Why are fuel and lubricant prices rising so fast?

Fuel and lubricant prices are rising fast. They are growing at a rate we haven’t seen in years. Earlier this month, the national average of gasoline hit the record high at $4.104 gallons, beating the previous record from 2008 during the height of the Great Recession. These rising prices are very concerning because there is a new record high or a new reason why prices continue to climb every day. Oil and fuel prices have always ridden a wild rollercoaster of ups and downs, but lately, the ride is on a breakneck speed upward with no hope of stopping.

As a fuel and lubricant supplier, we want you to know that we are doing our best to help our customers through these challenging times. One of the ways we are doing that is by keeping a close eye on the situation and communicating why these changes continue to happen. As a result, you can expect us to stay ahead of the curve as we carefully watch the changing oil and fuel markets across the globe. Then we will do our best to communicate developments as we see them unfold so that you can plan for business.

Expect high fuel prices to last
First, let’s talk about fuel prices. We all know that costs are at record highs and climbing. The record-breaking fuel price high earlier this month on March 7 is just one of the latest fuel records to break. The national average cost of gasoline recently saw its largest 7-day price spike. Moreover, the ongoing conflict in Russia and other world events will continue to affect price increases.

According to Patrick De Haan, head of petroleum analysis at GasBuddy: “Americans have never seen gasoline prices this high, nor have we seen price increases so fast and furious. That combination makes this situation all the more remarkable and intense, with crippling sanctions on Russia curbing their flow of oil, leading to the massive spike in the price of all fuels: gasoline, diesel, jet fuel, and more. It’s a dire situation and won’t improve any time soon. The high prices are likely to stick around for not days or weeks like they did in 2008 but months. GasBuddy now expects the yearly national average to rise to its highest ever recorded.”

Lubricant prices are going up amid supply issues
Rising fuel prices are not the only thing business owners have to contend with; lubricant prices and availability are also becoming a problem. The increased cost of raw materials, transportation, and availability of base oils contribute to higher lubricant prices and increased scarcity of some products. One of the most significant issues facing lubricant manufacturers is the availability of additives and components, making blending finished products difficult. These disruptions are causing some manufacturers to phase out specific products or leading to long wait times for orders. In addition, many distributors struggle to find some lubricant supplies, and when they do, the prices are often higher. As a result, major manufacturers have announced price increases, including ExxonMobil, Excel Paralubes, and Chevron.

One reason manufacturers are implementing price increases is the rising cost of base oil supplies. Base oil prices have increased twice this year alone. In addition, ExxonMobil announced a $ 0.30-gallon price increase effective March 14. Demand for base oil remains high as these supplies are essential for the production of lubricant supplies and additives. Base oil prices are also strongly influenced by diesel oil prices which are also rising rapidly to record heights. Distributors expect that this situation will continue for the time being, and high prices and shortages may last for months.

Oil prices are the culprit
Most fuel and lubricant suppliers knew that prices would rise as we came out of the COVID-19 pandemic and demand increased. But the record-setting highs we’ve seen are more than anyone imagined. Now, the Russia-Ukraine war is further complicating things, as countries worldwide impose economic sanctions on Russia and their oil supplies.

Crude oil is always the driving factor behind fuel and lubricant price increases. If the oil price goes up, you can expect to be paying more at the pump. In early 2022, crude oil prices were high, around $79 a barrel in January, but as the year progressed, demand increased. But as the conflict in Ukraine escalated into a full-out war, prices rose dramatically. As of February 4, oil was around $90 a barrel. It remains to be seen exactly how the fallout of the Russian-Ukraine war will affect oil prices worldwide. We expect that prices will continue to increase. Russia produces 10% of the world’s oil supply and is also a key member of OPEC+. Sanctions against the country and its oil supplies could have significant consequences.

The record high price of oil also comes when there is low supply in the market. OPEC+ has missed output targets, and there is significant slow growth in oil production worldwide. This low supply combined with increased demand as the world recovers from the COVID-19 pandemic is cause for concern. According to the International Energy Agency, global oil demand is expected to reach 100.6 million barrels a day in the coming year.

How to offset fuel price increases
As your fuel and lubricant supplier, we know that these prices increases are not easy. Everything is getting more expensive as inflation costs rise, and your profit margins will pay the price. We want you to know that we are here for you. Here are a few programs we offer that may help reduce your fuel budget and needs.

  • Fleet Fueling Program: We offer an extensive fleet fueling program that may significantly reduce fuel costs and helps you closely monitor your consumption. Using our program, you can supply your drivers with fleet fueling cards that are easy to monitor. They will have access to a nationwide network of 24-hour card lock fuelling sites, and you’ll have itemized accounting of all your fuel costs. This program also has several safeguards to prevent fraud and fuel theft!
  • Oil Analysis: Rising lubricant costs and supply scarcity mean that it may be more difficult in the coming months to get the lubricant supplies you need. Our oil analysis program can help. Our lab will provide custom lubricant recommendations and equipment analysis using the data gathered from your oil samples. These findings can help you take preventative measures to prevent costly maintenance and lower your overall lubricant costs.
  • Bulk Fuel Delivery and Remote Tank Monitoring: You can also offset the rising cost of fuel by buying in bulk and storing your fuel onsite. We also offer remote tank monitoring services to ensure that your bulk fuel supplies are protected from theft. Our remote monitoring tools can also help you monitor your usage so you can strategically time when you buy your next load of fuel when prices may be lower.

There is a lot out of our control in the fuel and lubricant world right now. Like you, we watch the changing developments with trepidation and hope for the best. If you have any questions about our high quality fuel and lubricants, call us today.

How to handle a grease transition

Recently Chevron announced the sunset of some of their grease products. These products are being phased out due to supply chain issues. Supplies of these grease products will only be available while inventory lasts, and after that time, customers will need to transition to new products. You can view the affected products here.

It is often frustrating when your favorite products or supplies are phased out. Many of our clients worry about compatibility issues or performance problems when transitioning to new products. That’s a very normal feeling, and we want to ease your mind about the process of transitioning to new grease products.

Grease 101
First, it’s important to remember that grease products always have a little diversity, even in the same product line. Grease products from different refinery locations can look different, even if they have the same makeup. Many customers fixate on grease color, but the color is often not that important. Usually, the grease is dyed to make identification easier for users. The thing to remember about grease products is that they are derived from locally sourced base oils when possible. So, even if two products have the same formula, the base oils used in different refinery locations may be slightly different, which can cause color and appearance changes. However, the grease products still have the same properties and capabilities despite the differences.

So, when you’re transitioning to a new grease product, don’t get hung up on the color or appearance of the grease. Instead, you need to focus on the compatibility and performance of the product for your needs. Chevron’s grease compatibility matrix is the best way to check which type of grease you need. This document guides you through the different levels of grease compatibility based on thickener type.

Grease products are composed of base fluid oils, thickeners, and additives. The thickener holds these substances together as grease so that it can be applied to the equipment. Different thickener types affect the performance of the grease. Here’s how it works: when the grease is applied to the moving part, the pressure exerted by the movement separates the base oil and additives from the thickener as the part moves, which then lubricates the machinery. The oil is reabsorbed back into the thickener when the moving parts stop. When grease is incompatible, this process doesn’t occur the way it should, and the oil isn’t reabsorbed into the thickener. The process is called ‘bleeding,’ and it appears when you choose the wrong grease or if there is contamination or incompatibility. If you follow the principles of the Chevron Grease Matrix, you should be able to avoid this problem and other compatibility issues as you transition to new grease products.

What about oil separation during storage?
Customers worried about ‘bleeding’ are often concerned about oil separation in their grease products during storage. They may report a layer of separated oil on top of the product, a lumpy texture, or surface cracking. Oil separation during storage is very normal and often causes no harm. Usually, you can restore the grease by stirring it up before applying it to the machinery.

Oil separation typically occurs when products are stored in high-temperature areas, at least over 43ºF. If you follow proper storage procedures, you will generally prevent this issue. We recommend following these grease storage protocols.

  • Store products in cool, dry areas with minimal exposure. Indoor storage is best, and a temperature range with 32ºF to 77ºF. Ensure that your products are not exposed to dust particulates to avoid label and container deterioration.
  • Store products in an upright position to prevent oil separation.
  • Cover your products with plastic covers or tip oil drums to prevent water and particulate contamination when storing outdoors.
  • Rotate inventory regularly, so you are using your oldest supplies first.
  • Warm up your grease products to the dispensing temperature before use.
  • Use airtight containers, and wipe the containers off before opening to prevent contamination.
  • Clean tools and equipment you are using with your grease products before handling.

If you open your grease products and notice some oil separation, you can pour the excess oil off into a compatible container or absorbent bag. You can also stir the product to reabsorb the oil into the thickener. If you are concerned about excessive oil separation, get your products tested and analyzed for contamination or water damage.

Chevron has a large selection of grease products
Choosing the proper grease for your equipment is a complicated process, so, understandably, it’s frustrating when your favorite products are no longer available. But, even though some common Chevron grease products are being phased out, that doesn’t mean you wouldn’t be able to find other grease supplies with compatible properties. Chevron has an extensive product line and has developed various products for your lubrication needs. The replacement products Chevron is recommending provide the same level of lubricant and additive performance. It’s just a different product formula. Check the new replacement products against the Grease matrix and your equipment manual standards. You might even find that the new grease products provide additional coverage or performance.

We can help you find the right grease products
We’re not saying that one grease is the same as all others. There is a great deal of diversity among grease products, even in the same product line. But it is possible to get the same level of lubricant performance from a different but equally compatible product. It helps if you understand how grease lubricants are produced and work. Once you have that basic understanding and know-how to care for and store your lubricant supplies properly, you can then select a new compatible grease product for your equipment needs.
Our role is to help make this process easier for you. If you are concerned about any of these product changes, please call your Greg’s Petroleum Service rep. We can walk you through the selection process, explain the Chevron grease matrix, and help you select the right lubricant products for your equipment needs. We even have an oil analysis program to test your supplies for compatibility or contamination to ensure that you get the best lubricant performance. As your local fuel and lubricants supplier, we're here to help...call us today if you have any questions.