Costco's Motor Oil Rationing: What Does It Mean for Shoppers?

Costco has reportedly started rationing its house brand of motor oil this week, limiting purchases to two boxes per week, as drivers across the country continue facing higher gas and diesel prices.

The membership-only warehouse club, which has long prided itself in selling products at discounted prices in bulk, has introduced the purchase limit after significantly raising the price of Kirkland Signature full synthetic motor oil, The Auto Wire first reported.

The product—a 5-quart, two-bottle case of engine oil for gasoline-powered vehicles—is used during oil changes to lubricate and protect an engine’s moving parts, helping to reduce wear, manage heat, and keep the engine running efficiently. It is now listed on Costco’s website for $57.99, up from an average in the mid-$30s which the company had maintained for years, according to the automotive-focused news media.

In the product details, Costco warns members of a "limit of one transaction per membership, with a maximum of two units every seven days." It is unclear how long the cap will remain in force.

Other motor oil product purchases are also capped, with sales of a six-quart case of Mobil 1—currently costing $44—capped at five per member.

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According to The Auto Wire, there are only two reasons why a company like Costco would cap purchases of motor oil: either they are not confident they can keep it in stock in the future, or they think the price might rise so much in the future that would make no financial sense letting customers stock-buy the product now.

Newsweek contacted Costco for comment by email on Monday and is awaiting a reply.

While 10 percent to 20 percent of a synthetic motor oil like the one sold by Costco consists of chemical additives, between 80 percent and 90 percent of it is made of base oil, a product obtained by refining crude oil.

Considering the spike in oil and gas prices that has followed the start of the war in Iran in late February, oil companies are now making more profit turning crude oil into petrol, diesel or jet fuel instead of motor oil ingredients. Because of this, they are likely to produce less motor oil.

It is this supply squeeze which pushes prices up through manufacturers, distributors and retailers, until consumers see a higher price on the shelf even at a normally budget-retailer like Costco. On top of that, higher quality standards and more demanding tests for motor oil introduced in recent years have made production a costly business.

For drivers trying to save money on oil changes by doing it themselves, this is bad news. Especially as Costco, the only company which has so far capped purchases, is not the only retailer affected by the motor oil supply squeeze.

Oil prices were still surging on Monday, rising more than 3 percent from the previous day after a surge of around 9 percent last week following a fresh wave of attacks in the Middle East. Brent crude—the global price benchmark for roughly two-thirds to three-quarters of the world’s traded crude oil—rose above $100 a barrel last week and climbed over $108 on Monday, as Yemen’s Houthi forces launched a series of attacks on Saudi Arabia.

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Costco's major competitors have not introduced purchase limits as of now.

Walmart offers equivalent-name-brand synthetic oil at roughly $32 per 5-quart jug, while a pack of two goes for nearly $64. AutoZone sells a pack of two bottles of Mobil 1 Standard Full Synthetic 5W-30 Engine Oil 5 Quart for $40.99. On Amazon, the same product goes for $31.97 for one bottle and $63.94 for two.

Newsweek contacted Walmart, AutoZone and Amazon for comment by email on Monday and is awaiting responses.

Costco’s Kirkland motor oil is a well-known low-cost alternative to premium brands, and its unusually attractive price might be a reason why the retailer has introduced limits on its purchase to prevent stockpiling and resale.

Contact Newsweek editors on this story: Ben Kelly and James Debens