00:00Something is quietly unfolding right now that affects almost every petrol and hybrid car
00:07built in the last 10 years, every single one of them.
00:10Most people have no idea it's happening, but they will very soon because it's going to
00:15affect them significantly.
00:17The United States, and not just the US, but other countries as well, are running out of
00:22synthetic motor oil.
00:25Experts say the shortage won't be resolved until at least this time next year, most likely
00:33later than that.
00:34Here's the root cause.
00:36The US war with Iran has effectively shut down the Strait of Hormuz, the narrow waterway that
00:41handles around 20% of all global oil shipments.
00:46That has cut off access to the Middle East, which supplies nearly half of America's imported
00:51Group 3 base oil.
00:52That's the key ingredient in virtually every synthetic and semi-synthetic motor oil on
00:59the market worldwide.
01:01To be specific, three Persian Gulf producers, Pearl GTL in Qatar, Adnok in the UAE, and BAPCO
01:09in Bahrain, together supply around 44% of US Group 3 base oils.
01:14All three are now effectively offline for exports.
01:18And Pearl GDI, one of the world's largest gas-to-liquids facilities, was hit by Iranian
01:25missile strikes in March, and will be running at half capacity for at least a year before
01:31it can be repaired.
01:33Yeah, I mean, we don't even know if it will be in half a year.
01:36The Independent Lubricant Manufacturers Association expects the US to completely run out of Gulf-sourced
01:42Group 3 oil by June.
01:47Yeah, as in this month, June this year.
01:51Now, normally there are backup operations, but every single one has faded simultaneously.
01:56It's been a cascading disaster.
02:01South Korea typically picks up the slack, supplying around 30% of US Group 3 imports.
02:06But South Korean refiners are struggling to source Middle Eastern crude.
02:13And here's the other problem.
02:15Jet fuel and diesel margins are at 40-year highs right now.
02:20So producers worldwide are making those instead of base oils.
02:24It makes sense, right?
02:25Pivot to where you make money.
02:26It's simply more profitable.
02:27Even the Group 2 base oil fallback used in conventional motor oils faces the same economics.
02:35Refiners are routing everything into fuels.
02:39So which oils are most affected?
02:41The thin, low-viscosity grades that modern engines require.
02:45All of them do.
02:490W8, 0W16, 0W20.
02:52These are spec required in nearly every Toyota, Nissan, Honda, Hyundai and hybrid vehicle built
02:58in the last decade.
03:00Every one of them.
03:01On the Electric Viking website, I'll put a link in the description below.
03:05We have more articles about electric cars and battery technology than any other website
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03:21EV world.
03:22Now, 0W20 alone accounted for roughly one-third of all passenger car motor oil demand last year.
03:29Automakers are rationing.
03:31Nissan began a formal allocation system on the 21st of May, cutting dealer supplies of its
03:37proprietary 5W30 to 70% of last year's volume, and 0W20 to just 50%.
03:48Nissan's VP of after-sales sent a bulletin to all car dealers on May the 15th, instructing
03:54them to reserve remaining stock strictly for warranty repairs, recalls, goodwill service,
03:59and prepaid maintenance.
04:01Older vehicles simply get, well, put aside.
04:05You can't get your car serviced, basically.
04:08That's insane.
04:09Maybe for a year.
04:11Toyota sent down its own memo on the 30th of April, warning that its supplier, Exxon
04:16Mobil, is going to struggle to fulfill demand for genuine Toyota motor oil in 0W8 and 0W16,
04:23and provide dealers with a list of potential substitutes.
04:28Yeah.
04:30I don't know how that's going to go, though.
04:31Basically putting the wrong oil in your car.
04:33The American Petroleum Institute activated emergency provisional licensing back on the
04:3825th of March, allowing oil marketers to substitute base oils while still carrying the API quality
04:45mark.
04:46I don't know what you're going to get in your oil now.
04:49This does can cause significant issues for engines having the wrong oil.
04:53They've also asked all automakers, including General Motors, whose Dexos certification is
04:58particularly strict, to allow flexibility on proprietary oil specs.
05:03On the retail side, empty shelves are already appearing.
05:070W20 was completely sold out in Detroit in the entire area on the 23rd of May.
05:14Wholesale prices have gone up enormously.
05:17One Florida Ford dealership has seen its oil cost jump by $1.40 per gallon and expects another
05:24hike within weeks. Dealers across the country are topping off bulk storage tanks as a precaution.
05:31The CEO of Pera Automotive Products, which supplies dealerships with oils and lubricants,
05:35described the panic buying six months of inventory now sells in 30 days.
05:39It's like the toilet paper craziness during the pandemic.
05:43He said he's receiving requests not for hundreds of gallons, but for 450,000 gallons at a time.
05:52There's a lot of panic right now.
05:54And this is not just affecting the United States, it's also affecting countries like Australia
05:58and Europe too.
05:59The comparison being drawn inside the industry is to the COVID chip shortage, not toilet paper,
06:04but I thought that one worked better, because Group 3 base oil goes into transmission fluid
06:09as well.
06:10Well, automakers may not be able to drive finished vehicles off assembly lines.
06:15You can build the car, you just can't fill it with oil or transmission fluid.
06:21That's a pretty big deal.
06:24You've got the cost of gasoline skyrocketing, the cost of diesel skyrocketing.
06:28Now, you might not be able to get synthetic motor oil for your car or transmission fluid.
06:34Now, EVs, of course, need none of this.
06:37No group 3 base oil, no synthetic engine oil, no transmission fluid of this type whatsoever.
06:47Zero exposure to this supply chain.
06:50While petrol and hybrid owners face uncertainty this year and next year.
06:55And this is one crisis that electric vehicle drivers are completely insulated from.
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