Supply chain issues are plaguing the lubricant industry. Are you prepared?

Supply chain disruptions are nothing new, especially in the oil industry. A hurricane can wipe out production at a refinery leading to shortages and price increases, or a ship can get stuck in a canal. These things happen. In fact, in 2005, Hurricane Rita caused significant disruptions to the lubricant industry. Tammi Walts, then the vice president of Idemistu Lubricants, could not fill an order for a US automotive plant because the hurricane disrupted the supply chain. She didn’t have the additives and base oils she needed to complete the order, so she had to call in a big favor and have the fluids airlifted from a supplier warehouse in Japan!

This example shows how easily the supply chain can be disrupted, especially in the oil and fuel industry. As we all know, the supply chain for every type of good has been under tremendous stress over the past few years. It started with the shutdowns at the start of 2020 when COVID-19 was declared a pandemic. Problems have continued through other significant events like the ice storm in Texas and the blockage of the Suez canal. In addition, the decreased demand for fuel and lubricant supplies in early 2020 and 2021 have also exacerbated production and supply chain issues.

Now, in 2022 as our economy recovers and oil and fuel demand skyrockets, shortages are occurring everywhere. Almost every industry has been affected, and orders take longer to fill. In the lubricant world, deficits are being reported of some of the most common engine oils and lubricants, including 15W-40 and 5W-40 heavy-duty engine oils, full synthetic passenger vehicle oil, way oil, hydraulic oils, synthetic gear oils, and EP grease.

What is causing lubricant shortages now?
First off, it’s important to remember that the supply chain never fully recovered from the events of 2020 and 2021. Demand for fuel and lubricants skyrocketed when things were starting to improve at the end of 2020, which caused further strain. By 2021, lubricant manufacturers began to feel the pressure as base oil, and additive supply tightened worldwide. This strain caused seven record price increases from December 2020 to October 2021 for base oils and additives. These issues continue to plague the market in 2022. But new supply chain complications are also causing problems, such as:

  • The Omicron variant is a big issue for our supply chain management. While this new variant is typically milder, it is more contagious and has led to record high cases, which leads to worker shortages and production delays.
  • Labor shortages are also causing issues for various industries. In November 2021, there were a record-high 10 million job openings across the country, as more than 4.4 million people quit their jobs. The movement is known as the ‘great resignation’ as workers protest working conditions, hours, and pay. This labor shortage affects all industries, including the oil and lubricant industry.

There are a lot of issues that affect the supply chain, but one of the largest right now is the shortage of truckers. Nearly every good we buy from our produce to our motor oil is transported at some stage by a truck driver. 72% of all goods we consume are moved by truck. Trucks are a critical part of the supply chain, and right now, drivers are in short supply. The industry has long faced workforce challenges, including long hours, pay issues, and poor working conditions, but those became increasingly apparent during the pandemic. Truck drivers scrambled to meet demand, stay safe and healthy on the road and faced significant challenges. Turnover is high among drivers, and the workforce is aging and struggling to recruit younger drivers. The Biden administration even announced a Trucking Action Plan to address these concerns and issues and to help strengthen the trucking workforce across America.

How will these supply chain issues affect your business?

It may be harder to get your lubricant and fuel supplies. Unfortunately, there’s not much we can do to prevent supply chain issues. But we can help you prepare for the changes that may come. Here are a few things you should expect in 2022.

  • Longer wait times for lubricant supplies. The supply chain issues the industry is facing may increase wait times for specific products or make them harder to find. We suggest planning out your needs when ordering so that you have time to wait for your order to arrive. Make sure you also plan your maintenance schedule around reduced lubricant supplies.
  • Be prepared for price changes. If you’ve recently filled up at the pump, you’ve probably noticed that gas prices are up. Gasbuddy reports that the national average is up 12.3 cents from Jan 2022 and 97.5 cents per gallon higher than a year ago. Fuel prices are a great indicator of how the whole oil and lubricant industry will be affected. If fuel prices are increasing, lubricant prices will not be far behind. So take time to look over your budget and begin preparing for increases now.
  • Reduced Inventory. Most of the supply chain issues directly affecting the oil and lubricant industry are additive and base oil-related. As a result, there isn’t as much stock available, causing shortages for some products, especially ones with additives. As a result, it may be more challenging to find specific products. Be prepared to order alternatives when needed.

Trust us to be your fuel and lubricant supplier
As your fuel and lubricant supplier, we will do our best to mitigate the effect of these supply chain disturbances. But sometimes, the effects of these disturbances may be out of our control. We will do our best to work with each of our customers to ensure that you have the supplies you need, even if that means we have to stretch our inventory a little.
In the 2005 lubricant shortage crisis, one of the ways that the industry worked to meet orders was by communicating with one another and working together. Blenders worked together to share inventory and regularly reached out to base oil and additive distributors to help make orders for companies. Sometimes they reduced orders to ensure that everyone got some of what they needed until things picked back up. That spirit of cooperation and collaboration is what we are striving for during these tumultuous times. We will do our best to communicate directly with you to meet your needs and work with our various partners to find what you need. Together we will be able to weather this crisis until things cool down. We appreciate your patience and trust in us as your fuel and lubricants supplier.