New York Post, Ariel Zilber: Costco is rationing its Kirkland Signature motor oil as a global shortage of a key ingredient used in synthetic lubricants sends prices soaring — with a 10-quart pack that once sold for as little as $30 now fetching nearly $58.
The warehouse giant is limiting members to two units every seven days as supplies of premium base oils remain squeezed by production outages and disruptions in the Middle East.
Costco’s website lists two-packs of its Kirkland Signature 0W-20 and 5W-20 full synthetic motor oil — 10 quarts in total — for $57.99.
That’s nearly double the roughly $30 price the Kirkland oil has fetched in the past, according to The Auto Wire.
Fuel prices have been surging alongside the lubricant squeeze. The EIA’s latest weekly reading put regular gasoline at $4.16 a gallon and on-highway diesel at a record $5.97, while more recent AAA data put diesel above $6 a gallon and regular near $4.29.
Crude oil, meanwhile, has climbed back above $100 a barrel — adding another layer of pressure to motor-oil makers already grappling with a shortage of premium Group III base oils, as refiners have more incentive to steer barrels toward higher-margin gasoline, diesel and jet fuel.
The purchase cap on motor oil is an unusual step for a product that generally has a long shelf life and can be stored by consumers for future oil changes.
The shortage is largely concentrated in Group III base oil, a highly refined petroleum product widely used to make full-synthetic and low-viscosity motor oils.
Andrew Lipow, president of Houston-based consulting firm Lipow Oil Associates, said the squeeze is concentrated in the premium base stocks used to make synthetic lubricants.
“What we do know is that Qatar, UAE, and Korea provide what is known as Group III Base Oils,” Lipow told The Post.
“They are used in synthetic motor oil and synthetic blends of motor oil and have superior performance qualities.”
Lipow said the supply crunch is already working its way downstream.
“Yes, there seems to be a supply shortfall, and the packaging plants are seeing it first followed by some of the retailers,” he said.
About 44% of normal US demand for Group III base oil had been supplied from the Persian Gulf before much of that supply was knocked offline this year, according to the Independent Lubricant Manufacturers Association.
The trade group has said damage, shutdowns and other disruptions caused by the ongoing war in Iran has hit major producers in Qatar, Bahrain and the United Arab Emirates.
Among the biggest blows was damage to Shell’s Pearl gas-to-liquids facility in Qatar, which had supplied roughly 30,000 barrels a day, according to ILMA.
Repairs there were expected to take at least a year, the group said in April.
The shortage has persisted even as shipping conditions have improved because damaged production capacity and depleted inventories cannot be quickly replaced, according to the industry group.
That has left blenders scrambling for Group III supplies from other regions, including South Korea — itself a major importer of Middle Eastern crude.
Prices across the lubricant market have climbed sharply as those supply pressures have mounted.
The producer price index for finished lubricants jumped about 15.8% between March and August, while an industry survey of 97 motor oil products found retail prices rose 24.2% from February through August.
Valvoline has said higher lubricant costs were adding roughly $5 to $7 to the cost of an oil change, according to industry reporting.
And relief may not come quickly.
Prophetic Link:
“And ye shall hear of wars and rumours of wars: see that ye be not troubled: for all these things must come to pass, but the end is not yet. For nation shall rise against nation, and kingdom against kingdom: and there shall be famines, and pestilences, and earthquakes, in divers places. All these are the beginning of sorrows.” Matthew 24:6-8
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