Costco Rations Motor Oil Amidst Global Shortage, Prices Increase

Costco Implements Purchase Limits and Price Hikes

Costco has begun rationing motor oil, limiting purchases of Kirkland Signature full-synthetic motor oil to two 10-quart cases per member every seven days. The price for a 10-quart case of Kirkland Signature oil has also increased to $57.99, up from previous prices in the mid-$30 range. Similar restrictions apply to Mobil 1, with a limit of five units per member.

Factors Contributing to the Shortage

The rationing and price increases are attributed to a global shortage of motor oil. This shortage stems from tightening lubricant supply and the increasing complexity and cost of producing oils that meet modern engine requirements. Today's lubricants must handle advanced engine technologies like turbochargers and direct injection, while adhering to stringent industry specifications such as General Motors' dexos1 Gen 3 approval and updated API and ILSAC standards.

Sophistication of Modern Motor Oils

Modern motor oils are considerably more sophisticated than older formulations. They require extensive development, testing, and certification to meet performance standards, including protection against issues like low-speed pre-ignition. These processes add significant costs before the product reaches retailers.

Upstream Supply Chain Pressures

Pressure in the petroleum industry's upstream supply chain also contributes to the shortage. Base oil, a key component of lubricants, comes from the same refining systems that produce gasoline and diesel. When transportation fuels offer higher returns, the supply of lubricant base-stock can be constrained, leading to increased costs that are passed down to consumers.