Quote:
Additional Challenges
As an independent oil company, AMSOIL faces many
unique challenges. The volatility of the current market
impacts independent manufacturers differently than it
does “Big Oil.” Recently, the Independent Lubricant
Manufacturers Association (ILMA) submitted comments
to the Federal Trade Commission (FTC) renewing its criticism
of the pricing practices of major oil companies.
ILMA’s biggest complaint lies with the majors’ practice
of issuing a price increase for base oils to all of their
competitors and delaying the subsequent price increase
on their finished lubricants. Independent blenders, like
AMSOIL, buy base oils from the majors and compete
against them in the sale of finished goods.
In some cases, ILMA contends, the same suppliers
that implement numerous base oil price increases to
independents delay increasing prices on their finished
products for 45 to 60 days, causing a price squeeze on
independent lubricant manufacturers. For example,
Shell announced a price increase on finished lubes
May 23 that doesn’t go into effect until August 5.
ILMA General Counsel Jeff Leiter said the only conclusion
that can be reached is that the major oil companies
are trying to squeeze out the independents for market share. “ExxonMobil might say ‘Shell’s our competition,
not ILMA members,’ but it’s kind of curious that
ExxonMobil is selling base oil to Shell. Exxon raises
prices, and the rest of them follow suit the next day by
the same amount. Our sense is, we’ve lost a competitive
market for base oils, and that’s what is creating the
problem,” said Leiter. Price increases from base oil
suppliers used to be approximately $0.05 per gallon.
Now they are more like $0.30 per gallon each increase.
Additional Challenges
As an independent oil company, AMSOIL faces many
unique challenges. The volatility of the current market
impacts independent manufacturers differently than it
does “Big Oil.” Recently, the Independent Lubricant
Manufacturers Association (ILMA) submitted comments
to the Federal Trade Commission (FTC) renewing its criticism
of the pricing practices of major oil companies.
ILMA’s biggest complaint lies with the majors’ practice
of issuing a price increase for base oils to all of their
competitors and delaying the subsequent price increase
on their finished lubricants. Independent blenders, like
AMSOIL, buy base oils from the majors and compete
against them in the sale of finished goods.
In some cases, ILMA contends, the same suppliers
that implement numerous base oil price increases to
independents delay increasing prices on their finished
products for 45 to 60 days, causing a price squeeze on
independent lubricant manufacturers. For example,
Shell announced a price increase on finished lubes
May 23 that doesn’t go into effect until August 5.
ILMA General Counsel Jeff Leiter said the only conclusion
that can be reached is that the major oil companies
are trying to squeeze out the independents for market share. “ExxonMobil might say ‘Shell’s our competition,
not ILMA members,’ but it’s kind of curious that
ExxonMobil is selling base oil to Shell. Exxon raises
prices, and the rest of them follow suit the next day by
the same amount. Our sense is, we’ve lost a competitive
market for base oils, and that’s what is creating the
problem,” said Leiter. Price increases from base oil
suppliers used to be approximately $0.05 per gallon.
Now they are more like $0.30 per gallon each increase.
