Consumer Crunch: Costco Motor Oil Prices Soar Amid Escalating Global Supply Crisis

Long Island consumers are experiencing a substantial increase in the cost of motor oil, with prices for Costco’s store brand synthetic motor oil nearly 50% higher than they were last year. Costco, a prominent warehouse club operating eight locations on Long Island, has not only raised prices but has also imposed a weekly limit of two boxes per customer for its Kirkland Signature brand synthetic motor oil. A two-pack of 5-quart containers, which previously cost around $30, is now priced at just under $58, representing an almost twofold increase.

This sharp surge in motor oil prices is largely attributed to a confluence of factors, including escalating crude oil prices, ongoing supply constraints, and disruptions within the global oil market, exacerbated by the U.S. war with Iran. Synthetic motor oil’s production is highly dependent on Group III base oils, which are refined from crude oil. Industry experts and local businesses confirm that the conflict has profoundly affected the supply chain, leading to increased costs for these critical components. The global benchmark, Brent crude oil, has seen its price rise by 49% since the onset of the war.

The economic repercussions of these rising costs are widely felt across the automotive service sector, particularly among local auto shops on Long Island. Many businesses report significant increases in the price of their supplies. Amir Abbasi, owner of Dennis Auto Center in Garden City South, stated that he now pays over $1,000 for a 55-gallon drum of synthetic oil, marking a $350 to $400 increase compared to prices before the war. These substantial cost hikes inevitably compel small businesses to adjust their oil change prices, thereby affecting consumers directly. Chris Daniello, executive director of the Long Island Gasoline Retailers Association, emphasized that businesses operating on narrow margins have “no choice but to pass that increase onto customers.”

Market data further substantiates these trends. According to an analysis by JobbersWorld, an industry publication, overall motor oil prices increased by an estimated 24.2% between February 2, before the war in Iran commenced, and August 10. Specifically, for 5 quarts of synthetic motor oil, prices climbed by 16.6% to 25.7% during the same period, with variations depending on quality. Thomas F. Glenn, president of Petroleum Trends International, highlighted the immediate impact on consumers, noting they will “do a double take when they see the price of their oil change.”

Compounding the supply challenges is reported damage to Middle East refineries responsible for producing the chemicals essential for motor oil, coupled with the higher cost of crude oil required for these chemicals. Holly Alfano, CEO of the Independent Lubricant Manufacturers Association, underscored the fierce competition within the industry, stating, “We’re all competing against each other to purchase the same product.”

Costco’s policy of limiting sales is likely a strategic measure to prevent smaller repair shops from buying up motor oil at consumer prices, thus preserving stock for average shoppers. While Costco’s prices have surged, competitors present varied pricing; for instance, Walmart sells 5-quart containers of its in-house Super Tech brand for $22-$33, and AutoZone offers 5 quarts of STP brand synthetic motor oil for $35. Costco officials did not respond to Newsday’s requests for comment regarding these price adjustments and limits.