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Re: Gas prices have tripled or more in recent years, why not the price of lubricating oil?

It's been what, 5 - 7 years or so since we last saw $1/gal gas in the

> US? Now it's $3 - $4. In that same time, a quart of non-synth oil has > gone up, but not nearly as dramatically.

A quart of oil costs whatever the market for quarts of oil will bear.

Because of the way they rationalize purchase decisions, consumers are willing to pay more for something which is rarely purchased.

Consumers are simply not that sensitive to paying a lot for more for a given quantity of motor oil compared to the same quantity of gasoline.

This makes sense: how much do you spend, in total, on motor oil every year compared to gasoline? If motor oil were to increase 50% in price, how would it affect your bottom line compared to a similar increase in the price of gasoline?

So of course you get ripped off at the retail level, where you are buying dinky quantities like quarts and gallons.

The oil change shops that buy the 55 gallon drums also get similarly gouged, because their suppliers know that these shops are running a rip-off business, and they rightfully want a piece of that consumer- fleecing action. If the suppliers charged the lube businesses less for oil, the oil changers would still charge some $20 to $30 for an oil change, and just pocket more profit. The average driver who either doesn't know how to change his own oil, nor wants to expects to pay about that much.

So you see, they get you whether or not you're a do-it-yourselfer.

Reply to
Kaz Kylheku
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Also, look at this:

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The demand for lubricating oil and gasoline is relatively inelastic, since they are necessary and have no substitute. If you don't change your oil, and don't put in gas, you don't move.

This means that the demand doesn't respond to price changes.

People grumble, but they pump and drive anyway.

The examkle with salt is also relevant ``Demand for salt, for instance, at its modern levels of supply is highly inelastic not because it is a necessity but because it is such a small part of the household budget.'' Similarly, motor oil is a small part of your transportation budget, in addition to being a necessity, like gasoline. So it is less elastic than gasoline and consequently costs more.

Reply to
Kaz Kylheku

Yes, it has gone up, but not in proportion to crude-oil prices. (And one still occasionally sees substantially sub-dollar after-rebate prices for quarts of motor oil at retail, plus or minus the conventional wisdom that only about half of eligible consumer rebates get sent in, approved, and fulfilled.)

I suspect that the reasons are (a) petroleum is a much more distant ancestor of motor oil than of gas, i.e., a lot more chemical processing occurs even in non-synthetic oils, making it less sensitive to crude oil prices; and (b) the cost is much more dominated by packaging and shipping (colorful little quart bottles of many different brands competing for shelf space is the very picture of inefficient distribution, whereas gasoline is handled and sold more as a bulk commodity).

I've also read that (c) retail motor oil at discount-store prices, say around a buck a quart, is usually a "loss leader" or at least an almost zero margin item offered at an artifically low price -- and located near the back of the store so you have to run a gauntlet of higher-margin temptations to get at it. At the other extreme, the prices of motor oil at gas stations and grocery stores run more toward the "you need it, we got it, you know it, and we know you know it" category. A cost- plus-slight-profit price would be somewhere in between. But I am less sure of this point.

--Joe

Reply to
Ad absurdum per aspera

No they're as different as Africa is from Australia. The final step in refining gasoline is ALWAYS some place in Calitucky. The final step in refining 10W-30 is ALWAYS Wal-Mart.

Reply to
zzbunker

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