Who Gets the Oil? Looming Allocation Threats Put Pressure on Operators

After spending the past week talking with OEMs, dealers, operators, and distributors, Nate Chenenko, principal at the management consulting firm Ducker Carlisle, says he is “shocked by how many people are still in wait-and-see mode” with regards to oil availability and prices.

Operators, especially those with smaller independent shops, should be running calculations on how much they are willing to pay for oils and identify who will sell those oils to them at that price.

If they continue to drag their feet, “the smaller operators are in serious trouble because we think Valvoline and Jiffy Lube are relatively in weak spots because they are aligned with particular brands, but if they navigate this in a more crafty manner than other operators, that is really going to be an issue for those other operators with thin margins who don’t have a lot of room for error,” Chenenko says. “I’m pretty surprised, for as much talk as there has been on this topic, there’s remarkably little action. I get that raising your prices to customers, that moment has not yet come, but the moment has long passed that you should have stocked up. And it is definitely the time to figure out what you are prepared to pay.

“Even if you’re not seeing a shortage yet, when it happens, what are you going to do?”

While Chenenko sees many operators taking a deliberate approach, don’t count Costa Kapothanasis, president of Costa Oils, among them.

Kapothanasis tells NOLN that his company was in contact with its oil supplier, Chevron, early and began putting together a strategy to avoid going under allocation or missing orders shortly after production at Shell’s Pearl gas-to-liquids facility in Qatar was halted in mid-March.

“The one that’s owned by Shell was kind of like the canary in the coal mine that there was going to be issues,” he says.

To stave off supply shrotages, Costa Oil has begun to stock up on synthetic blend oils again after switching to exclusively pouring fully synthetic oils in 2025. Kapothanasis says his company is not under allocations currently, but after weathering the COVID-19 pandemic, he has learned that it’s important to have as many available options as possible if it becomes necessary to pivot.

“That was the big takeaway from COVID,” Kapothanasis says. “There were so many people with their head in the sand and pretending it wasn’t happening. And then, you know, a lot of people went out of business.

“History doesn’t necessarily repeat, but it definitely rhymes. There’s a lot you could take away from what happened in 2020 and apply it to now to be more prepared for whatever situation.”

Kapothanasis believes smaller independent operators face the biggest risk to oil order allocations from their distributors, especially those who have frequently jumped from vendor to vendor in search of the best price in recent years.

“There was a period there where, whether it was filters or oil, there are people who will change vendors to save 25 cents and hop from one to the next and change brands and change suppliers,” Kapothanasis says. “If you've been one of the few independent operators who have stuck with your rep and not done that price shopping, you're probably going to have your rep’s ear and he's going to go to battle for you when it comes time for allocation.”

Covering Costs

Having retired after 32 years as a program manager and computer engineer for a defense company, Jim Ripper went into business with Strickland Brothers in late 2020. He opened his franchise location in Beaufort, South Carolina, in July 2024.

After a slow start, business for Ripper’s Strickland Brothers shop has been steadily trending upward, month by month, in 2026. With current events challenging that momentum, Ripper tells NOLN that his shop recently added about $3 in surcharges per oil change to cover rising costs. He has not yet faced allocations, but has been told they are coming, likely starting with his next order, which is scheduled to be delivered in about three weeks.

“We were told things were coming down the line, like the Group III full synthetics," Ripper says. "For 0W-20, we’re going to only give the Dexos for those that really need it, like GM cars that are still under warranty. If not, we’ll do the regular full synthetic 0W-20. That hasn’t started yet, but with our next delivery I think it will. We’ll still charge the same price for both, but we will use less of the Dexos 0W-20.”

Ripper says he was told by his supplier, Reladyne, to expect an increase of up to $1.75 per gallon for synthetic blend and $3 per gallon for full synthetics. Synthetic supplies are tightening, so additional increases could follow. In turn, Ripper plans to keep his prices for oil changes the same, but make adjustments to surcharges as needed.

Availability Uncertainty

Of the two main challenges that quick lube operators are facing because of the Middle East conflict, product availability is a bigger concern than price, says Chenenko.

“If you can get more product and charge more, that’s fine,” Chenenko says. “People may not be happy, but you’re in the same position as your competitors. On the availability side, though, if you can’t get product, then my biggest concern (from the perspective of a quick lube operator) is that we’re going to see a lot of customer churn.”

If a customer’s preferred oil change shop suddenly doesn’t have the right oil for their vehicle, Chenenko says, that customer will hunt for another store.

“Obviously, A, you lose business if you’re the one who is out of oil,” Chenenko says. “And, B, you risk the customer having a good experience at your competitor.”

Chenenko likened the situation to a recent experience he had flying. His long-preferred airline canceled a flight, prompting him to choose a competitor he hadn’t flown in more than a decade. His experience was surprisingly good, and now he books 50/50 between the two airlines.

“I haven't defected completely, but I'm no longer as loyal as I once was because I realized the competition is just as good. Not better, but just as good,” he says. “So, that's my biggest issue and the concern that I would have if I was a quick lube shop.”

Chenenko says that while attending a recent industry event, he was told a large distributor of one of the biggest full synthetic motor oils is lowering allocations for all customers across the board, although not necessarily by the same amount per customer. In addition to allocation cuts announced by Nissan and Toyota, Chenenko says other OEMs have also experienced cuts as well.

“Weirdly, this could actually help (NOLN’s) readership,” Chenenko says. “It’s no secret that Nissan and Toyota are on ExxonMobil and they can't leave ExxonMobil. It’s factory filled, they've got these long-term contracts. So, they can't just switch to Castrol or switch to Pennzoil.

“If I was ExxonMobil or Castrol for Volvo and BMW or Shell for Stellantis and ConocoPhillips for Ford, I would say, ‘Hey, my dealer customers are pretty much captive. … So, I'm going to short their allocation the most, because they're the ones who can't quit.’ So, I think that actually, to some degree, that benefits quick lube shop operators because they're in a more competitive market. Many of them are aligned to a brand, but there's a lot less stopping them from going down the street to Advance Auto Parts or Walmart and just picking up whatever they need for that day. That's a bad margin position to be in. It's expensive to do that, but at least you don't lose the customer.”