• Log In
  • Register
  • Home
    • Contact
    • About Rafe
    • About LX
  • LX Pro
    • News Feed
    • Courses
    • Groups
    • Members
    • Account details
  • Services List
    • LX Pro Course List
    • Training Options
    • Consulting Options
    • Marketing Options
  • Publications
    • LX Articles
    • External
    • YouTube
    • Podcast
  • Forums
    • Additives
    • Base Oils
    • Filtration
    • Degradation
    • Oil Analysis
    • Turbines
    • Compressors
    • Greases
    • Electric Motors
    • Bearings
    • Gears
    • Engines
    • Hydraulics

    Shopping Cart

    No products in the cart.
    Sign in Sign up

    Shopping Cart

    No products in the cart.
    • Home
      • Contact
      • About Rafe
      • About LX
    • LX Pro
      • News Feed
      • Courses
      • Groups
      • Members
      • Account details
    • Services List
      • LX Pro Course List
      • Training Options
      • Consulting Options
      • Marketing Options
    • Publications
      • LX Articles
      • External
      • YouTube
      • Podcast
    • Forums
      • Additives
      • Base Oils
      • Filtration
      • Degradation
      • Oil Analysis
      • Turbines
      • Compressors
      • Greases
      • Electric Motors
      • Bearings
      • Gears
      • Engines
      • Hydraulics

    • Log In
    • Register

    Month: November 2021

    What is Micro Dieseling of Lubricating Oils?

    Microdieseling is pressure-induced thermal degradation of oil. An air bubble moves from a low or negative pressure zone to an area of high pressure. The air undergoes…

    Rafe Britton 30 November 2021
    0 Comments

    Additive Shortages: Effects of Covid

    Are you able to maybe speak to some of the more specifics of the additive supply chain? What were some of the dislocations we saw there? In some ways …
    Rafe Britton 30 November 2021

    How did Covid Cause Base Oil Shortages?

    The question is really around base oils and base oil shortages. My understanding around base oils is that integrated companies are producing both fuel and…

    Rafe Britton 29 November 2021
    0 Comments

    Recent Posts

    • How does the lubricant change between different compressor types? 
    • The Effect of Gases on Compressor Oils
    • Ash in Gas Engine Oils
    • What is RPVOT and How Should I Use It?
    • What is the Best Way to Remove Water from Large Oil Systems?

    Recent Comments

    • Uthman Rufa'i Dhinnurain on Course Selection
    • Tania Juarez on Course Selection
    • Marcos Rubio on Course Selection
    • Thomas Martin on Course Selection
    • Rafe on What is the Best Way to Remove Water from Large Oil Systems?
    © 2023 - Lubrication Expert
    How did Covid Cause Base Oil Shortages?

    Forum Description

    The question is really around base oils and base oil shortages. My understanding around base oils is that integrated companies are producing both fuel and lubricants. Demand for both of those products dropped off a cliff when lockdowns were imposed by governments around the world. There was a period after that, where demand for lubricants came back but demand for fuel did not. That caused a dislocation between demand for two different products which come from the same feedstock. So with that in mind, 

    How close are we to normal operations?

    "The first three months of COVID and lockdown; let's see - I think there's quite a distinct difference between then and now, because then it was all about refinery capability. Basically a refinery starts with a distillation column; most refineries produce the full range of crude products. Generally they will be optimised for fuels production and of course, fuel demand falling off a cliff has never happened [to this extent]. The refineries just had no outlet for the fuel. So they basically cut off production and therefore [with no crude refining] there were no lubricants. The situation is asymmetrical; if there's no demand for lubes and bitumen and the other things off the bottom of the column they can put them through a cracker and create more fuel. But that couldn't happen last year;  you can remember there was a day or so sometime in May or June 2020 when crude oil prices went negative. That was down to lack of storage capability, but that was also true of finished lubricant products. If people weren't putting gas in the tank, then there was no where to store the gas. https://youtu.be/xIzSgJdCE4c

    What is the new normal?

    I think it's now about economics. Demand for gasoline is returning in many countries. Demand for diesel didn't really drop that much because even though a country locked down, they still realised that goods had to be shipped from A to B to C even if it was just personal protective equipment. So diesel demand did drop a bit, but in most countries is probably somewhere near the same level [as pre-Covid]. And therefore refineries are able to run again and produce base stocks suitable for conversion into lubricant base oils or raw materials for synthetics. So I think we are somewhere near the new normal. Older refineries that were already smacked heavily in the face by IMO 2020 certainly didn't weather the storm of COVID very well. That was like receiving a left hook after the right jab. And so there are one or two of the older refineries in Europe in particular that were already been touted throughout 2018, 2019 as being vulnerable to the effects of IMO 2020 (and therefore would lose their capability to produce group one base); they closed down. Oil refineries that were able to produce the lower sulfur fuels still had relatively good refinery economics. Those that didn't have the capability to produce those IMO 2020 compliant fuels; that affected their ability to produce base oils if they were also producing base oils or having associated base oil plants. Those are the first things and that's tended to have a negative effect on refining and Group I base oil availability mainly in Southern Europe a little bit in North Africa. The Americas and the East tend to have not been that badly affected because they tended to be already aiming towards producing Group II or Group III anyway. So it was mainly in Europe, whether there was a lot of older equipment that this effected base oil supply. 

    What does the future hold?

    Then we move to economics. I think that's where we are at the moment. Again, Refinery economics are driven by fuel. Gasoline demand has picked up. Diesel demand has picked up. Aviation fuel demand is still lower though in the United Kingdom, we're looking at the way this week, we're allowed to go to America again. And certainly the airlines are suddenly burning a lot more jet A1 than they were last week. Jet is really important to refineries because there's really good margin there. But probably what you've seen to compensate things in many countries in the world is that gasoline and diesel prices have risen significantly. And that's the company is trying to recover the margin that they can't get on Jet A or jet A1 depending on what part of the world they're in. This is obviously going to affect the cost of lubricant base stocks. Because the refinery operators are having to find that margin from somewhere else.  So I think the aviation fuel market may actually be a good indicator of where lubricants prices might go. If demand for aviation fuel stays low (we're making the assumption that everything else is roughly constant or a gentle ride back towards pre COVID levels) then the Jet A, Jet A1 market stays suppressed and refinery operators are going to be recovering the costs from elsewhere. And so we're going to see higher base oil prices.  Subscribe

    Report

    There was a problem reporting this post.

    Harassment or bullying behavior
    Contains mature or sensitive content
    Contains misleading or false information
    Contains abusive or derogatory content
    Contains spam, fake content or potential malware

    Block Member?

    Please confirm you want to block this member.

    You will no longer be able to:

    • See blocked member's posts
    • Mention this member in posts
    • Invite this member to groups
    • Message this member
    • Add this member as a connection

    Please note: This action will also remove this member from your connections and send a report to the site admin. Please allow a few minutes for this process to complete.

    Report

    You have already reported this .
    Clear Clear All