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January 20, 2016

Volume 17 Issue 52

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API Raises Engine Oil License Fees

The American Petroleum Institute increased its fees for Engine Oil Licensing and Certification last month, to offset costs related to the upcoming introduction of new heavy duty diesel and gasoline engine oil categories.

Effective Dec. 15, 2015, the revised EOLCS fee structure is:

  • License application fee for first-time licensees increased to $4,000, up from $3,000.
  • License renewal fee increased to $4,000, up from $3,000. Renewers pay the flat fee each year per company, not per product. The license-holder then can list any number of qualified products under that license (each product must be approved by API).
  • Renewing companies also pay a fee based on the volume of oil they sell. This fee rose to $0.0070 per gallon, up from $0.0050, on every gallon of licensed oil sold after the first million gallons. All API-licensed engine oil brands, whether sold in packages or in bulk, must be counted in the volume reported.

API member companies pay the same fees as nonmembers, and once payment is confirmed, the renewed license is valid through March 31, 2017. Licensees, who must renew by March 31 of this year, are responsible for all testing necessary to prove compliance with API’s Engine Oil Licensing and Certification System.

Only engine oils with valid licenses are allowed to display API’s trademarks on their labels. These include the API service mark or “donut” symbol showing the oil’s viscosity grade and the Service (“S”) or Commercial (“C”) category it meets, and the “starburst” logo certifying it meets the latest ILSAC GF-series specification.

As of last week, more than 14,000 products were licensed to display the American Petroleum Institute’s Service mark, and about 737 companies around the world held API licenses, according to Kevin Ferrick, engine oil manager at the Washington, D.C.-based trade group. Those figures are up from about 12,000 products and 650 companies holding such licenses a year ago.

“We appear to be adding licensees in the Middle East and Asia,” Ferrick told Lube Report.

About 47 percent of licensees are from North America (United States, Canada and Mexico), 37 percent are in Asia or Australia, and 12 percent come from Europe and the Middle East. Less than 3 percent come from Latin America or the Caribbean. Africa has less than 1 percent of the world’s licenses.

This was the first fee increase since December 2013, and API said it is needed to cover costs for supporting new and more complex engine oil categories. Coming first are two new diesel categories -- API CK-4, an upgrade to the current CJ-4 category, and API FA-4, designed to meet more stringent greenhouse gas emissions requirements – which are expected to be introduced by Dec. 1, 2016.

With their introduction to the marketplace at hand, “API will have to educate fleet operators, truck, dealers, service providers and truck owners and operators on the importance of using these new heavy-duty diesel engine categories as recommended by engine manufacturers,” Ferrick said in an October letter announcing the fee increase.

In addition, new gasoline engine oil categories are expected in late 2017 or early 2018.

“At minimum, API will have to fund an educational campaign on the new categories and increase the number of oils tested to ensure on a broader scale the quality of licensed oils and those making API claims,” Ferrick noted.

Among the goals which API says will be supported by the increased fees:

  • Launch an industry and consumer education campaign on the importance of using API-quality oils and following owner’s manual recommendations
  • Promote the API Motor Oil Matters program so it is readily recognized by industry and consumers as a mark of quality. The Washington, D.C.-based institute said it has been asked by oil-change locations, automakers, distributors and oil marketers to promote the program so that it is recognized by consumers.
  • Conduct audits on more packaged and bulk engine oil samples drawn from the global marketplace to ensure on a broader scale the quality of oils making API performance claims.
  • Publish a list of nonconforming oils and regularly update the API unlicensed list.
  • Take more enforcement actions against nonconforming oils. From 2009 to 2014, API found as high as 19 percent of bulk oils it tested failed to meet the claimed API Service category requirements. API said they were bulk samples purchased from oil-change locations that likely believed they were receiving quality oils.

All products holding a current API license are listed in a searchable online database.

Renewals must be completed at API’s dedicated engine oil website, using the secure website for API licensees.

For information about the EOLCS system, email ferrick@api.org.