A reader asks: Will AMSOIL increase or decrease Canadian prices in the immediate future? The Canadian dollar is low, but crude oil is low as well. I know Amsoil is synthetic, but just wanted to see if I should buy now or wait for lower prices. What are your thoughts?
Our answer: That is a great question and frankly we wish we had a definitive answer. The last Canadian price increase due to our weak currency was in July, 2015 (about 12%). One would think that AMSOIL is seeing cost relief due to depressed crude prices. What they are telling us is that the raw materials in their synthetic motor oil products are highly processed and aren’t affected by lower crude to any substantial degree.
That being said, with $30 crude they should be seeing somewhat lower raw material costs, production costs, transportation costs, packaging material costs, etc. But then we thought that the drop in crude would have lowered all of these costs back in July and AMSOIL prices did increase. A big move in the Canadian dollar has a massive effect on the viability of AMSOIL’s business up here and seems to outweigh any cost reductions from lower crude prices.
Why Does AMSOIL Have To Raise Prices When the Canadian Dollar Drops?
AMSOIL is a US-based company, so all of their operating costs are measured in US dollars. When the Canadian dollar drops versus the US dollar, less Canadian dollars come back to them to cover these costs.
But we remember the financial crisis of 2008 where the Canadian dollar was battered and AMSOIL was forced to raise prices. After the Loonie recovered, AMSOIL did roll back Canadian prices. So they do have a record of providing price relief for Canadian customers when a currency situation stabilizes. As there are many variables at play, there’s never a guarantee that prices will be lowered in the future, but it has happened before.
If we were forced to make a bet right now, we would say that the odds of prices increasing are greater than prices decreasing anytime soon. We don’t pretend to know the future, but when we know that a low Canadian dollar has trumped lower crude prices in the past.
AMSOIL is very tight-lipped about the direction of prices, but they do give us a few weeks notice before making price changes. Let’s hope that the Canadian dollar finds some footing so that AMSOIL prices in Canada can remain stable.