Jobbers world
Demand, Supply Imbalance Leads to Lubricant Price Increases
Increasing lubricant demand as the world economy recovers from the shock of the COVID-19 pandemic and continued supply (and supply chain) challenges have pushed oil suppliers to steadily raise prices throughout 2021, including a new round of hikes this month.
This newest price increase on finished lubricants and other oil additives continues a trend that stretches back to the early months of 2021, but links directly to myriad challenges from the COVID-19 pandemic.
While prices are set to increase yet again this month, there is hope that demand and supply will find equilibrium early in Q1 2022.
December Sees More Lubricant Price Increases
Nearly a dozen top suppliers of crude and finished oil products announced price increases in December 2021. Tilley Distribution’s partners, including ExxonMobil, have confirmed price increases up to 15% starting December 9. Like all suppliers, ExxonMobil has tried to avoid increases to better support their customers, many of whom have experienced longer wait times and limited availability. Unfortunately, market forces have made it impossible to move forward without price adjust
Several major oil companies have announced a price increase of up to 10% on lubricants effective November 18, 2020. Despite a large number of major companies falling in line with the trend, others, such as Castrol, have stated that they will wait until 2021 before enacting price increases. Please contact your local PTL representative to see how and if the price increase has impacted your region.
Oil Price Increase: A History
The below information was adapted from and originally featured in an October edition of Jobbers World.
There have been 21 times over the past 10 years where lubricant price increases have been announced. Over that time there have only been two announced price decreases. On average these increases represent close to two a year. But, as shown in the chart below, there have been a few years where the frequency of increases was one or two a year, and in 2015, when the price of crude oil, and consequently base oil, dropped significantly, there were no increases and one announced price decrease.
• Importantly, although there were only two announced price decreases over the period, many of the price increases did not stick over time. This is due to
Need to Know
The first phase of distributor consolidation started with merger and acquisition activity of the major oil companies in the 1990s and early 2000s. The first was British Petroleum’s acquisition of Amoco Corp., then Pennzoil’s acquisition of Quaker State in 1998. This was followed by Exxon’s purchase of Mobil in 1999, then Chevron’s deal to acquire Texaco in 2001. In 2002, Royal Dutch/Shell Group acquired Pennzoil-Quaker State Co.
Prior to their M&A activity, majors maintained networks of 300-500 distributors. Later, merged majors had to rationalize the combined number they were doing business with to minimize channel conflicts, improve efficiency and reduce costs. With that, Chevron, ExxonMobil and Shell culled their distributors by alignment models based on volume metrics, brand commitments, sub-jobber arrangements and other methods.
The writing was on the wall and distributors were getting the message that they had to either align and commit to grow business with a given major or risk contract cancellation. Understandably, this drove consolidation and gave rise to new enterprises in lubricant distribution. One of the first was PetroLiance, which was in
The state of jobbers in the U.S. may be a cautionary tale for Canadians or a reminder of the differences between the distribution business in both countries as operations appear to be trending differently.
Once the backbone of the American auto parts world, jobber stores are now fighting to stay relevant as sweeping changes in distribution threaten their survival, according to a recent report.
South of the border, traditional jobber stores — long-time middlemen in the U.S. auto parts supply chain — are facing a steep uphill battle. Lang Marketing’s report paints a stark picture: Jobber stores are disappearing at an alarming rate, with their numbers down more than 47 per cent from their peak in the early 1980s.
Back then, there were over 31,000 jobber outlets across the United States. Today, that number has been nearly cut in half. While the decline slowed in the 2010s, the COVID-19 pandemic reignited the trend, accelerating store closures and exposing deep vulnerabilities in the jobber model.
“The pandemic created unprecedented supply chain issues nationwide,” the report states, noting that the aftermarket — which relies heavily on specific-application parts — was hit especi