers and suppliers in North America. The Company is the private label supplier for some of the largest retailers, marketers and lubricants distributors in North America and has customers in more than 30 countries. It has the capacity to produce 100 million gallons of bulk and packaged lubricants from more than 1,100,000 square feet manufacturing and distribution facilities in Iowa, West Virginia, Alabama and Texas. The headquarters office is in Omaha, NE.

Vesco Acquires Acculube

On the Wire and In the News

Vesco Oil Corporation Acquires Acculube, Leading Distributor of Lubricant and Metalworking Products in Dayton, Ohio

Vesco Oil Corporation, one of the largest distributors of branded automotive and industrial lubricants in the United States and a leading provider of environmental services, including used oil and antifreeze collection, today announced the acquisition of Accurate Lubricants & Metalworking Fluids Inc, aka Acculube.

lillyes2018

Lilly Epstein Stotland
Vesco Oil Corporation President and co-owner

Vesco Oil, a third-generation family-owned business founded in 1947, services the Michigan, Ohio, Pennsylvania and Indiana markets. For Vesco Oil the acquisition will enlarge its geographic footprint and expand its product and service offerings in Ohio. Founded in 1990 and based in Dayton, Ohio, Acculube is a leading distributor of industrial and metalworking fluids. It is a privately held distributor of Mobil industrial and commercial vehicle lubricants, and a distributor of industrial chemicals and metalworking fluids for Castrol and Houghton. Vesco Oil Corporation President and co-owner Lilly Epstein Stotland made the acquisition announcement. “Acculube has a wonderful history and reputation in the industry, and we have the utmost respect for its leadership and expertise. Vesco Oil has sought strategic growth, and Acculube fits perfectly into our growth plans,” said Epstein Stotland. “Our companies share similar values and a customer-centric mindset. We welcome Acculube to our Vesco Oil family.”

“For 28 years, our leadership team and dedicated employees have built a great company,” said Acculube CEO Marilyn Kinne. “I am so pleased we will now join Vesco Oil, a company I have held in high regard for many years.” Acculube President Chris Fisk will continue as the Dayton division manager for Vesco Oil. “We take great pride in serving our customers. Our relationship with Vesco Oil will only help them to grow and prosper,” said Fisk. In the last eight years, Vesco Oil has expanded its business with existing suppliers including five locations in Cleveland, Columbus, Dayton, and Wauseon, Ohio, and Pittsburgh, Pennsylvania.

Vesco Oil is one of the largest distributors of Mobil branded lubricants. Other key supplier relationships include Valvoline-VPS, Castrol Metalworking, Perkins, Motorcraft, MOC Products, Fortech, and Niteo.

About Vesco Oil Corporation:
Vesco Oil Corporation is an ISO 9001 – 14001 certified and environmentally conscientious distributor, providing automotive and industrial customers with a full range of high quality lubricants and supporting services. Founded in 1947 by Eugene Epstein, Vesco Oil Corporation is one of the largest distributors of branded automotive and industrial lubricants in the United States and is a leading collector of used oil and antifreeze. The company also is a full service provider of automotive appearance products, sells a full line of metalworking fluids and is a leading provider of bulk windshield washer solvent and antifreeze. Vesco Oil Corporation is a majority women- owned business, receiving Certification from the Women’s Business Enterprise National Council. For more information, visit www.vescooil.com.

FTC Completes Review of Recycled Oil Rule

The Federal Trade Commission (FTC) today announced it has completed its regulatory review of the Recycled Oil Rule (formally, the “Test Procedures and Labeling Standards for Recycled Oil”).

“As part of its systematic review of all current FTC rules and guides, in 2017 the Commission sought public comment on the costs, benefits, and regulatory and economic impact of its rule. After reviewing the comments received, the agency has amended the rule to update the reference to API Publication 1509.”

The FTC updates the Rule’s reference to American Petroleum Institute Publication 1509 to reflect the most recent version of that document. Otherwise, the Commission retains the Rule in its current form.

Click for public comment analysis and amendment: 16 CFR Part 311: Test Procedures and Labeling Standards for Recycled Oil; Incorporation by Reference of Updated Publication

Class-Action Lawsuits Filed Against Tractor Supply Company, Smitty’s Supply, Orscheln, CITGO, and Old World Industries for Sales of “303” Tractor Hydraulic Fluid Products

As reported in JobbersWorld on July 16, 2018

Three class-action lawsuits have been filed in Cass County, Missouri claiming that the defendants (Tractor Supply Company, Smitty’s Supply, Orscheln, CITGO, and Old World Industries) conduct has harmed consumers by inducing them to purchase and use “303” tractor hydraulic fluid (THF) products, on the false promise that the 303 THF products meet certain specifications and by directly or implicitly representing that the products are safe for use in farm, construction and logging equipment and have certain characteristics and qualities that protect equipment from wear and damage when, in reality, the products do not meet any specifications and cause harm, increased wear and damage to consumers’ equipment.

Each of the defendants answered the complaints and denied any knowledge that representations of the products were false, and denied that they are liable to the plaintiffs in any amount.

Links to the Class Action filings:

ORSCHELN FARM AND HOME AND CITGO
OLD WORLD INDUSTRIES
TRACTOR SUPPLY COMPANY AND SMITTY’S SUPPLY

Tractor Hydraulic Fluid – Class Actions Filed

Class-Action Lawsuits Filed Against Tractor Supply Company, Smitty’s Supply, Orscheln, CITGO, and Old World Industries for Sales of “303” Tractor Hydraulic Fluid Products

Three class-action lawsuits have been filed in Cass County, Missouri claiming that the defendants (Tractor Supply Company, Smitty’s Supply, Orscheln, CITGO, and Old World Industries) conduct has harmed consumers by inducing them to purchase and use “303” tractor hydraulic fluid (THF) products, on the false promise that the 303 THF products meet certain specifications and by directly or implicitly representing that the products are safe for use in farm, construction and logging equipment and have certain characteristics and qualities that protect equipment from wear and damage when, in reality, the products do not meet any specifications and cause harm, increased wear and damage to consumers’ equipment.

Each of the defendants answered the complaints and denied any knowledge that representations of the products were false, and denied that they are liable to the plaintiffs in any amount.

Links to the Class Action filings:

ORSCHELN FARM AND HOME AND CITGO
OLD WORLD INDUSTRIES
TRACTOR SUPPLY COMPANY AND SMITTY’S SUPPLY

Warren Distribution Breaks Ground on $13 Million Investment Doubling the Size of its Warehouse in Council Bluffs

Warren Distribution, a privately-owned manufacturer, marketer and distributor of automotive aftermarket products, announced that it broke ground last week on a $13 Million investment that virtually doubled the size of its warehouse in Council Bluffs, Iowa.

The 211,000 square foot addition will be built as an extension to Warren Distribution’s current warehouse and is needed to support the rapid growth it has been experiencing in the past several years.

Quote7162018“We are proud of our long history in Omaha and Council Bluffs, and remain committed to manufacturing, packaging and distributing superior lubricants and performance fluids,” said Bob Schlott, chief executive officer of Warren Distribution. “This expansion affirms our continued collaboration within the region, as well as our desire to provide customers the most comprehensive product experience of its kind.”

Schlott told JobbersWorld that Warren Distribution has reinvested an average of $20 Million a year over the past 5 years, and in 2017 and again in 2018, it will be spending in excess of $30 Million. Recent major investments include the new Houston blend plant that was commissioned earlier this year, a new warehouse in Ohio to support its operation in Glen Dale, WV, new blow molding capacity and conversion of high-speed filling lines across Warren Distribution’s system to accommodate wide-mouth bottles and pressure-sensitive labeling.

About Warren Distribution: Warren Distribution was founded in 1922 as Warren Oil Company by James Schlott, the grandfather of Robert N. Schlott, the current Chairman / CEO. The business began by supplying lubricating oils and related products to the agricultural business in the surrounding area. Such business remains the principle focus of the firm today. Today, three quarters of company revenue is from its own manufactured products (including both private label and house branded). Over the years Warren Distribution has received a number of performance recognition honors from its business partners including a Sears Partner in Progress Award (2000) and twice a WalMart Vendor of the Year Award (2003 and 2005).

Valvoline Completes the Acquisition of Great Canadian Oil Change

With 73 franchised stores in five provinces, Great Canadian Oil Change becomes Valvoline’s largest quick-lube brand in Canada

Valvoline Inc., a leading worldwide supplier of premium branded lubricants and automotive services, today said that it has completed the previously announced acquisition of the business assets of Great Canadian Oil Change Franchising Ltd., the third-largest quick-lube system in Canada.

The acquisition expands Valvoline’s existing quick-lube network to more than 1,200 company-owned and franchised locations in North America.

“Growing and strengthening our quick-lube network through organic store expansion and high-quality acquisitions in both core and new markets is a key growth strategy for the company,” said Sam Mitchell, chief executive officer. “Great Canadian Oil Change, with its established brand and loyal customer base, is Valvoline’s first international quick-lube acquisition and provides us with an excellent opportunity to expand our quick-lube footprint outside the U.S.”

About Valvoline™
Valvoline Inc. is a leading worldwide marketer and supplier of premium branded lubricants and automotive services, with sales in more than 140 countries. Established in 1866, Valvoline’s heritage spans over 150 years, during which it has developed powerful brand recognition across multiple product and service channels. The highly trusted brand ranks as the No. 3 passenger car motor oil brand in the DIY market by volume, the No. 2 quick-lube chain by number of stores in the United States and the No.3 quick-lube chain by number of stores in Canada. The company operates and franchises more than 1,140 Valvoline Instant Oil ChangeSM centers in the U.S. and more than 70 Great Canadian Oil Change locations in Canada. It also markets Valvoline lubricants and automotive chemicals, including the new Valvoline™ Modern Engine Full Synthetic Motor Oil, which is specifically engineered to protect against carbon build-up in Gasoline Direct Injection (GDI), turbo and other engines manufactured since 2012; Valvoline High Mileage with MaxLife technology motor oil for engines over 75,000 miles; Valvoline Synthetic motor oil; and Zerex™ antifreeze.

HollyFrontier to Acquire Red Giant Oil

IN THE NEWS AND ON THE WIRE

HollyFrontier to Acquire Red Giant Oil

HollyFrontier today announced that it has entered into a definitive agreement to acquire Red Giant Oil Company (“Red Giant Oil”). Red Giant Oil, a private family-owned lubricants company founded in 1903, is one of the largest suppliers of locomotive engine oil in North America.

Headquartered in Council Bluffs, Iowa, Red Giant Oil has storage facilities in Idaho, Utah and Wyoming, along with a blending and packaging facility in Texas. Following the acquisition, Red Giant Oil is expected to generate approximately $7.5 million in annual forecasted EBITDA for HollyFrontier.

George Damiris, President and CEO of HollyFrontier, commented, “We are pleased to announce the acquisition of Red Giant Oil, with its outstanding history and brand in the railroad lubricant industry. This transaction demonstrates the continued growth of our lubricant business and brings outstanding value to HollyFrontier.”

This transaction is subject to customary closing conditions and is expected to close in the third quarter of 2018. HollyFrontier was represented by Morgan Lewis & Bockius LLP on this transaction.

About HollyFrontier Corporation:
HollyFrontier Corporation, headquartered in Dallas, Texas, is an independent petroleum refiner and marketer that produces high value light products such as gasoline, diesel fuel, jet fuel and other specialty products. HollyFrontier operates through its subsidiaries a 135,000 barrels per stream day (“bpsd”) refinery located in El Dorado, Kansas, a 125,000 bpsd refinery in Tulsa, Oklahoma, a 100,000 bpsd refinery located in Artesia, New Mexico, a 52,000 bpsd refinery located in Cheyenne, Wyoming and a 45,000 bpsd refinery in Woods Cross, Utah. HollyFrontier markets its refined products principally in the Southwest U.S., the Rocky Mountains extending into the Pacific Northwest and in other neighboring Plains states. In addition, HollyFrontier, through its subsidiary, owns Petro-Canada Lubricants Inc., whose Mississauga, Ontario facility produces 15,600 barrels per day of base oils and other specialized lubricant products, and owns a 57% interest and a non-economic general partner interest in Holly Energy Partners, L.P.audience.

 

Safety-Kleen Announces Increase

As previously reported in JobbersWorld, Safety-Kleen (Kleen Performance Products) began contacted its U.S. customers on June 15th to announce a price increase on all blended lubricants and grease products of up to 9%. The increase is effective July 16.

In addition to its U.S. price increase, Safety-Kleen began contacting its Canadian customers last week about a similar price increase on all blended lubricants and grease products in Canada, effective August 6.

Price Increase Roundup

Independent lubricant manufacturers are the first and the fastest to move on price in the latest round of increases.

Independent lubricant manufacturers kicked off the most recent round of lubricant price increases with Sinclair’s announcement on May 8th of a 10 to 12% adjustment effective July 1, 2018. By the end of May most independents followed with announced increases. ExxonMobil was the first major to move with an announcement coming on June 1. TOTAL followed on June 8th and a within 26 days all other majors announced price increases. Most of these increases came in the first two weeks of June. A timeline of the recent round of prices increases is shown below.

IncreaseTimeline6262018R3

In all cases, when reasons are given for the price increase, the drivers are said to be increases in the cost of base oils, additives, packaging, and transportation.

In addition to being the first to move, independent lubricant manufacturers also moved more quickly than the majors in this round of price increases. As shown below, whereas there is an average of 16 days from the time independents announced an increase to its effective date, the average distance for the majors is 34 days.

Average price increase (announced) 7.3%
Average time from announcement to effective date 22 days
Independents: Average time from announcement to effective date 16 days
Majors: Average time from announcement to effective date 34 days

 

According to some of the independent lubricant manufacturers JobbersWorld has spoken with, independent lubricant manufacturers are often the first to move and have less lead time then the majors due to their tighter margins. In addition, whereas majors generally purchase base oil under contract, some independents source from the spot market. Consequently, they have to respond relatively fast to maintain margins when base oil prices increase, as seen over the past few months shown below.

CrudePic6262018

In addition to the base oil price increases already seen in 2018, there has been an increase in the price of lubricant additives. The first was announced on May 18th by Afton when it advised its customers that effective June 18, 2018, it will increase prices on all performance additive products from all source points. The price adjustment is said to be in response to higher raw material and transportation costs.

Lubrizol followed on May 29 when it announced a price increase that varied across product areas and specific product families effective July 1, 2018. Lubrizol attributes the increase to the higher cost of raw materials resulting from robust demand and continuing consolidation and closure of capacity. In addition, the price adjustments are said to be necessary due to significant increases in transportation costs.

It should be noted that the higher than typical number of lubricant price increases we have seen so far in 2018 are reflected in the comparatively steep ramp up shown below in the Producer Price Index (PPI) for Petroleum Lubricating Oils and Grease Manufacturing (NAICS 324191). The PPI is an index published by the Bureau of Labor Statistics that measures the average change in the selling prices received by domestic producers for their output over time.

ProducerPriceIndexChart

Recently Announced Lubricant Price Increases

Company Announced Date Effective Date Increase
Sinclair Lubricants 5/8/2018 7/1/2018 10 to 12%
Sunoco 5/16/2018 6/16/2018 4 to 6%
Advanced Lubrication Specialties 5/16/2018 6/16/2018 4 to 6%
CAM2 5/18/2018 6/16/2018 4 to 9%
Smitty’s Supply 5/18/2018 6/16/2018 4 to 9%
U.S. Lubricants, Commerce, CA 5/18/2018 6/17/2018 $0.40/gal lubricants
$0.05/lb greases
Axel Royal 5/21/2018 6/24/2018 5%
Chemlube 5/22/2018 6/11/2018 5 to 9%
Maverick Performance Products 5/22/2018 6/18/2018 4 to 8%
Allegheny Petroleum Products 5/23/2018 6/18/2018 6 to 8% on bulk, additional 2% on drums and totes
Warren Distribution 5/23/2018 6/25/2018 4 to 8%
PennStar 5/23/2018 6/15/2018 6 to 10%
Martin Lubricants 5/23/2018 6/22/2018 5 to 9%
Old World Industries 5/24/2018 6/30/2018 4 to 9%
ExxonMobil 6/1/2018 7/1/2018 up to 9%
TOTAL Specialties USA 6/8/2018 7/1/2018 4 to 6%
Nu-Tier Brands/Gulf/ECOSE 6/11/2018 7/13/2018 6 to 8%
Shell 6/13/2018 7/16/2018 up to 10%
Reliance Fluid Technologies 6/13/2018 7/16/2018 4 to 8%
Lubriplate 6/13/2018 8/13/2018 Mineral oil-based Lubricants by 7%, Synthetic/Long-life lubricants by 4%
Chevron 6/14/2018 8/1/2018 up to 9%
Safety-Kleen 6/15/2018 7/16/2018 up to 9%
Valvoline 6/19/2018 8/1/2018 up to 9%
Phillips 66 6/22/2018 7/23/2018 up to 9%
Calumet Branded Products 6/25/2018 7/25/2018 up to 10%
Castrol North America 6/26/2018 8/6/2018 up to 9%

CLICK FOR COMPLETE LIST OF LUBRICANT PRICE INCREASES IN 2018 ROUND 1

CLICK FOR COMPLETE LIST OF LUBRICANT PRICE INCREASES IN 2018 ROUND 2

Click on the Timeline Below to See All Effective Increase Dates in 2018

TimelineLong6262018

Castrol North America and Phillips 66 Announce Price Increases

IN THE NEWS AND ON THE WIRE

ExxonMobil mulls ‘multi-billion’ dollar expansion at Singapore refinery
“The expansion would enable ExxonMobil to introduce a new high-viscosity base stock to the market”
Ingevity names IMCD as distributor for lubricant products in Brazil
Univar Extends Agreement to Distribute Castrol Oil Company’s Industrial Lubricants and Greases

Castrol North America and Phillips 66 Announce Price Increases

Castrol North America announced a price increase today of up to 9% for Castrol and BP branded lubricants. The increase applies to certain conventional, synthetic blend and full synthetic passenger car and heavy-duty lubricants and is effective August 6, 2018. Castrol attributes the adjustment to the continuous rising cost of base oils, additives, packaging and transportation. The increase does not apply to Castrol or BP industrial products at this time.


Phillips 66 announced that effective July 23, 2018, it will adjust finished lubricant prices by up to 9%. Phillips 66 says the increase is due in part to increasing costs in the production and delivery of its products.

Scroll to the bottom of the page for a complete list of recent price increases reported by JobbersWorld.

Price Increase Roundup

Independent lubricant manufacturers are the first and the fastest to move on price in the latest round of increases.

Independent lubricant manufacturers kicked off the most recent round of lubricant price increases with Sinclair’s announcement on May 8th of a 10 to 12% adjustment effective July 1, 2018. By the end of May most independents followed with announced increases. ExxonMobil was the first major to move with an announcement coming on June 1. TOTAL followed on June 8th and a within 26 days all other majors announced price increases. Most of these increases came in the first two weeks of June. A timeline of the recent round of prices increases is shown below.

IncreaseTimeline6262018R3

In all cases, when reasons are given for the price increase, the drivers are said to be increases in the cost of base oils, additives, packaging, and transportation.

In addition to being the first to move, independent lubricant manufacturers also moved more quickly than the majors in this round of price increases. As shown below, whereas there is an average of 16 days from the time independents announced an increase to its effective date, the average distance for the majors is 34 days.

Average price increase (announced) 7.3%
Average time from announcement to effective date 22 days
Independents: Average time from announcement to effective date 16 days
Majors: Average time from announcement to effective date 34 days

 

According to some of the independent lubricant manufacturers JobbersWorld has spoken with, independent lubricant manufacturers are often the first to move and have less lead time then the majors due to their tighter margins. In addition, whereas majors generally purchase base oil under contract, some independents source from the spot market. Consequently, they have to respond relatively fast to maintain margins when base oil prices increase, as seen over the past few months shown below.

CrudePic6262018

In addition to the base oil price increases already seen in 2018, there has been an increase in the price of lubricant additives. The first was announced on May 18th by Afton when it advised its customers that effective June 18, 2018, it will increase prices on all performance additive products from all source points. The price adjustment is said to be in response to higher raw material and transportation costs.

Lubrizol followed on May 29 when it announced a price increase that varied across product areas and specific product families effective July 1, 2018. Lubrizol attributes the increase to the higher cost of raw materials resulting from robust demand and continuing consolidation and closure of capacity. In addition, the price adjustments are said to be necessary due to significant increases in transportation costs.

It should be noted that the higher than typical number of lubricant price increases we have seen so far in 2018 are reflected in the comparatively steep ramp up shown below in the Producer Price Index (PPI) for Petroleum Lubricating Oils and Grease Manufacturing (NAICS 324191). The PPI is an index published by the Bureau of Labor Statistics that measures the average change in the selling prices received by domestic producers for their output over time.

ProducerPriceIndexChart

Recently Announced Lubricant Price Increases

Company Announced Date Effective Date Increase
Sinclair Lubricants 5/8/2018 7/1/2018 10 to 12%
Sunoco 5/16/2018 6/16/2018 4 to 6%
Advanced Lubrication Specialties 5/16/2018 6/16/2018 4 to 6%
CAM2 5/18/2018 6/16/2018 4 to 9%
Smitty’s Supply 5/18/2018 6/16/2018 4 to 9%
U.S. Lubricants, Commerce, CA 5/18/2018 6/17/2018 $0.40/gal lubricants
$0.05/lb greases
Axel Royal 5/21/2018 6/24/2018 5%
Chemlube 5/22/2018 6/11/2018 5 to 9%
Maverick Performance Products 5/22/2018 6/18/2018 4 to 8%
Allegheny Petroleum Products 5/23/2018 6/18/2018 6 to 8% on bulk, additional 2% on drums and totes
Warren Distribution 5/23/2018 6/25/2018 4 to 8%
PennStar 5/23/2018 6/15/2018 6 to 10%
Martin Lubricants 5/23/2018 6/22/2018 5 to 9%
Old World Industries 5/24/2018 6/30/2018 4 to 9%
ExxonMobil 6/1/2018 7/1/2018 up to 9%
TOTAL Specialties USA 6/8/2018 7/1/2018 4 to 6%
Nu-Tier Brands/Gulf/ECOSE 6/11/2018 7/13/2018 6 to 8%
Shell 6/13/2018 7/16/2018 up to 10%
Reliance Fluid Technologies 6/13/2018 7/16/2018 4 to 8%
Lubriplate 6/13/2018 8/13/2018 Mineral oil-based Lubricants by 7%, Synthetic/Long-life lubricants by 4%
Chevron 6/14/2018 8/1/2018 up to 9%
Safety-Kleen 6/15/2018 7/16/2018 up to 9%
Valvoline 6/19/2018 8/1/2018 up to 9%
Phillips 66 6/22/2018 7/23/2018 up to 9%
Calumet Branded Products 6/25/2018 7/25/2018 up to 10%
Castrol North America 6/26/2018 8/6/2018 up to 9%

CLICK FOR COMPLETE LIST OF LUBRICANT PRICE INCREASES IN 2018 ROUND 1

CLICK FOR COMPLETE LIST OF LUBRICANT PRICE INCREASES IN 2018 ROUND 2

Click on the Timeline Below to See All Effective Increase Dates in 2018

TimelineLong6262018

Calumet Announces Increase, Valvoline Introduces new HDEO

Calumet Announces Price Increase

Calumet Branded Products announced today that effective July 25th, 2018, Calumet Branded Products will implement a price increase of up to 10% on finished lubricants. Calumet attributes the adjustments to increasing costs of raw materials used in the production and delivery of its products.

Scroll to bottom of page for complete list of recent price increases reported by JobbersWorld.

Valvoline Unveils its Premium Blue One Solution™

One Solution has become the first engine oil approved to meet Cummins Engine Spec (CES 20092) that allows for extended drains in natural gas engines.

As previously communicated in Valvoline’s April 2018 Product Information Bulletin, a new mobile natural gas engine oil performance specification has been introduced for stoichiometric combustion Cummins Westport mid-range and heavy-duty engines. The new specification-Cummins Engineering Standard (CES) 20092-provides significantly improved oxidation and thermal stability compared to previous natural gas oils.

ValvolinePremiumBlue9200With today’s announcement, Valvoline says its new “Premium Blue One Solution™” has become the first engine oil approved to meet Cummins Engine Spec (CES 20092) that allows for extended drains in natural gas engines.

According to Valvoline, with the use of CES 20092 compliant oils, such as Valvoline™ Premium Blue One Solution™, Cummins Westport has recommended increasing oil drain intervals for some engines and applications. Applicable engines are the Cummins Westport ISX12 G, ISX12N, ISL G, and L9N natural gas engines.

  • ISX12 G / ISX12N: The recommended interval is 40,000 mi (64,000 km) for vehicles with average road speeds greater than 25 mph (40 kph).

Operators of vehicles with average road speeds less than 25 mph (40 kph), should consult the appropriate Operation and Maintenance manual for recommended oil drain intervals.

  • ISL G / L9N: The recommended interval is 1,000 hrs.

All Cummins Westport natural gas engines using stoichiometric combustion are compatible with CES 20092 oils. These platforms will benefit from a transition to CES 20092 oils, which require a more modern oil additive system than previously used for CES 20074 or CES 20085 oils. The new specification requires a much stronger antioxidant combination to provide protection at the high temperatures experienced in modern natural gas engines. The range of allowable ash levels for CES 20092 oils (0.7-0.9%) is similar to the CES 20085 specification. Lean burn legacy engines should continue to use CES 20074 oils until further notice.

Click for more


Recently Announced Lubricant Price Increases

Company Announced Date Effective Date Increase
Sinclair Lubricants 5/8/2018 7/1/2018 10 to 12%
Sunoco 5/16/2018 6/16/2018 4 to 6%
Advanced Lubrication Specialties 5/16/2018 6/16/2018 4 to 6%
CAM2 5/18/2018 6/16/2018 4 to 9%
Smitty’s Supply 5/18/2018 6/16/2018 4 to 9%
U.S. Lubricants, Commerce, CA 5/18/2018 6/17/2018 $0.40/gal lubricants
$0.05/lb greases
Axel Royal 5/21/2018 6/24/2018 5%
Chemlube 5/22/2018 6/11/2018 5 to 9%
Maverick Performance Products 5/22/2018 6/18/2018 4 to 8%
Allegheny Petroleum Products 5/23/2018 6/18/2018 6 to 8% on bulk, additional 2% on drums and totes
Warren Distribution 5/23/2018 6/25/2018 4 to 8%
PennStar 5/23/2018 6/15/2018 6 to 10%
Martin Lubricants 5/23/2018 6/22/2018 5 to 9%
Old World Industries 5/24/2018 6/30/2018 4 to 9%
ExxonMobil 6/1/2018 7/1/2018 up to 9%
TOTAL Specialties USA 6/8/2018 7/1/2018 4 to 6%
Nu-Tier Brands/Gulf/ECOSE 6/11/2018 7/13/2018 6 to 8%
Shell 6/13/2018 7/16/2018 up to 10%
Reliance Fluid Technologies 6/13/2018 7/16/2018 4 to 8%
Lubriplate 6/13/2018 8/13/2018 Mineral oil-based Lubricants by 7%, Synthetic/Long-life lubricants by 4%
Chevron 6/14/2018 8/1/2018 up to 9%
Safety-Kleen 6/15/2018 7/16/2018 up to 9%
Valvoline 6/19/2018 8/1/2018 up to 9%
Calumet Branded Products 6/25/2018 7/25/2018 up to 10%

IncreaseTimeline6212018R3

CLICK FOR COMPLETE LIST OF LUBRICANT PRICE INCREASES IN 2018 ROUND 1

CLICK FOR COMPLETE LIST OF LUBRICANT PRICE INCREASES IN 2018 ROUND 2

Click on the Timeline Below to See All Effective Increase Dates in 2018

IncreaseLong6212018

 

Detroit Responds to Shell’s Claims, and ELM announces “NO PRICE INCREASE”

Detroit Diesel Responds to Shell’s Claims

In a letter sent yesterday to its vendors, suppliers, customers, and a number of organizations, and others, Detroit Diesel Corporation released a position statement regarding “Shell’s Mobil Competitive Claim.”

The letter is directed at Shell’s advertising campaign where Shell claims that a sample of ExxonMobil Delvac 1300 Super 15W-40 it tested does not meet API CK-4 and Detroit Diesel (93K222) engine oil specifications. Specific to the claim, Shell says the sample did not pass the Volvo T-13 engine test.

In response to the Shell’s claim, Detroit Diesel’s position statement says that “Mobil Delvac 1300 Super 15W-40 met all of the requirements to receive an API CK-4 license” and “all the requirements for inclusion on Detroit Diesel’s 93K222 approved engine oil list.” Further, “Inclusion on Detroit Diesel’s 93K222 approved engine oil list is at the sole discretion of Detroit Diesel Corporation” and that “The Volvo T13 engine test data for Mobil Delvac 1300 Super 15W-40 met the requirements for API CK-4 and DDC DFS 93K222.”

In addition to these points, the statement says, “The Volvo T13 engine test is approved by ASTM, API, ACC, EMA, DDC, and other organizations” and “The precision statement for the Volvo T13 engine test is available in ASTM D 8048.”

Detroit Diesel’s position statement concludes with:

“Any and all public claims that a Detroit Diesel-approved product does not meet Detroit Diesel specifications shall only be communicated by Detroit Diesel Corporation.”

From what JobbersWorld is hearing from those who received the letter, the position statement makes it clear that Detroit Diesel stands by its approval of Mobil Delvac 1300 Super 15W-40. Further, the letter makes it clear that Detroit Diesel calls the shots on its product approvals, not lubricant marketers.

Related stories and video:

ExxonMobil Responds to Shell’s Claim
Shell Amps up the Volume about its Claim
Shell Claims Shell Rotella Meets The Standards While A Leading Diesel Engine Oil Does Not
Not All Oils Meet Industry Standards
– YouTube – (Video 1 and Video 2)

New Tariffs Mean no Price Increase for ELM Biobased Greases

In what clearly is a change from much of the news JobbersWorld has been publishing in 2018 about industry wide price increases, Environmental Lubricants Manufacturing, Inc. (ELM), a leading biobased lubricants company announced that prices will not rise in some of its key grease products.

LouAHonary

Dr. Lou A. Honary, Chairman and President Professor-Director Emeritus, University of Northern Iowa NABL Center

According to ELM President Dr. Lou Honary “… since the beginning of 2018 we have seen three waves of price increases by major suppliers for base oils, additives and for finished lubricants and greases. We too are impacted by increases in the price of additives, but we have also seen our base oil prices stabilize and decrease much to the disappointment of our farmers. Depressed agriculture commodity prices combined with continuous improvement in our microwave-based grease processing, we are pleased to inform our customers that not only are we not following the crowd and increasing our prices, in the case of biobased rail curve, wire rope, drill rod grease and food grade greases, we are seeing some price reductions.”

ELM production manager Saeed Soleimani stated, “increase in sales volumes of VGP certified biobased wire rope grease, barium grease-substitute biobased drill rod grease, and our lithium-based rail curve greases have helped us to further increase our purchasing power.” ELM has been private labeling biobased greases for several US and international companies. Honary said “we have long recognized that our way to the broader market is through cooperation with successful mineral oil lubricant marketers and manufacturers. We are signing on more capable private labelers who find their margins continue to degrade in mineral oil-based products while biobased products offer a new high margin opportunity.”

Another Major Moves: Add Valvoline to the List

Another Major Moves: Add Valvoline to the List

Valvoline advised its customers that it will implement a price increase on its branded lubricant products up to 9%. The price movement is effective August 1, 2018. Valvoline attributes the price adjustment to the rising raw material costs associated with manufacturing and distribution of its products.

See below for complete list of round 3 price increases in 2018.

Shell Amps up the Volume about its Claim

 As reported in JobbersWorld last Friday, Shell went public with a claim that a sample of Mobil Delvac 1300 Super 15W-40 CK-4 Shell examined “does not meet the minimum API CK-4 requirements or the Volvo/Mack or Cummins OEM requirements.”   

While the claim was initially made public on Shell’s website in release accompanied by a “Full Report” displaying graphics illustrating a comparison of test results on Volvo T-13 for samples of Rotella and Delvac, Shell’s website now includes a video (click to see video) where Shell says “Through this testing, we discovered that a sample of Mobil Delvac 1300 Super 15W-40 not only failed the requirements of API CK-4, but also the Volvo VDS 4.5, MACK EOS 4.5 and the Cummins CES 20086 performance standards.”  Videos are also now appearing on YouTube (see link 1 and link 2).

Shell marketers were made aware of the claim in advance of the public announcement and they along with select customers were invited to join a Shell webcast about the claim on Wednesday of this week. From what JobbersWorld has learned, the webcast stayed on script to the talking points made public. Further, marketers were cautioned about the sensitivity of the claim and to avoid any disparaging statements toward ExxonMobil. At the same time, news about the claim, including the video, is said to be part of Shell’s efforts to get the word out to customers and prospects.

While you can be sure Shell and its marketers are already pounding the pavement to capture new business with Shell’s claim in hand, some others question the veracity of the claim and believe ExxonMobil will take swift legal action to challenge it and minimize damages. To this point, the comment of one reader expresses the thoughts of several others heard by JobbersWorld.

It is inconceivable that ExxonMobil would not have obtained an approval and completely followed the rules for industry testing. Evidence of this would be in the documentation for the API claims. Further, ExxonMobil would have to apply for and review the data with various OEM’s to secure approvals for Volvo VDS 4.5 which is more severe than API CK-4/FA-4.  With that, the OEMs would have to accept the results, which according to ExxonMobil, they did, and stand by it.”

Another comment coming from someone with a rich history in the business says:

“Not something I would want to take sides on, but from my experience, one test does not ensure good or bad performance. Although, no one ever questions when a product passes or yields great results, many questions are asked when one fails. I suspect we will hear more about these questions and the answers if ExxonMobil challenges Shell’s claim.” 

Although JobbersWorld received other comments about Shell’s claim, understandably, all who commented did so “off the record.”

NOTE: ExxonMobil reached out to JobbersWorld on Tuesday of this week with the following statement regarding Shell’s claim:

“ExxonMobil stands by the quality of our products and has re-affirmed for our distributors and customers that Mobil Delvac 1300 Super 15W-40 carries valid OEM approvals and API CK-4 licensing. In addition, Volvo has confirmed that the Volvo VDS-4.5 and Mack EOS-4.5 approvals for Mobil Delvac 1300 Super 15W-40 remain intact based on the fully compliant data set originally submitted, which includes passing the Volvo T-13 engine test results for oxidation and viscosity increase at the more stringent Volvo limits. Beyond valid API licensure and OEM approvals, Mobil Delvac 1300 Super and Mobil Delvac Super FE have proven on-road performance in ExxonMobil controlled field trials utilizing 69 representative trucks accumulating 23 million miles. ExxonMobil cannot address the specifics of the test results Shell produced, because we do not have the data, but we are conducting a thorough investigation.”


Round 3 Lubricant Price Increase Summary

Company Announced Date Effective Date Increase
Sinclair Lubricants 5/8/2018 7/1/2018 10 to 12%
Sunoco 5/16/2018 6/16/2018 4 to 6%
Advanced Lubrication Specialties 5/16/2018 6/16/2018 4 to 6%
CAM2 5/18/2018 6/16/2018 4 to 9%
Smitty’s Supply 5/18/2018 6/16/2018 4 to 9%
U.S. Lubricants, Commerce, CA 5/18/2018 6/17/2018 $0.40/gal lubricants
$0.05/lb greases
Axel Royal 5/21/2018 6/24/2018 5%
Chemlube 5/22/2018 6/11/2018 5 to 9%
Maverick Performance Products 5/22/2018 6/18/2018 4 to 8%
Allegheny Petroleum Products 5/23/2018 6/18/2018 6 to 8% on bulk, additional 2% on drums and totes
Warren Distribution 5/23/2018 6/25/2018 4 to 8%
PennStar 5/23/2018 6/15/2018 6 to 10%
Martin Lubricants 5/23/2018 6/22/2018 5 to 9%
Old World Industries 5/24/2018 6/30/2018 4 to 9%
ExxonMobil 6/1/2018 7/1/2018 up to 9%
TOTAL Specialties USA 6/8/2018 7/1/2018 4 to 6%
Nu-Tier Brands/Gulf/ECOSE 6/11/2018 7/13/2018 6 to 8%
Shell 6/13/2018 7/16/2018 up to 10%
Reliance Fluid Technologies 6/13/2018 7/16/2018 4 to 8%
Chevron 6/14/2018 8/1/2018 up to 9%
Safety-Kleen 6/15/2018 7/16/2018 up to 9%
Valvoline 6/19/2018 8/1/2018 up to 9%

IncreaseTimeline6212018R3

CLICK FOR COMPLETE LIST OF LUBRICANT PRICE INCREASES IN 2018 ROUND 1

CLICK FOR COMPLETE LIST OF LUBRICANT PRICE INCREASES IN 2018 ROUND 2

Click on the Timeline Below to See All Effective Increase Dates in 2018

IncreaseLong6212018

 

EXXONMOBIL RESPONDS TO SHELL’S CLAIM

ExxonMobil Responds

ExxonMobil reached out to JobbersWorld this afternoon with a statement regarding a claim JobbersWorld reported on last Friday; a claim made by Shell saying that a sample of Mobil Delvac 1300 15W-40 CK-4 Shell examined “does not meet the minimum API CK-4 requirements or the Volvo/Mack or Cummins OEM requirements.” Shell Claims Shell Rotella Meets The Standards While A Leading Diesel Engine Oil Does Not

With regards to Shell’s claim, ExxonMobil says:

“ExxonMobil stands by the quality of our products and has re-affirmed for our distributors and customers that Mobil Delvac 1300 Super 15W-40 carries valid OEM approvals and API CK-4 licensing. In addition, Volvo has confirmed that the Volvo VDS-4.5 and Mack EOS-4.5 approvals for Mobil Delvac 1300 Super 15W-40 remain intact based on the fully compliant data set originally submitted, which includes passing the Volvo T-13 engine test results for oxidation and viscosity increase at the more stringent Volvo limits. Beyond valid API licensure and OEM approvals, Mobil Delvac 1300 Super and Mobil Delvac Super FE have proven on-road performance in ExxonMobil controlled field trials utilizing 69 representative trucks accumulating 23 million miles. ExxonMobil cannot address the specifics of the test results Shell produced, because we do not have the data, but we are conducting a thorough investigation.”

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