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The last several years have seen an unprecedented rise in oil and energy costs for this country and the world. The rising costs of additives, basestocks, packaging, freight, energy itself, and just about everything we buy has significantly impacted our business, and in an effort to keep pace AMSOIL was forced to implement numerous of price increases over the last 4 years. Unfortunately, these costs continue to rise so quickly that our 90-120 day requirement for implementing price increases has not been timely enough.
By the time our price adjustments are effective, we have already suffered more cost increases that require the near immediate planning of yet another price increase.
For example, the increased costs that hit us in October, November and early December of 2007 forced the planning of the next price increase. We calculated costs and established new prices, announced the increase in the January Action News, and printed and distributed all new price lists by around February 1 for the March 1 effective date. Unfortunately, the company was hit with yet another round of large cost increases in February, significant enough to require another price increase even before the effective date of the previous price increase. Once again we were unable to recover our increased costs.
Since February, AMSOIL has received even more cost increases, and with the run up of crude oil well beyond the $100/barrel mark in recent weeks, we expect another across-the-board round of increases soon. With no end in sight and with the “experts” predicting everything from a burst of the bubble and oil prices dropping to the $50-$60 range, to those predicting a rise to near $200, no one clearly knows where energy costs are going.
Due to the quickening pace of the volatility in the energy sector and its undeniable impact on the prices of nearly everything, AMSOIL must develop a more efficient way to address these cost increases than continually trying to re-issue new price lists with prices that are inevitably behind the times by the time they become effective. Much like trucking companies, utilities and others faced with wildly fluctuating costs, AMSOIL is forced to implement an energy surcharge that will be applied to the total product value of each order and will be effective May 1, 2008 in the United States and Puerto Rico. If it is determined that Canada will be affected an announcement will be made.
By doing so the company will not have to continue re-issuing price lists to all customers, and it should help avoid changing discount schedules, freight schedules, etc., until some semblance of stability returns to the market. That way if our costs were to come back down we would not have to lower prices but could simply lower or eliminate the energy surcharge. Conversely, if costs continue to rise, we can implement a change in the surcharge monthly to address that volatility.
The initial surcharge is expected to be in the 3%-7% range. The company will wait until the very end of April to establish the exact percentage and will modify it on a monthly basis as needed. We will keep you posted in the Dealer Zone as new information becomes available that would impact the status of this surcharge program.
In the meantime, announcements will be developed for the Action News and for mailing to accounts informing them of the energy surcharge and the effective date. Your assistance in explaining the necessity for this is appreciated and will be to everyone’s individual benefit as well. Fortunately, AMSOIL products are still the most cost effective lubricants and filters available on the market today due to their longer drain and change intervals, and those are the points that need to be made to address objections you may face regarding price. The price of all lubricants will be going up, and that makes our cost effectiveness even more readily demonstrated. AMSOIL Dealers have the edge in these times of rising costs, and no one can logically tell you otherwise. Let the facts and cost calculations speak for themselves.
The last several years have seen an unprecedented rise in oil and energy costs for this country and the world. The rising costs of additives, basestocks, packaging, freight, energy itself, and just about everything we buy has significantly impacted our business, and in an effort to keep pace AMSOIL was forced to implement numerous of price increases over the last 4 years. Unfortunately, these costs continue to rise so quickly that our 90-120 day requirement for implementing price increases has not been timely enough.
By the time our price adjustments are effective, we have already suffered more cost increases that require the near immediate planning of yet another price increase.
For example, the increased costs that hit us in October, November and early December of 2007 forced the planning of the next price increase. We calculated costs and established new prices, announced the increase in the January Action News, and printed and distributed all new price lists by around February 1 for the March 1 effective date. Unfortunately, the company was hit with yet another round of large cost increases in February, significant enough to require another price increase even before the effective date of the previous price increase. Once again we were unable to recover our increased costs.
Since February, AMSOIL has received even more cost increases, and with the run up of crude oil well beyond the $100/barrel mark in recent weeks, we expect another across-the-board round of increases soon. With no end in sight and with the “experts” predicting everything from a burst of the bubble and oil prices dropping to the $50-$60 range, to those predicting a rise to near $200, no one clearly knows where energy costs are going.
Due to the quickening pace of the volatility in the energy sector and its undeniable impact on the prices of nearly everything, AMSOIL must develop a more efficient way to address these cost increases than continually trying to re-issue new price lists with prices that are inevitably behind the times by the time they become effective. Much like trucking companies, utilities and others faced with wildly fluctuating costs, AMSOIL is forced to implement an energy surcharge that will be applied to the total product value of each order and will be effective May 1, 2008 in the United States and Puerto Rico. If it is determined that Canada will be affected an announcement will be made.
By doing so the company will not have to continue re-issuing price lists to all customers, and it should help avoid changing discount schedules, freight schedules, etc., until some semblance of stability returns to the market. That way if our costs were to come back down we would not have to lower prices but could simply lower or eliminate the energy surcharge. Conversely, if costs continue to rise, we can implement a change in the surcharge monthly to address that volatility.
The initial surcharge is expected to be in the 3%-7% range. The company will wait until the very end of April to establish the exact percentage and will modify it on a monthly basis as needed. We will keep you posted in the Dealer Zone as new information becomes available that would impact the status of this surcharge program.
In the meantime, announcements will be developed for the Action News and for mailing to accounts informing them of the energy surcharge and the effective date. Your assistance in explaining the necessity for this is appreciated and will be to everyone’s individual benefit as well. Fortunately, AMSOIL products are still the most cost effective lubricants and filters available on the market today due to their longer drain and change intervals, and those are the points that need to be made to address objections you may face regarding price. The price of all lubricants will be going up, and that makes our cost effectiveness even more readily demonstrated. AMSOIL Dealers have the edge in these times of rising costs, and no one can logically tell you otherwise. Let the facts and cost calculations speak for themselves.
