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Experts say that Canada will see an increase in the costs of motor oil as the Strait of Hormuz closure continues to halter production.
Patrick de Haan, a petroleum analyst at GasBuddy, said that Canada has seen a “rise” in the costs of motor oil, engine oil and lubricants due to base oils being either stuck or blocked at the Strait of Hormuz.
“We are starting to see pricing impacts, with price increases of 20 per cent or more, have been happening to motor oils,” he said.
“There have been some availability issues with manufacturer specific motor oils, those that have special additives for major manufacturers we’ve seen now supply issues with some of those special blends.”
Beirut Bakhtiari, an assistant professor in the operations management area at McMaster University, said that the closure has “choked” the production of base oil.
Currently, a barrel of West Texas intermediate crude oil is down about 87 cents to $1.08. Crude oil is down about $1.60 cents a barrel, with trading at about $110 a barrel.
Bakhtiari said that volatility in prices and supply at mechanic shops in Canada is “already happening.”
“Canada is absolutely vulnerable to higher price and lower availability of these high high-end motor oil,” he said.
He also added that the impact on any shortage of high-quality motor oil will become evident in “six months to a year from now.”
“That’s when more and more Canadian drivers will choose the substitute or lower-quality substitute, or more drivers will delay getting their oil change or that service visit, and it results in potential results in engine failures down the road, maybe a year from now,” Bakhtiari said.
“But one thing that’s for sure is that maintenance is going to become more expensive.”
As a result, Bakhtiari said this could possibly translate to a “mechanical debt,” where “a lot of engines failing on our cars” in a year or two.
“Canada obviously could potentially control by not choosing the lower-quality motor oil, that extra tens of dollars that is what they need to pay extra for the higher-end oil as long as it’s available it’s absolutely worth it,” he said.
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De Haan stated that availability issues might also start to become present in auto part stores with certain blends.
“The more popular blends of motor oils, I don’t expect to see much of an issue, but most of these oils and lubricants may see an increase in price due to the ongoing surge in the price of oil.”
Dr. Sohrab Zendehboudi, a professor in the department of process engineering at Memorial University, stated that while major shortages of commonly-used motor oils are not expected, Canadian manufacturers may have to adapt.
“We may see more efforts to diversify supply sources, improve refining efficiency, expand recycling and re-refining, and explore alternative lubricants, including synthetic and bio-based options,” he said in an emailed statement to Global News.
However, Zendehboudi also stated that these changes can change the market for the better.
“These kinds of challenges can encourage better planning, things like improved inventory management, stronger domestic capacity, and more resilient supply chains.”
Should Canadians be moving up service appointments for their vehicles?
Bakhtiari believes that Canadians should “not panic,” but rather pay closer attention health of their cars.
“Regardless on the motor oil issues, so that they ensure is maintained, and look at that as basically a strategic asset,” he said.
“With the price of motor oil going up, the car is a little more vulnerable to wear and we at least have to make sure that other aspects of the car are properly maintained.”
Zendehboudi also believes that “if disruptions persist, greater costs or limited availability of certain products could start to influence maintenance decisions, particularly for some businesses, including trucking, delivery, and other industrial operations.”
Vehicle maintenance and repairs costs climbed by 4.2 per cent over the past year, according to Statistics Canada data findings from April.
Consumer inflation also surged last month to 2.8 per cent compared to a year earlier, with higher gas prices being the primary driver, according to Statistics Canada.
“Just know that the next time you get an old change, the price may be elevated, and in extreme situations, you may have a type of oil substituted temporarily because of the Strait [of Hormuz] closure,” de Haan said.
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