Synthetic Oil is Gaining Ground

By Peter C.T. Elsworth
Journal Staff Writer

This article appeared in The Providence Journal
01:00 AM EDT on Wednesday, October 25, 2006

It’s more expensive but it’s cleaner, lasts longer and high-performance car enthusiasts say it’s worth it.

Indeed many such cars, including BMWs, Corvettes and Porsches, are now sold with it, along with a recommendation to continue using it. What is it?

Synthetic motor oil.

Synthetic oil, as opposed to conventional, petroleum-based motor oil, has been flying under the radar screen for over 30 years — partly because of its higher cost — but is now gaining ground, especially in the market for high performance cars. Originally developed by the aerospace industry for jet engines, which need an oil that maintains viscosity and lubricity at very high and low temperatures, synthetic oil is now used by about 8 percent of the nation’s road vehicles, according to Ed Newman, advertising director at Amsoil, a privately held company based in Superior, Wis.

Synthetic oil is “bigger in the Midwest down to Texas, Florida and the Southeast than in New England and California,” said Al Lagerstrom, an Amsoil dealer based in Coventry.

“Absolutely, it’s growing (in New England),” he said. “When I started (four years ago), it was a hard sell. Now I have people contacting me looking for it.”

Amsoil, pronounced Amzoil (which was its name until it settled a lawsuit with Pennzoil which sued over the similarity in their names), pioneered its development in the U.S. and is the nation’s leading manufacturer.

Unlike conventional oil, which is a by-product of refined crude oil, synthetic oil is made from chemical compounds called polyalpha-olefins (PAOs), and its molecular structure is very different, making it far cleaner and more stable. For example, synthetic oil is more stable at high temperatures because it has few low-molecular-weight hydrocarbons, which evaporate in extreme heat.

The difference between conventional oil and synthetic oil can be compared to the difference between an artificial granite countertop to one made of natural granite, according to Dennis Rebelo, director of business development and corporate training at Inskip Automall in Warwick. “Man-made is consistent, while the natural is full of imperfections. The molecular structure of synthetic oil is more consistent.”

“Synthetic oil is 100 percent pure chemicals,” said Florida-based Amsoil distributor George Douglas. “The main benefit is that it can . . . lubricate in a higher and lower temperature range. The car will turn over on a cold day (resulting in) pretty good wear on the motor.”

Douglas said he once put some conventional oil in his freezer overnight along with some synthetic oil. The next morning, the conventional oil was solid while the synthetic oil “poured out.” But apart from its “low-temperature fluidity and high temperature thermo stability,” according to an Amsoil promotional DVD, synthetic oil also lasts longer because it is cleaner and does not contain the tar, wax, sludge and varnish in conventional oil, and releases fewer pollutants such as sulfur.

“It does cost more, but it provides a lot more cleanness,” said Inskip’s Rebelo. “There’s no varnishing of the internal parts.”

And because of its consistency and stability, synthetic oil does not need to be changed with anything approaching the regularity of conventional oil. Amsoil’s basic motor oil, for example, needs to be changed only every 10,000 miles or so, according to Newman, while its premium oil is sold as a 25,000 mile or one-year change product.

Such extended “drain intervals” offset the higher cost of synthetic motor oil, which was first marketed in 1971 by the French oil company MOTUL.

The oil was developed here by Amsoil founder Al Amatuzio, a retired Air Force lieutenant colonel who is still involved in the company, although he is now in his eighties. The company brought the product to market in 1972 and a number of oil companies have since followed suit, notably Mobil with its Mobil 1 Synthetic Oil in 1974.

Rebelo said synthetic oil especially appealed to owners of high-performance cars “that are typically driven a lot harder,” citing Porsche owners who might “enter their cars in auto cross or club races.”

However, it was the significantly higher price that set back the initial marketing of synthetic oil by in the United States in the early 1970s. Consider that when Amatuzio started marketing his synthetic oil in 1972, it cost about $5 a quart, compared with 50 cents for regular oil, Newman said. “You couldn’t put it on a shelf and expect to sell it,” he said. “It had to be sold on its benefits.”

Caught between his “product growing dust on the shelf,” the enormous sums of money needed for a national advertising campaign, let alone the marketing challenges posed by the price differential, Amatuzio was sold on the idea of selling it directly through a network of dealers — a marketing model known as Multi-Level Marketing — that continues today.

“It started in 1972, 1973 and nobody would buy it unless someone was there to explain why,” Douglas said.

“Al’s been offered millions of dollars for the company, but he’s dedicated to his dealers,” Newman said. At the same time, he noted the company had grown at double digits a year for 20 years, with not a single down year, so it was more a philosophy of staying with what works or “(dancing) with the one that brung ya.”

“(Multi-level marketing) allows you to tell a story,” according to the Amsoil DVD. “It’s friend telling friend, neighbor telling neighbor.”

In addition, the oil is paid for when it is shipped.

“Twenty years ago, ‘What is synthetic oil?’ was the question,” Newman said. “Now the question is ‘Does it warrant the higher price?’ ”

Six quarts of the XL7500 series 5w30, including shipping and sales tax, costs about $37, or just over $6 a quart, according to Lagerstrom. That compares with about $1.50 for a quart of conventional oil.

But comparing the price is tricky and really depends on how often the oil is changed. Although oil companies recommend changing a vehicle’s oil every 3,000 miles, many manufacturers do not regard that as necessary with 5,000 miles or more seen as adequate.

“A lot of oils are durable but (oil companies) want people to change oil (so they can make more money),” said Lagerstrom, who also runs his own truck haulage business.

So despite a price differential of about 4-to-1, synthetic oil can be price competitive given a drain interval three times longer as well as better wear on the engine and cleaner emissions. “The better product for your engine for the same price,” Newman said.

Many high-end car manufacturers now recommend synthetic oil, Lagerstrom said, with Corvettes (and Porsches) being supplied with it from the factory since 1992. “Now BMWs, Mercedes Benzes, VW diesels all come factory-filled with synthetic oil,” he said.

Rebelo agreed that attitudes toward synthetic oil were changing. “People are embracing it and manufacturers are endorsing it,” he said.

And while current use is limited to less than 10 percent of the nation’s vehicles, with nearly 1.5 billion gallons of motor oil sold in the U.S. each year, according to the Freedonia Group, a Cleveland-based market research company, there is a good deal of money being made from synthetic oils.

In addition, synthetics are used in the manufacture of a wide range of lubricants, such as transmission fluids, gear lubes and greases.

Meanwhile, the market leader is happy to continue selling through its network of dealers.

“Amsoil is a pretty big little player,” Douglas said, agreeing the company was better off staying in its niche area rather than going retail.

“With people who are quality minded, it is perceived as the best oil out there.”