Price of motor oil

It's the "man" stickin it to us (the little people).

My guess is that much less engine/gearbox/etc oil shifts "over the counter" per unit time (week, say,) than fuel (petrol (AKA gas), diesel etc), so retailers are stuck with product they paid for a couple of months ago - which may wholesale at lower prices now - but they still need to shift (without taking a loss).

Don't use much oil myself, so I couldn't comment on the price over here. Was it much less than $3.99/qt before oil prices shot up?

[FYI - unleaded fuel has gone down over here from about £5.40/gal in July to £4.10/gal now.]

Hello John:

I haven't researched it, but I've heard that UK's free medical is financed by fuel taxes. Obviously there is a substantial tax on your fuel, I just did a quick conversion at the highest point you were paying approximately $7.96 a gallon. Hopefully your medical include psychiatric because that would have driven me nuts.

I've been doing some historical research (a friend whose memory is much better than mine) and we were buying castor oil GTX on sale for about $.70 a quart throughout the 70s, when gasoline prices were running anywhere from $.40 a gallon to $.90 a gallon. So it seems that will still within the same ratios as we were in the 70s.

Don't think the UK fuel price was quite as high as that (converting to $/US gallon) - did you include the fact that 1 imperial gallon ≈ 1.2 US gallons?

How much do you think the oil itself is worth, as a percent of the cost to get it to you in that convenient marketing package?

just rough numbers here, (I'm not an oil economist) presuming a barrel is 55 gallon drum, that 220 quarts at $140/barrel, that was 63 cents a quart; at $40 a barrel, thats 18 cents a quart... At 3.99 a quart, thats a 6X markup; you're paying abunch for a lot of NON oil in that consumer package.

given the fall of 100 bucks of the price of a barrel, the fall of the value of the oil in that quart is 63-18 or 45 cents.

The price of oil in a cute retail package is significantly decoupled from its actual bulk commodity value.

Think about bottled water... you aint payin over a buck for the water or the bottle...

My apologies folks for what surely is a gross oversimplification, and ignoring volume fraction and refining costs and yields etc. just trying to illustrate the fact that apples at the farm cost a hell of a lot less than apples delivered in the pretty "organic apple package" in the store, so to speak.

In most consumer products the price is hardly correlated to the underlying commodity from which it is produced, An 11 ounce box of wheaties can cost as much as a bushel of wheat these days. Apparently the marketing and paying the athlete for his picture adds a wee bit to the "price."

hope this helps.

milo

I agree with your analysis, except that a barrel of oil (crude petroleum) is defined as 42 gallon/bbl not 55 gallon/bbl.

Thank you guest. We appreciate the correction.

further responders have also shed good light on this.

milo

Milo said

"just rough numbers here, (I'm not an oil economist) presuming a barrel is 55 gallon drum, that 220 quarts at $140/barrel, that was 63 cents a quart; at $40 a barrel, thats 18 cents a quart... At 3.99 a quart, thats a 6X markup; you're paying abunch for a lot of NON oil in that consumer package"

I agree with the convenient consumer package part .... however a barrel of oil is 42 US gallons a chemical drum is 55 gallons. We do pay an awful lot for some items - my favorite is stuffing mix - 5 cents worth of bread crumbs and flavorings etc in a 10 cent package and we happily pay around $1.89 for it in my neck of the woods. Don't even get me started on bottled water. Ed

Thanks guys,

I think JohnDG has it probably right. I guess if the retail price drops suddenly in the next few weeks, it will indicate that retailers purchased a new batch at a lower cost.

-John

I buy a fair amount of oil in small containers on a regular basis. Before gas shot up, oil was about half what it is now. Gas went up, but oil didn't for about a month and a half, best I recall. So I expect the same lag in time for it to fall in price. Maybe a little longer because there is bound to be some greed wanting to gouge what it can. I think I heard something as to the reason being that it takes longer to refine and package and ship, so the price flucuations are slower. Reminds me of a joke, but some might consider it racist, so I better not tell it.

Oh, what the hell. I thought I was logged in, but if no one gets too offended,

There was this asian guy that goes to the bank to trade his 100 yen for dollars. He says to the banker, (a cracker, a white dude) Mr. Banker, how much dollar I get for my yen? The banker says, today, you get 80 dollars for 100 yen. The aisian guy says, Oh no, I come back other day. Next time he goes in the bank and asks again, the banker tells him 70 dollars for 100 yen. The aisian guy comes unglued! He hollars, ONLY 70 DOLLAR! WHAT HAPPEN! YESTERDAY YOU SAY 80 DOLLAR FOR MY 100 YEN!

The banker replies, Well, it's the money fluctuations. The asian guy responds with, Yeah, well fluctuwhiteguys too!

Prices went down around $.50/gal of base oil to a level of are around $3.70/gal the regular to $5.00/gal the semi synthetic depending the base used.

to these prices, add a little bit for additives, packaging , production, distribution, retailers costs. Except for base oils, all those other costs are stable.

thank you for sharing. the gas you're burning in your car was probably made last wednesday while the oil you're lubricating it with might have been made two years ago. The competition to sell you gasoline is on virtually every corner in town. Far rarer are stores that sell oil, so there is less competition. Stores typically have a few advertised specials, some of them selling at or below wholesale cost, for the purpose of drawing in customers. While customers are wandering around the store, the store owners hope that they will see other things they need. Twenty years ago, oil changing at home was much more common, so oil would often be their loss leader and the store would surround the cases of oil with overpriced oil filters, filter wrenches, replacement oil pan plugs, tools, and so on. But now the instant oil changing places have largely taken the place of people changing their oil at the curb When was the last time you saw a guy in a jumpsuit crawling around under his car at the curb? So oil is no longer a reliable way to draw gullible customers into the store.

Because they can.......

and milk is >$3/gal, bread is $3/loaf, 'bottled tap water' is >$4/gal. Considerin gthe technology and effort required to make the base oil and additives, much less package it in a DOT approved tamper evident, post consumer recycle friendly container, lube oil is so cheap.

The oil in my diesels has gone up roughly 35% over the past year. It's my understanding that it usually takes up to 6 months for the price changes to catch up. Retailers will jump the gun and raise prices before their wholesale goes up. They will also milk the high prices when the wholesale goes down. But, they still need to remain competitive.

I suggest shopping around. Hopefully early next year we'll see the prices come back down.

On a side note, I run Mobil 1 5w30 full synthetic in by gasoline powered cars. It appears to be non-existent in all auto parts stores, wholesale clubs, and department stores. I've switched to Castrol full synthetic for now. I'm curious as to where it went?

What part of the world are you from?

The Boston Massachusetts area. I just updated my profile info.

Because you'll pay it and lube oil is not widely traded like gas or crude oil with speculation buy/sell fluctuations.

The mechanics of lube oil:

Base oil is 80% of the cost, and base oils are highly refined and expensive to produce. The base oil market has NOT corrected like crude oil has (crude prices are driven by emotion, nothing else), but will as of this week or so. You will see prices drop a bit once new warehouse orders are received and demand slows, but no where near in tune with crude oil prices.

The other cost of lube oil is additives such as paratone (viscosity improver) and other chemicals, packaging, blending plant operations, labor, transportation, marketing, profit, etc. Those constituents are not volatile in the market place.

Consider this, that profits were lower when crude oil was high (oil company costs go up 5 fold compared to crude oil price increases), but the market could not stand raising prices for lube oil (do you think people would change their oil on time at $8/ qt ??). Now consider that profits are normal based on slightly reduced base oil stock costs. Now consider that over-all sluggish economy, less driving miles, causes a market slow down. Watch how prices drop in the next 6 months, but, not by leaps and bounds.

In the voice of my ex-wife, this profound wisdom come to you from a moron ! Use it accordingly.

Here it is NOV. 2009 and Big outfits like Walmart ect., still have not dropped motor oil much, so they must have bought contracts too far into the future thinking oil was not coming back down, then they got stuck with big contracts of overpriced oil, and now they pass it on to us, still. In Missouri, wallymart 5 qt. was $8 , in Denver Walmart 5 qt. is $9.50. I thought walmart was pretty consistent, but not in this case.

Yeah..what can I say...

You guys in the US are still living in "the blessed country". We in Europe pay around 24$/quart (synthetic) an 17$/quart for standard mineral type motor oil...Quess how may times we change our oil.....

Is this true? Oh. My. Milo

My Alfa's started drinking oil. Proper Alfa stuff (Selenia 20K) is about £35/5litres, but as it's being used so quickly I buy Halfords own brand semi-synth 10W/40, £22/5l.

Sorry to leave the conversions to you - my dinner's ready .