Additive and Base Oil Supplies

[MolaKule]

One of our members inquired as to oil supplies and price increases and here was my response:

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I keep receiving letters from suppliers as well raising base oils and additive prices, but we have not raised prices and won't until absolutely necessary.

Certain additives and oil supplies have been hampered by the hurricanes. One of my add suppliers says his synthetic PCMO add may be arriving late.

As far as gear oil adds, we're fine since we purchase about 6 months ahead.

I haven't had any real problems yet with base oil suppliers and many of my gear oil adds are made by me, except for one EP add, and we buy that in large quantities anyway from a company in the Midwest.

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Here is a typical recent letter to SF from one of our suppliers:

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Attn. Purchasing Agent
RE: Supplier Surcharges

A variety of our suppliers have announced surcharges that will be added to invoice. This notification of surcharges is necessary due to the recent impact of Hurricane Katrina. Due to this siutation, there have been many disruptions in rail and road transport along with the increased cost of energy. Many suppliers are incurring extraordinary cost penalties to source materials and [to] keep facilities running.

Invoices will start to show these surcharges based on the supplier and the product purchased.

XXX Y. ZZZ
Marketing Coordinator

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So if I laugh about product cost's or tell a customer to quit complaining about shipping costs, this is the reason.

 

[buster]

Thanks.

Here is a recent article by Amsoil on the subject.

http://www.amsoil.com/articlespr/2005/pr_price_increase.aspx

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“We’ve always done everything possible to keep our prices down,” said Alexander, “but for the past year and a half our costs have risen substantially. We’ve seen regular increases in raw materials, packaging costs and shipping. We either have to adjust our prices or reformulate our products with less effective chemistries. Reformulating with less effective chemistries is not something AMSOIL is going to do.”

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