Fuel Marketer News Magazine Fall 2015

Fall Issue 2015

Your Source for News and Information

SHOW ISSUE FOCUS: EMV Energy Security vs.

Energy Independence

Climate Change: Regulations Roundup Final EPA UST Rule

SUPPLY, MARKETING, DISTRIBUTION, TRANSPORTATION & LOGISTICS

PUBLISHER’S NOTE

A note from Your Source for News and Information

Gary Bevers CEO & Group Publisher

A Publication of FMN Media, LLC

Mexico currently has approximately 11,000 PEMEX-branded gas stations vs. more than 180,000 (mostly) independently owned and unbranded U.S. outlets.

Almost all gas stations in Mexico are on major highways and roadways; there are few neighborhood gas stations and no competitive locations.

EDITORIAL STAFF Publisher Gary Bevers gbevers@fmnweb.com Editorial Director Keith Reid kreid@fmnweb.com Managing Editor Tricia Corrigan tricia.corrigan@fmnweb.com Copy Editor Kathy Bevers kbevers@fmnweb.com Columnists and Contributors Betsi Bixbi Greg Cushard Vladimir Collak Shane Dyer John Eichberger Doug Haugh Corey Henriksen Maura Keller Alan H. Levine Joseph H. Petrowski Fred M. Whitaker Dr. Nancy Yamaguchi Editorial Board Ed Burke Lisa Calhoun George A. Overstreet, Jr. Joseph H. Petrowski Art Director Jeff Beene jbeene@fmnweb.com Advertising Sales Greg Mosho 115 Tinton Falls Road Farmingdale, NJ 07727 732.610.5735 Mobile gmosho@fmnweb.com Mailing Address 15201 Mason Road Suite 1000-288 Cypress, TX 77433

www.FuelMarketerNews.com

© Copyright 2015, Fuel Marketer News All rights reserved.

¿Hablas Español?

PEMEX, the National Oil Company of Mexico, is in the process of denationalizing, opening up their fuel markets for competition and selling off assets, much as we have seen the Major Oils do here in the U.S. market.

I recently had the opportunity to travel to Querétaro to speak at GasExpo, a national trade show and conference event hosted

by AMPRES, Mexico’s independent distributors and dealers trade association.

I was invited to speak by Bob Renkes, executive vice president of PEI and co-sponsor of the event, about the downstream petroleum supply chain, however, it turned out to be a very educational trip for me.

I was surprised to learn that there are already “independent” distributors and gas station owners in Mexico today. I had assumed that all petroleum related properties were owned by PEMEX, but that turned out to be my first incorrect assumption.

I also learned that all transportation fuels are sold through old-fashioned “gas stations” with an attendant—no selfservice, no convenience stores and no restrooms! I thought I had stepped back in time, except all the equipment is modern and many of the same brands are represented as in the United States.

Finally, and most significantly, I learned that there are far fewer fueling outlets by population and fuel consumption percentage than in the U.S. market.

As PEMEX denationalizes and the government deregulates fuels prices, there will be a major market expansion opportunity for Mexico’s independent operators the same way it has occurred in the United States. The U.S. news has mainly focused on upstream opportunities, but I also see a growth opportunity for downstream U.S.-based operators to move into Mexico in the coming market expansion.

Focus on EMV In this issue, you’ll find three articles on EMV, and by the time you read this, the October 1 deadline will be behind us and changes in procedures and processes will be well underway. In addition, our energy-expert columnists deliver objective analysis of the facts, changes and trends in our industry and what it means to you as a fuel marketer. Whether traditional fossil fuels (gasoline and diesel) or alternative fuels (ethanol, isobutanol, biodiesel, CNG, LPG, hydrogen, electric), we strive to thoroughly and objectively cover the information that matters to your business.

If you find our expert columnists, industry news and operational solution feature articles interesting and helpful to your fuel business, you can find much more online every week. So, don’t wait for the next issue of the print magazine—you’ll miss out on too much quality content and timely coverage. Register for our enewsletter at www.fuelmarketernews.com to get in the loop as new content gets posted. Registration is free, and the process is short and easy.

TABLE OF CONTENTS

Publisher’s Note

84

Environmental and Consumer Safety at the Station

by Ed Kammerer

26 Refined Fuels as Autumn Approaches

by Alan H. Levine

90

Final EPA UST Rule: What’s Left?

by Keith Reid

30 Climate Change: Regulations Roundup

by Ed Burke

96

FYI: P97 Networks Mobile Payment Solution

by Keith Reid

3

FUELS & SUPPLY

14 Peak Zealots and

Their History of Failure

by Joe Petrowski

6

POLICY BRIEF: The Future of Fuels Q&A with John Eichberger

14 Peak Zealots and Their History of Failure

by Joe Petrowski 20 What Really Matters Most? Energy Security vs. Energy Independence

by Doug Haugh

20 What Really Matters

Most? Energy Security vs. Energy Independence

by Doug Haugh

36 Global Crude Balance: A Rule of Three, and the Rules of the Three

by Dr. Nancy Yamaguchi

WHOLESALE & FLEET OPERATIONS

48 Down, but not out? Restoring diesel’s damaged reputation in Europe Submitted by Integer Research

102 VENDOR VIEW: The Retail Fuel Business Broken Down in 30-Second Sales Pitches

by Brian Reynolds

RETAIL OPERATIONS

106 E85 Fueling Equipment— What You Don’t Know Could Hurt Your Bottom Line

by Joe O’Brien

36 Global Crude Balance:

A Rule of Three, and the Rules of the Three

110 VENDOR VIEW: OBCs for Carriers: Cut the Cord!

by Kirby Smith

by Dr. Nancy Yamaguchi

BUSINESS OPERATIONS 116 Entrepreneurship

by Joe Petrowski

a Benefit or Two

by Maura Keller and Keith Reid

EMV

52 EMV Costs, and Perhaps

120 Obtaining Convenience and Gas Bank Assets…A Great Acquisition Opportunity, But You Have to be Prepared

by Corey Henriksen

52 EMV Costs, and Perhaps a Benefit or Two

by Maura Keller and Keith Reid 62 The Rationale and Technology Behind EMV

by Vlad Collak

124 Six Tips for Reducing Workers’ Compensation Costs

by Greg Cushard and Ryan Brown

68 VENDOR VIEW: Liability Shift isn’t the Real Risk with EMV

by Chris Santy

PRODUCT ROUNDUP & INDUSTRY NEWS 128 Company Product Roundup

72 Connecting Loyalty and Your Customers

by Maura Keller

90 Final EPA UST Rule: What’s Left?

140 Industry News

80 Share of Wallet—The Rest of the Story

by Shane Dyer

by Keith Reid

FMNMagazine

154 ADVERTISER’S INDEX 4

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FUELS & SUPPLY POLICY BRIEF

Q&A with John Eichberger Executive Director of the Fuels Institute

2015

THE FUTURE OF FUELS The Fuels Institute, founded by NACS in 2013, is a 501(c)(4) non-profit research-oriented think tank dedicated to evaluating the market issues related to vehicles and the fuels that power them. Led by a diverse board of directors and driven by a board of advisors, the Fuels Institute incorporates the perspective of interested stakeholders affected by this market, including but not limited to fuel retailers, fuel producers and refiners, alternative and renewable fuel producers, automobile manufacturers, environmental advocates, consumer organizations, academics, government entities and other stakeholders with expertise in the fuels and automotive industries.

John Eichberger

FMN, the official media partner of the Fuels Institute Annual Meeting, interviewed John Eichberger, Fuels Institute executive director, for an overview of the institute and its activities.

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2020

2025

2030

2035

2040

2045

2050

2055

2060

2065

by Keith Reid

FMN: What prompted the formation of the Fuels Institute?

Eichberger: Several years ago, the executive

committee leadership of NACS was getting frustrated that policy and market strategies were being developed in somewhat of a vacuum. Each party—the auto industry, refiners, biofuels industry, etc.—they’re pursuing their separate agendas, and ultimately what would come through were policies and market strategies with little input from the retailer and that often left the retailer holding the bag.

So the executive committee at NACS said there has to be a better way to do this. Since NACS represents 85% of the market can we step up and try to bring these stakeholders together to foster some collaboration and discussion among the parties, identify some of the key issues that are impeding the market today and into the future and see if we can address some of those issues in a non-advocacy and collaborative manner.

FMN: Why was there a desire to move this

more formally out from under the NACS banner?

Eichberger: Associations, NACS included, have

certain positions they cannot cross. They cannot say certain things or even discuss options that might conflict with their FMNMagazine

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stated public policy positions, because that might backfire in the public relations world. In the Fuels Institute there is no association that has a vote. All of the voting participants are businesses whose objectives are long-term viability. So, they can entertain something that might not be the political statement of the industry. They can evaluate it and their perspective might lead to a better long-term solution.

Now, we will analyze different policies in the context of how they affect the market, but we’re not playing politics. We’re able to step away and be a bit more objective.

FMN: Research is a core function of the Fuels

Institute. What have been some of the major areas you have researched or are looking to research in the future?

Eichberger: When we started I really thought we were

going to be focused on individual fuel items. We started a natural gas study, which Carnegie Mellon is still conducting for us; we did a diesel piece and an E85 piece and those have been well received. They provide valuable information to the market. But what we found is the coalescing of interest is really more around the umbrella issues—the broad market analysis.

We did a driver demographics piece that looked at 100 years of government data showing miles traveled, who has a driver’s license and what has been the motivating factor to

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“

FUELS & SUPPLY POLICY BRIEF

Fuels Institute: The Future of Fuels

When you come to the Fuels Institute the first thing we emphasize is that this is a no-conflict area. We’re here to exchange information and learn from each other and not fight things out. We’ve deliberately honored that from day one, and that’s that a key ingredient to our success.

increase the total vehicle miles traveled in the country. That report has gained more attention and more references than anything that we have done before or since. So what we’re now looking at is how do we take a broader picture?

One of the studies that we are currently reviewing proposals on, and that I’m really excited about, is understanding what the costs of E15 really are. We are reviewing proposals that would first look at the overall health of the distribution system from refinery to retail—what are the costs of operations, the pinch points, the strengths and weaknesses and then comparing what happens to that with E10, E15, E30, E85, B5 and B20? What are the additional equipment needs, what are the costs and what are the opportunities and challenges? So, we then have a 30,000-

”

foot perspective on the issue. And that kind of analysis, I think, is extremely helpful to everybody whether you’re in biofuels, petroleum, retail or automotive. I’m not aware of anybody that’s done a comprehensive assessment of the distribution system.

In addition, we’re looking at consumer behavior in terms of what’s driving their behavior in terms of buying vehicles and what kind of things can turn their minds to alternative fuels. We’re still looking at natural gas. There will be another E85 piece based on today’s market prices. The impact of an ondemand economy with services like Zipcar, Lift and Uber. There is a lot of stuff like that, and the board of advisers will be meeting in September to decide the agenda moving forward.

FMN: How do you bring together such disparate groups into a collaborative environment?

Eichberger: When you come to

the Fuels Institute the first thing we emphasize is that this is a no-conflict area. We’re here to exchange information and learn from each other and not fight things out. We’ve deliberately honored that from day one, and that’s that a key ingredient to our success.

We’ve got people who politically and policy-wise have strong disagreements with each other. They often don’t trust each other; they fight each other constantly in the popular press. But, we’ve recruited people to participate in the institute on the basis of, “Look, we’re not in it for the political fight or hashing out political differences. We want to cut to the chase.”

All of these people and these organizations sincerely believe that their position is the right position. So, when you present the idea of doing an analysis of the facts, they all agree because they all believe that the facts are going to support their position.

And when you do the analysis—if it’s rooted in common sense, objectively defensible and verifiable information—all we’re doing is providing the stakeholders with more insight and information.

FMN: I would assume that

the usual antitrust concerns are present with the Institute.

Eichberger: You absolutely have

to comply with antitrust. You have auto companies that compete, biofuel companies that compete, refiners that compete, retailers that compete—all in the same room discussing the market. We will never talk about prices or allocation of markets or any of those things that any association has to be careful with. We talk about the bigger picture items.

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FUELS & SUPPLY POLICY BRIEF

Fuels Institute: The Future of Fuels

Let’s say you want to bring E15 to market, what are the issues?

Not “what are you going to do, retailer “A,” but if you were to do this what are the fundamentals?” NACS has always had the objective of providing their members with options. Part of the regulatory strategy when I was in the advocacy world (Eichberger has served as NACS vice president of government relations) was knocking down barriers to innovation. Give retailers the ability to move into a new fuel market with a level playing field. Clarify the regulatory issues and give them an option and here’s what’s involved—go for it. That’s kind of the same with the Fuels Institute. All we want to do is make sure that everyone is aware and understands the challenges and opportunities that exist when looking to bring something to market.

With hydrogen—it’s a very nascent technology—who knows if it’s going to take off? There are some beautiful things about it and some huge hurdles. But what they’ve done is have the automakers, fuel suppliers, retailers and regulators work together to identify opportunities and challenges. They are bringing vehicles to the market where the fuel is available and building from there. It’s a very collaborative, constructive and strategic effort to bring this product to market and very much the model we should be trying to pursue elsewhere.

FMN:

What are some of the surprising areas of common ground and agreement that have developed as this process approach has moved forward?

Eichberger: I think the thing that surprised me the most

FMN: What would be an example of that

approach from the Fuels Institute perspective?

Eichberger: I like to draw a parallel between E85 and flex

fuel vehicles and hydrogen. The E85 market has been around 12 to 15 years and we probably have 3,000 stations and some 17 million vehicles on the road. The problem is the vehicles don’t have to buy the product so there is no defined demand, and there also has been no coordinated marketing strategy. Here are the vehicles, here’s a newly approved fuel so let’s see what happens. There’s been a struggle with that.

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is the ability of people who have had some of the most aggressive differences in the public relations sphere set aside their differences and talk. From the very first meeting we’ve had some fairly sensitive issues come up, and the conversation has always been constructive.

I’ve been in politics now for 19 years and I’m pretty cynical.

When I was launching the site people would come up to me and say you have no idea how difficult this is going to be— these people will not talk. They will not get along. So I actually went into it with a fairly pessimistic attitude. I owe

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FUELS & SUPPLY POLICY BRIEF

Fuels Institute: The Future of Fuels

FMN:

“

everybody a big apology because we completely underestimated the constituents that are involved here. It is not petty. While we get into politics, and politics gets so petty so quickly, when you talk about business there is no pettiness.

I think that has been the most eye-opening for me. I have lost so much of my cynicism and it’s a very uncomfortable position for me (laughs).

What do participants gain from their involvement and attending the institute’s meetings?

Eichberger: The people who have gotten engaged

receive tremendous value in our conferences. It gives them the opportunity to network with people from parallel industries that would be difficult, otherwise. Even when you sit in the audience you are participating. We have presenters that The other thing that I think has been extremely enlightening speak for about one third of the time and the rest of the time for me with this process is that so many people have said there is the audience sharing insight with each other and the is a need for this and there has been for a long time. I don’t presenters. In the room you’re going to have marketers, fuel providers, refiners, biofuel folk, natural gas advocates, electrical vehicle The people who have gotten engaged receive automakers, the national labs and government tremendous value in our conferences. It gives them entities. If you have a question about anything in the industry the chances are somebody sitting the opportunity to network with people from parallel next you will be able answer it. It really is the industries that would be difficult, otherwise. Even ultimate opportunity for people trying to figure when you sit in the audience you are participating. out where the market is heading, and what they should be paying attention to.

”

We put together an agenda that is designed to prompt discussion. For example, at our last meeting in Indianapolis, we had Reuben Sarkar, Deputy Assistant Secretary for Transportation, U.S. Department of Energy, who talked about DOE priorities such as high-octane fuels, electric vehicles, hydrogen and other projects.

know why nobody else has done it. Maybe it’s because the cynicism in them said it couldn’t be done. We’re now over two years old, and people have started to understand that what we said we wanted is actually taking place. It was not a “bait and switch.” And I think that has opened up opportunities for the Institute to have a much more meaningful role in the market. People are starting to really recognize who we are and want to talk to us about it. And that is pretty cool.

In another presentation, we took a look at a straw man strategy to bring a new fuel to market, and then tear it apart.

Say it’s an E25 high-octane fuel. What do we need to be thinking about? How do we develop a coordinated strategy to be successful and satisfy the various interests of the key stakeholders?

FMN: We touched on it a bit already,

but who can be a participant in this process?

Eichberger: Anyone can be a participant. We are looking

for people that have a stake in the fuels and vehicles market.

As we fill the board we’re being very deliberate to make sure it’s balanced to make sure that no single stakeholder community has undue influence on the research and we’ve done a pretty good job. But in terms of the general participation we want the biggest pool we can have. We want people that have a mindset about how to make the market better, and not just tomorrow but 10 or 15 years down the road. What do we need to be thinking about to improve the delivery of products and services to the customer?

There’s a lot more. Our spring meeting is going to be held in April 27 – 29 in San Francisco. I would suggest anyone attend who is interested in getting some key insights into their business and some of the opportunities that might be developing. n

So we’re open to more marketers, retailers, automakers, fuel producers, consumer advocates, environmental advocates and government entities. We’re very diverse, and the more diverse we get the stronger we become. If there is a viewpoint that is not being presented, we miss something. The last thing we want to do is publish what we consider to be a comprehensive analysis of a market issue then have somebody say you completely forgot this stakeholder’s perspective. Then we have to start over.

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The United Nations Food and Agriculture Organisation (UNFAO) has released data showing that global food prices have experienced the steepest monthly drop since 2008, casting doubt upon concerns about the impact of ethanol production in food price increases. The recent decline in food prices has coincided with a period of record ethanol production expansion, reaching a high of 94 billion liters in 2014 from 83.5 billion liters in 2012, a 10% increase over this period. This contrast suggests that increased ethanol production has not driven up food prices.

Global Renewable Fuels Alliance

READ MORE

at fuelmarketernews.com

FUELS & SUPPLY

Peak Zealots

by Joe Petrowski A recent headline based on an Energy Information Administration (EIA) report citing reserves may peak in next 20 years revived the discussion of “peak” oil just six months after the markets shuddered with a $60/barrel drop in price and the idling of wells and new drilling because of the “glut” of supply. The “Peakonistas” and their political sycophants came out of hibernation like cicada bugs chattering doom and gloom. Since I have been bullish on oil in the mid to high 40s, I felt I might have to reverse my position and get bearish on oil based on the contrarian theory that no one has had a worse record of forecasting the supply or price of a commodity than these market-challenged alarmists.

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and Their History of Failure

Let’s examine the record and where we are today.

I

n 1798, Thomas Malthus famously said food demand would outstrip population causing massive starvation. While there has been hunger, and some starvation, it has been driven by political, poverty and distribution factors. In fact, in most of the 19th century countries fought trade wars to access markets for their surplus commodities. The corn wars in Britain and the South fighting the Civil War (as much for access to European textile mills as for the right to preserve slavery) are but two prime examples.

in manure. Oat production in the United States did peak (in 1980) when farmers switched to corn. Food processors (except Cheerios) used other grains and we lifted the ban on importing Canadian and Polish oats.

In 1865, two members of the British parliament grimly predicted the peak of coal production and the dire consequences that would follow. At the same time some U.S. politicians predicted oat production for horses would peak, and other politicians predicted that if we would not limit the horse population, the streets of New York would be covered

Our first peak oil call came in 1956. What followed was 30 years of unprecedented growth in both production and proven reserves culminating in $20/barrel oil, 30-cent retail diesel and $1 gasoline (less if you took out taxes). Only crazy government-designed market schemes (old oil/new oil), several Mideast wars and the formation of OPEC derailed

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There were also concerns over our dependence on whale oil, either based on concern for the whales or fisherman, but we survived that scare (though it did depress land prices in Nantucket for a while).

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FUELS & SUPPLY

Peak Zealots and Their History of Failure

that train. As little as five years ago, $100/barrel oil was going to be $200 by the prognosticators, so the solution crafted was to have billions of dollars in federal subsidies for solar and wind (to those companies supporting the agitated politicians), higher corporate average fuel economy (CAFE) standards and higher taxes to discourage usage.

The shale revolution was the skunk that showed up at the subsidy garden party hosted by the alarmists and would-be energy czars. And despite every attempt to squash badly needed pipelines to move our new found abundance from where it is produced to where it is needed, we have oil and natural gas prices at 25-year lows and proven reserves at all-time high.

What do these nervous Nostradamuses miss?

Two factors always blow up peak forecasts:

1. Technology: 1.5% of the world is carbon, which is the fifth most abundant element on earth. (Hydrogen at 7% is the most abundant, and we are creating economic hydrogen infrastructure and vehicles today.) Hydrocarbons are everywhere. All the dinosaurs did not go to Saudi Arabia to die—we drilled there because of geology and cost. Similarly, early Pennsylvania oil was called “rock oil” because it bubbled to the surface, and again, we extracted oil there because of geology and cost.

Our ability to find oil, drill in multiple directions, fracture rock and extract it economically was a technological breakthrough. Currently, Texas and California—two of our oldest producing regions—are producing higher percentages of our national total output because we are able to recover more hydrocarbons from existing wells.

This is why, despite a drop in price, our production level has held reasonably well, and our reserves have actually gone up.

2. Price and Markets: Most politicians struggle with economics. The cure for high prices is high prices. The cure for low prices is low prices. As Sheik Yamani, the Saudi Oil minister, famously said, “The stone age did not end when we ran out of stones.” It ended when we found substitutes that were better or cheaper. The oil age will end, but not any time soon and it will be when we switch to natural gas (already one-third the price of oil on a per-barrel equivalent), hydrogen, electricity—or something that we simply cannot foresee today. And while the supply response is more easily understood because it is driven by price levels, the demand response is often more powerful. Energy efficiency in combination with demographics has been as big a contributing factor to this current energy revolution as has technology.

“

The shale revolution was the skunk that showed up at the subsidy garden party hosted by the alarmists and would-be energy czars. And despite every attempt to squash badly needed pipelines to move our new found abundance from where it is produced to where it is needed, we have oil and natural gas prices at 25-year lows and proven reserves at all-time high.

”

Joe Petrowski Joe Petrowski has had a long career in international commodity trading, energy and retail management and public policy development. In 2005, he was named President and CEO of Gulf Oil LP and elected to the Gulf Oil LP Board of Directors. In October of 2008 he was named CEO of the now combined Gulf Oil and Cumberland Farms whose annual revenues exceed $11 billion and that now operates in 27 states. In September 2013, Petrowski stepped down as CEO of The Cumberland Gulf Group. He is now managing director of Mercantor Partners, a private equity firm investing in convenience and energy distribution.

In conclusion, the only peak we have experienced in this

country was a peak in political intelligence by our elected officials, and that occurred between July 4, 1826, and April 15, 1865. And we have survived that. n FMNMagazine

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The impact of fracking; a tale of two quotes: “As the lack of supply growth and price-insulated non-OECD* demand suggest a future rebound in U.S. gross domestic product growth or a major oil supply disruption could lead to $150-$200 a barrel oil prices,” Goldman Sachs, March 2008.

“While we are increasingly convinced that the market needs to see lower oil prices for longer to achieve a production cut, the source of this production decline and its forcing mechanism is growing more uncertain, raising the possibility that we may ultimately clear at a sharply lower price with cash costs around $20 a barrel Brent prices,” Goldman Sachs, September 2015. *The Organisation for Economic Co-operation and Development

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Energy Security vs. Energy Independence

What Really Matters Most?

FUELS & SUPPLY

by Doug Haugh

The claim that politics are a lagging indicator of the times

seems especially true in light of ongoing presidential

candidates’ campaign promises of energy independence.

Many of the top tier contenders have vowed this tired

slogan as part of their campaign announcements. Old habits die hard. An uninterrupted string of presidents dating back to Richard Nixon have made this energy

independence pledge. But for this crop of contenders, the promise is moot. The country has already achieved something much more important—energy security.

Figure 1: US Total Net Imports of Crude and Petroleum Products 1993–2015

kbpd

OPEC Percentage of Imports

Source: Trans-Energy Research, Inc., using USDOE/EIA data

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*2015 Jan-May average

FUELS & SUPPLY

Energy Security vs. Energy Independence – What Really Matters Most

First of all, “energy independence” is a ridiculously misunderstood statement. For most of the energy we use in the U.S. we are incredibly independent. If we take energy as three streams—electricity, heat and transportation fuels—then on the first two fronts we are secure and independent. So while Eastern Europe is

Net Oil Imports – Thousands of barrels per day

Figure 2: Ten Years of Progress and Improved Energy Security – Oil Imports Reduced by 65%

forced to make ongoing concessions to the Russians because they fear freezing through a winter without Putin’s gas, Americans can bask in a 100+ year supply of both natural gas and coal.

Similarly, but on the electricity side of things, Japan is having a near existential crisis around the supply of its electricity.

Understandable, since they decided to shut down their nuclear plants after the Fukushima meltdown, but certainly not a secure or independent place to be.

Contrast that with the current American electricity grid where we have the confidence to consider shutting down hundreds of coal plants to move to renewables and natural gas and may actually save money along the way. For electricity we use domestic resources in a changing mix of nuclear, coal and natural gas. We have such a surplus of all of those fossil fuels along with an increasing mix of renewables that we are having a fierce debate about how much to use of each. This is a “luxury” problem that no one else on the planet shares with us today. So when we hear politicians or their wonky public relations staff referring to “energy independence,” we are really talking about transportation fuels where we are still using petroleum for 92% of our needs.

Figure 3: Balance of “secure” Oil Supply in Blue vs. Hostile Supply in Red in 2005

So, what about that 92% dependency on oil for our planes, trains and automobiles? Well in 2011, President Obama gave a speech at Georgetown University when he called for oil imports to be cut by one-third by 2025. No thanks to current policies, or more properly, despite the lack of any comprehensive energy policy at all, the country has already surpassed this goal1—10 years ahead of schedule. More importantly, imports from OPEC countries— countries that are no friends of liberty or, in many cases, America— have fallen even more precipitously by 46%, from 5.6 million barrels of oil per day (mmb/d) in 2005 to 3 mmb/d today.2

Figure 4: Balance of “secure” Oil Supply in Blue vs. Hostile Supply in Red in 2015

Granted, the U.S. still imports 5 mmb/d on net 3—27% of the 19 mmb/d of domestic consumption.4,5 But this is down 60% from the 12.5 mmb/d of net imports in 2005.6 If you exclude refined product exports and the 2.6 mmb/d of net imports from Canada,7 the U.S. only imports 2.4 mmb/d, a mere 13% of consumption.

We can live with 13% and have confidence that we can enjoy supply reliability and price security. Seeking to drive this closer to zero and walling ourselves off from the world crude markets is not a sensible goal in political, economic or physical terms.

Thus, while we may not be truly energy “independent” where we produce every drop we consume, we are by all means energy secure. Americans no longer are threatened with price spikes, rationing and long lines at the pump.

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FUELS & SUPPLY

The best proof of this security is to simply observe how the oil price is no longer held hostage by the goings-on in the Middle East. We have at least three major wars going on in the Middle East and our military engagement has been minimal.

The civil war in Libya continues, Syria is hardly recognizable as a country any longer, Iraq is being divided up and Yemen is pure chaos. Even five years ago, any one of these events would have catapulted oil prices to well north of $100 a barrel.

Today the region’s chaos has had little to no effect on the oil price, which has been trading around $50 to $60 a barrel since December.8 Contrast this to when Obama gave his Georgetown speech, when the Arab Spring was roiling oil prices on a roller coaster ride above $100 a barrel.9 This was completely typical where for decades even the slightest geopolitical machinations in the Middle East sent the oil price spiking and American consumers spinning.

This price security improves the country’s national security. Foreign policy no longer needs to be influenced by the security of Middle East oil, meaning it can focus solely on true threats to the country— unlike the past 45 years since the oil embargoes of the 1970s, when

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FUELS & SUPPLY

Energy Security vs. Energy Independence – What Really Matters Most

Figure 5: Primary Energy Consumption by Source and Sector, 2014 (Quadrillion Btu) Percent of Sources

1. http://www.eia.gov/dnav/pet/pet_move_neti_a_ ep00_IMN_mbblpd_a.htm

Percent of Sectors

Transportation 27.0 (27%)

Total=98.3

Petroleum1 34.8 (35%)

92 3

71 23 4

5

1

38

11 13 77 Residential & Commercial6

34 32

100

30

Coal3 17.9 (18%) Renewable Energy4 9.6 (10%) Nuclear Power 8.3 (8%)

<1

11.3 (12%)

9

8 <1

22

91 13

Industrial5 21.4 (25%)

44 7

3

Natural Gas2 27.5 (28%)

24 11 52

References

2. http://www.eia.gov/dnav/pet/hist/LeafHandler.ash x?n=PET&s=MTTNT_NUS-ME0_2&f=A 3. http://www.eia.gov/tools/faqs/faq.cfm?id =727&t=6 4. http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n =pet&s=mcrfpus2&f=a 5. http://www.eia.gov/dnav/pet/pet_cons_psup_dc _nus_mbblpd_a.htm 6. http://www.eia.gov/dnav/pet/hist/LeafHandler .ashx?n=PET&s=MTTNTUS2&f=A 7. http://www.eia.gov/dnav/pet/pet_move_neti_a_ep00 _IMN_mbblpd_a.htm

1

42

Electrical Power7 38.5 (39%)

13 22

8. http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n =PET&s=RWTC&f=M 9. http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n =PET&s=RWTC&f=M

100

SOURCE

SECTOR

we secured our energy supplies with military might, and to a much lesser degree, foreign aid and diplomacy. No longer do our troops need to secure the flow of oil from abroad because American private ingenuity has done so at home.

The story of how this energy security has come about is well known. The shale oil revolution, made possible by fracking, reversed the decades-long decline in domestic supply to the point where oil is not only available, but also priced to sell. We have secured our energy supplies with ingenuity, innovation, hard work and copious amounts of private capital.

This revolution could have happened only in America. The freedom of U.S. labor laws, system of strong property rights, liquidity of financial markets, old-fashioned work ethic, and (for the most part) clear environmental regulations necessary for its success are unique to the United States. China, Argentina, Germany, France and the UK all have well documented shale resources that could now be reliably developed using proven U.S. technology. With the exception of China, in most of these places that development will never happen.

The energy security we have achieved today, while incredible, is not a permanent solution to our energy needs. I would not want to speculate when our newly developed resources will begin their inevitable decline, but we all know that every fossil fuel resource is finite. But those resources, however finite, are the key to not going forward on our knees. We now have a strong and long bridge we can stride confidently across to a more sustainable future that will secure our energy needs for every generation of Americans to come. n

Douglas H. Haugh Doug is currently President of Mansfield, a $9 billion industry innovator recently ranked by Information Week as the No.1 technology innovator in Energy & Utilities and the only nationwide provider of fuel supply, biofuels, propane and diesel exhaust fluid. Haugh is a frequent speaker on energy, supply chain technology and entrepreneurship.

He can often be found leading general sessions or seminars at many national conferences and conventions. He also blogs on energy issues at: http://thinkingonenergy.com.

The opinions expressed there (and here) are his, and not those of Mansfield.

READ MORE at fuelmarketernews.com FMNMagazine

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FUELS & SUPPLY

Refined Fuels as Autumn Approaches

by Alan H. Levine Early autumn presents an important inflection point for petroleum products. Gasoline retreats from the intense activity of summer driving. Distillate fuel oil interest rises in preparation for renewed economic activity in the fall and for winter heating oil demand. Both commodities face risks from price volatility of which fuel marketers should be aware. They should also know that there are ways to limit that risk by using futures markets.

This year, oil markets have lower prices as a feature. Prices have retreated from levels substantially higher than they are now. And the decline represents dramatic improvements in crude oil production technology, not simply a poor economic environment. The softness has been exacerbated by the Saudi decision to flood the market with crude oil.

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FUELS & SUPPLY

Reformulated blendstock for oxygenate blending (RBOB) was priced at $2.1850 as recently as the middle of June. At the end of July, values had fallen to $1.78, a loss of 18.5%. And with that decline, prices matched levels not seen since last spring.

Declining prices are not unusual for the postMemorial Day period, but the severity of the sell-off has been impressive.

Gasoline prices traded between $ 2.43 and $3.49 for an extended period starting in January 2011. This range was broken in October 2014 as prices reacted to higher levels of supply.

“

Refined Fuels as Autumn Approaches

Many analysts expect prices to remain at relatively low levels through 2015 – 2016, supporting demand.

Seasonally, gasoline prices tend to bottom in the fourth quarter of the year. There is no reason to expect this pattern to change.

”

The price drop has had dramatic consequences on demand for gasoline.

Demand for gasoline in the United States has reacted strongly to lower prices. The Energy Information Administration estimated demand for gasoline at 8.9 million barrels daily at the start of 2015. Declining prices boosted demand to 9.7 million barrels per day in June 2015, nearly as high as the all-time demand recorded in the exuberant economy of mid-July in 2007.

As July comes to an end, demand for gasoline typically starts to wane, a normal seasonal reaction. The strength in gasoline use comes as something of a surprise. Lower price, of course, boosts demand but gasoline was not a strong candidate to demonstrate this idea. Many observers had written the epitaph of gasoline as a remnant of old driving habits.

Underlying fundamentals appeared to have changed.

Demographics have shifted. The population is aging and older drivers are not as active as once they were. Younger people have turned to the Internet for communications, relying less on getting there by auto. Moreover, vehicles are more efficient.

These bearish factors were not enough to offset lower prices as a lure to driving the open road. The Federal Highway Administration (FHWA) reports Travel in Millions of Vehicle Miles. FHWA reported that 3.081 trillion miles were driven in the twelve months ending May 2015. This was the highest level of activity reported going back at least to 1990. It exceeds the previous record of 3.022 trillion miles achieved in 2007.

Many analysts expect prices to remain at relatively low levels through 2015 – 2016, supporting demand. Seasonally, gasoline prices tend to bottom in the fourth quarter of the year. There is no reason to expect this pattern to change. Refinery turnaround, occurring during the first quarter, tends to tighten gasoline inventories. Tight supply leads to higher price and, in turn, puts pressure on retail gasoline margins.

Some retailers have bought gasoline crack spreads late in the year. These are financial instruments that buy gasoline and sell crude oil. With refineries operating under constraint, crude oil stocks back up, putting pressure on price. Gasoline supplies tighten. The price difference potentially expands and the retailer’s situation offsets higher street prices with wider crack spreads.

Crack spreads are constructed with futures contracts. They are executed on the New York Mercantile Exchange. The owner must have a Futures Account in order to use crack spreads.

Those interested should ask a qualified Energy Futures Brokerage like Powerhouse for further guidance.

Refineries have been operating at very high rates. This reflects the large amount of crude oil available in the system. It also is a response to the limitation on export of crude oil that has been in place since 1975. There is no similar ban on the export of Petroleum products. Refiners have turned crude oil into its component products to avoid the export limit.

Refiners are operating around 95% of capacity, a rate not easily sustained. And much of that capacity is directed toward the production of gasoline. And production of gasoline brings along production of co-products like distillate fuel oil. Gasoline accounted for 55.5% of crude oil run to stills in 2005. Ten years later, gasoline is now nearly 58% of refinery production.

As gasoline output grows, so too does co-product distillate fuel oil.

In 2005, distillates accounted for 27.5% of refinery runs; most recently that share rose to 30.4%.

This translates into an increase of more than 760 thousand barrels daily over the past ten years.

FUELS & SUPPLY

Refined Fuels as Autumn Approaches

Some analysts see this as bearish for price or at least putting a drag on any seasonal rally that typically occurs in late summer/early autumn. This could translate into an opportunity for those with the ability to fill storage. At writing, ultra-low sulfur diesel (ULSD) for February 2016 is worth 8.75 cents more than the September 2015 contract.

This is more than the cost of storage. Moreover, some Northeast terminals are reportedly posting distillate prices below the futures price.

Buying wet barrels for storage and selling the February futures contract takes advantage of the carry in the market. Carry is the price difference between the current price and a price in the future. Market prices provide an incentive to utilize storage. Establishing such a structure requires a Futures Contract, like the gas crack spread discussed above. n (Submitted late July.)

Disclaimer: Futures trading involves significant risk and is not suitable for everyone.

Transactions in securities futures, commodity and index futures, and options on futures carry a high degree of risk.

The amount of initial margin is small relative to the value of the futures contract or forex positions, meaning that transactions are heavily â&#x20AC;&#x153;leveraged.â&#x20AC;? A relatively small market movement will have a proportionately larger impact on the funds you have deposited or will have to deposit: this may work against you as well as for you. You may sustain a total loss of initial margin funds and any additional funds deposited with the clearing firm to maintain your position. If the market moves against your position or margin levels are increased, you may be called upon to pay substantial additional funds on short notice to maintain your position. If you fail to comply with a request for additional funds within the time prescribed, your position may be liquidated at a loss and you will be liable for any resulting deficit.

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Alan H. Levine Alan is CEO of Powerhouse, a company offering the Power of Price Protection.

Alan has served the energy industries since 1969 and focused on hedging and price risk management since 1977. He can be reached at alan@powerhouseTL.com and (202) 333-5380.

READ MORE at fuelmarketernews.com

Climate Change:

REGULATIONS ROUNDUP

In the past several months, thereâ&#x20AC;&#x2122;s been movement by the Administration and the Environmental Protection Agency (EPA) on several different initiatives ultimately meant to curb emissions and combat climate change.

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FUELS & SUPPLY

by Ed Burke

Climate Change Proposals The comprehensive package and slew of new proposed regulations as a collective, from renewable use to methane emissions to power plant emissions, are aimed at substantially curbing environmental impacts in the name of reducing the impact of the United States on climate change.

The Renewable Fuels Standard (RFS) In June, EPA began taking comments on its recent proposal covering the years 2014, 2015 and 2016. While the Agency took some serious heat for releasing their proposal late, it does provide some positive changes for the industry. Since the proposal was delayed, the EPA used the actual amounts of biofuels blended in 2014 as the required renewable volume obligations (RVO).

EPA’s proposal cuts are more than 4 billion gallons per year lower than the 2007 legislation called for.

The proposal for total renewable fuel volumes is 15.93 billion gallons for 2014, 16.3 billion gallons for 2015 and 17.4 billion gallons for 2016.

Announcing the proposal, EPA acknowledged the so-called blend wall (the inability of most vehicles to use gasoline with more than 10 percent ethanol) and the lack of infrastructure to deliver fuel with higher amounts of renewable fuels. EPA said that these realities are the reason the RFS volume obligations were lower than what Congress called for in the 2007 legislation.

Addressing a major contention with refiners, EPA also significantly reduced cellulosic biofuel volume requirements based on actual production and availability of the biofuel. EPA expects the final RFS standards will be issued by the end of November.

FMNMagazine

“

Fuel Efficiency In June, EPA proposed new standards for mediumand heavy-duty vehicles that would improve fuel efficiency and cut carbon pollution. The proposed standards are expected to lower carbon emissions by approximately 1 billion metric tons, cut fuel costs by about $170 billion, and reduce oil consumption by up to 1.8 billion barrels over the lifetime of the vehicles sold under the program. These reductions are nearly equal to the greenhouse gas emissions associated with energy use by all U.S. residences in one year.

The EPA is ballparking the cost to comply with the proposal at $12,000 per vehicle, but argues the fuel savings garnered would offset the additional cost within 18 to 24 months.

”

Also in June, the Administration, EPA and Department of Transportation (DOT) unveiled details on the proposal for new regulations on emissions and fuel efficiency in heavy-duty trucks as part of a comprehensive push on stemming carbon emissions.

The proposals call for a one-third increase in fuel efficiency for all 2019 and later model year trucks. The diesel exhaust fluid (DEF) and selective catalytic reduction (SCR) technology regulations effective in 2010 have already made diesel vehicles cleaner than some of their gasolinepowered counterparts. The fuel efficiency proposals are essentially meant to “complete the cycle” by addressing what are viewed as extremely fuel-inefficient vehicles—namely, heavy-duty vehicles.

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Climate Change: Regulations Roundup

The EPA is ballparking the cost to comply with the proposal at $12,000 per vehicle, but argues the fuel savings garnered would offset the additional cost within 18 to 24 months.

Either way, don’t get too excited about a voluntary alternative. Firm, non-voluntary regulations are still being proposed and are expected to be released later this summer.

The industry is fairly split on the issue. The proposal is open for comment and won’t be finalized until sometime in 2016.

The goal of the Administration is to reduce methane emissions by 40 to 45 percent below 2012 levels by 2025.

Industry groups argue that regulations are costly and onerous versus voluntary compliance and incentives. However, as critics point out, less than one percent of industry companies reportedly take part in the EPA’s voluntary program.

Methane Emissions Another part of the climate change proposals was the proposed regulation on methane emissions—primarily from the agricultural and natural gas industries—that was released in 2014. However, there is a new proposal being considered in the form of the EPA’s Natural Gas STAR program. Essentially, this program is a voluntary alternative to proposed regulations for oil and natural gas companies. The partnership encourages these companies to adopt cost-effective technologies and practices that will improve operational efficiency and reduce methane emissions.

Industry groups argue that voluntary programs are better than new regulation. For one, it’s in the financial best interest of producers to capture the leaks responsible for the emissions in the first place. This is certainly true of upstream producers, however it is not the case with local utility companies. Since the ratepayers pay for the lost gas, the local gas companies don’t have a financial incentive, but rather a disincentive to repair smaller leaks. As seen over the past year, these small leaks are a lot more prevalent than previously thought. Boston, for example, is leaking an estimated 90 million dollars’ worth of natural gas annually—and that’s just the City of Boston, not the State of Massachusetts.

Power Plant Emissions On August 3rd, President Obama unveiled the next portion of the Administration’s Climate Change Proposal—new regulations on power plant emissions that aim to drop carbon emissions to 32 percent below the 2005 benchmark levels by 2030. This is the first time federal regulations would cap off power plant emissions, but the Administration and EPA cite the Clean Air Act as expressly giving them the authority to do so.

The earlier iterations of the proposal—before it became official—included implications that a switch to natural gas from coal would be the main catalyst of dropping plant emissions. That makes sense, given that natural gas would generate about 50 percent less emissions, which is obviously a significant move forward. However, the official proposal from August stipulates that a large portion of the reductions must come from renewable sources – wind, solar or nuclear.

The Clean Power Plan will lead to 30 percent more renewable energy generation in 2030. The current level of renewable energy generation is around 13 percent.

FUELS & SUPPLY

Climate Change: Regulations Roundup

This stipulation has the industry as well as some legislators up in arms. Not only is this perceived as another intended nail in the coal industry’s coffin, but the billions in infrastructure cost to move to renewables in the time frame allotted is extremely problematic. The EPA projects the annual cost of the new regulations at $8.4 billion annually, but argues that it is essentially offset by the projected benefits (including projected health benefits), which are estimated to be between $34 and $54 billion annually.

California and the Northeast, for example, have been promoting, regulating and subsidizing moves to trim carbon emissions and are leaning to more renewable energy sources.

California officials say they’re right in step with the new proposals. They say the state is on target to exceed the reductions required over the next two years with the existing plans in place. In Massachusetts, there’s a ballot initiative proposed for 2016 to meet 100 percent of the Commonwealth’s electric load by the year 2050 with renewable and alternative energy generation.

The plan stipulates that states map out and ratify a formalized plan indicating how they will hit the new emissions targets by 2018 and the initial projected targets by 2022.

States in the Northeast and Mid-Atlantic regions have been working to slash the sulfur content in heating oil. By July 2018, heating oil dealers in all but a few of these states will be loading their trucks with an ultra-low sulfur heating oil (15 ppm). The environmental benefits from these dramatic reductions in sulfur content move the heating oil industry into a much better position for transitioning to a low-carbon future. Additionally, most of the Northeast states have biodiesel products available at the rack.

Several states are already filing suit, arguing the proposal far exceeds the authority granted by the Clean Air Act, and legislators from coal states are predictably outspoken about refusing to adopt the measures. Given that the Supreme Court has upheld suits against proposals based on the Act in recent months, there is some doubt about which proposals, if challenged, have much chance of being overturned or amended.

In states where shale plays and drilling are major sectors, they’re already adapting much tougher methane regulations on wellheads, transfer stations, and pipelines.

State Initiatives

At the End of the Day

On a local view, states and regional partnerships adapting stronger environmental protection and climate change regulations that cut emissions and promote Clean Air Act initiatives. They’re looking at what works best for their states as well as what helps drive their economies and tourism industries.

It remains to be seen how the final versions of each proposal shake out over 2016 before there’s a real clear picture of how the U.S. will be regulating the move to combat climate change. n

Ed Burke Ed is chairman of the board of Dennis K. Burke, Inc., one of New England's leading suppliers of diesel fuel, gasoline and motor oil products. Headquartered in Chelsea, Massachusetts, the fuel distributor provides services to commercial, industrial and municipal accounts in eleven states. The family-owned business has over 50 years of reliable service. Contact Ed at: email support@burkeoil.com; phone 617.884.7800.

For every state that is pushing back on the regulations in order to protect their state, it seems there is another state moving to embrace or even exceed the proposed targets.

In short, many states are already moving in the right direction. The U.S. electric sector has already achieved almost half of the carbon dioxide emissions reductions that the Clean Power Plan aims to achieve.

FMNMagazine

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Global Crude Balance:

A Rule of Three, and the Rules of the Three

by Dr. Nancy Yamaguchi

FUELS & SUPPLY

The Rule of Three in the Global Crude Balance Soviet Union, not necessarily because they are inherently funnier, but because they are the forces that now move the global crude supply and demand balance. In addition, their crude exports are hugely influenced by government policy, though in different ways and for different reasons. Thus, we will examine not only the “Rule of Three,” but the “Rules of the Three.”

things that come in threes are inherently funnier, more satisfying, or more effective than things that occur on their own or in other number groupings. It is also easier to understand and remember information and to discern patterns within a group of three. This article focuses on three key areas: North America, OPEC and the Former

”

18 16

11

Dollars per Barrel

There are several changes in regional crude markets that have not yet been fully absorbed in the global balance, and they argue for a continuation of low prices.

Figure 1: Rise and fall of crude prices and Brent-WTI price differential

6 5

0 -1

-2

-1 -1 -1

-1 -1 -2

-2 -1

-2 -2

-1 -2

-2 -3

0

-1

Dollars per Barrel Differential

“

In writing, the “Rule of Three” refers to the idea that

0

-3

The crude price trend: heading down In late 2014, the author wrote a column in Fuel Marketer News noting that Saudi Arabia seemed willing no longer to restrain its crude production to support prices, that it was “restraining from restraint,” and that “a continued weakening of oil prices is likely.” This decline did indeed come to pass, with spot prices for West Texas Intermediate (WTI) and Brent crudes both falling below $48/b in January 2015. Prices began to recover during the January – May 2015 period, leading many to believe that the supply and demand were in balance. Prices now are in decline again, however. There is a huge range of opinion on why this is occurring, how low prices can go and

when/whether they will rebound. In the author’s opinion, the low prices can be expected to persist. There are several changes in regional crude markets that have not yet been fully absorbed in the global balance, and they argue for a continuation of low prices. Some of the changes were already occurring or in the works, while others are new forces. If these changes filter through, oil prices should remain low in the second half of 2015.

Figure 1 presents the long term spot price trend on an annual average basis for WTI and Brent crudes, along with the Brent-WTI price differential. Historically, the prices of these two crudes tracked

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one another closely, and Brent crude prices were slightly below WTI prices.

As U.S. crude supplies burgeoned, the price relationship broke, and WTI prices fell below Brent prices by a considerable margin. In 2011, Brent prices averaged over $16 per barrel above WTI prices. In 2012, Brent prices were even stronger in relative terms, with a price premium of over $17.50/b.

As crude prices began to subside in 2013, 2014 and 2015, the Brent-WTI differential also narrowed, falling to $10.73/b in 2013, $5.77/b in 2014, and $4.61/b on average for the first half of 2015. The glut of crude in the new shale plays is being absorbed more efficiently in the market.

FUELS & SUPPLY

Global Crude Balance: A Rule of Three, and the Rules of the Three

North American crude net imports continue to fall

Figure 2: Spot crude prices: not yet at their January 2015 lows

Dollars per Barrel

The increase in North American crude output is causing a monumental change in the global crude balance. According to the U.S. Energy Information Administration (EIA), U.S. crude production has risen from 5.0 million barrels per day (mmbpd) in 2008 to 9.5 mmbpd during the January – April period of 2015, a rise of 4.5 mmbpd. The EIA’s estimate of demand (product supplied) fell from 19.5 mmbpd in 2008 to 19.23 mmbpd during the January – April 2015 period, a drop of 0.27 mmbpd. Roughly speaking, therefore, the United States has eased the global supply-demand balance by 4.8 mmbpd.

Oct-2014

Nov-2014

Dec-2014

Jan-2015

Feb-2015

Mar-2015

Apr-2015

May-2015

Jun-2015

As the author discussed in the Spring 2015 issue of Fuel Marketer News, however, U.S. crude exports are regulated under U.S. federal policies including the Export Administration Requirements. These policies largely were responsible for the widening of the Brent-WTI crude price differential. With limited export avenues, the bulk of the new crude supplies had to be refined domestically. This backed out a massive volume of imported foreign crudes. In 2005, the U.S. imported approximately 10.13 mmbpd of foreign crude.

This has fallen to 7.26 mmbpd during the first five months of 2015, a drop of 2.87 mmbpd. To place this in the global context, this is larger than the total volume of exports in 2014 from Iraq and the United Arab Emirates, both of which exported approximately 2.5 mmbpd of crude in 2014. In fact, the reduction in U.S. imports since 2005 is larger than the year 2014 crude exports of all OPEC countries except for Saudi Arabia, which exported 7.15 mmbpd last year.

Jul-2015*

Figure 2 provides a closer look at recent monthly average prices from October 2014 through July 2015 (prices available through July 27th). The steep decline can be seen in the October through January period, followed by the recovery from January through May 2015. From June through July, prices have been in retreat. WTI prices averaged $51.69/b during the July 1 – 27 period, but the decline over the course of the month has been relentless: July 1 spot postings of $56.94 fell to $47.17 on July 27th. Note, however, that prices have not yet hit the lows seen in January, which were at approximately $44/b. Although the price collapse in January was viewed as a severe market correction, there is no reason theoretically why prices cannot fall to $44/b again in the second half of 2015. Market perceptions of what constitutes a “normal” or “sustainable” oil price continually fluctuate. When prices were $40/b, a rise to $100/b seemed phenomenal, perhaps impossible, and yet it happened. When prices were $80/b, a drop to $50/seemed abnormal. Now, the market seems to feel that $50 – $60/b is normal and sustainable, but $40/b is certainly possible again.

FMNMagazine

Figure 3: The widening Brent-WTI price differential stimulated U.S. refined product exports

kbpd

Dollars per Barrel Brent-WTI

Crude supply and demand are seeking a new balance, and it takes very little to start a price movement up or down in the futures market. On the demand side, for the Organisation for Economic Co-operation and Development (OECD), demand is expected to be more or less flat in 2015 – 2016, in spite of low prices that have tempted consumption. The European market is in a delicate state awaiting the outcome of Greece’s scheduled debt repayment to the European Central Bank on August 20. Every small step toward an agreement strengthens optimism in Europe. Every small hint that Greece could exit the Euro causes a slump. Demand growth continues in the nonOECD countries, but at a slower pace. Chinese demand growth in particular is slowing down, though recent stock market jitters have eased. The reduction in crude prices is a mixed bag.

Consumer prices will be falling, but so will many commodity and asset values, adding to investment risk. The lower price outlook cuts into revenues in the three key producing areas considered here: North America, OPEC and Russia.

In addition to the import substitution behavior, the growth in U.S. crude production caused a surge in refined product exports, which climbed from 1.0 mmbpd in 2005 to a record-high 2.76 mmbpd in 2013 and 2014. Figure 3 plots the Brent-WTI crude price differential alongside the trend

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Global Crude Balance: A Rule of Three, and the Rules of the Three

in U.S. refined product exports, illustrating the similarity in the shape of the curves. As the price differential widened, more inexpensive domestic crude flowed into domestic refining and there was a sharp increase in exports of surplus products. The price differential peaked in 2012, and refined product exports have gently declined in response.

Figure 4: Drop in prices causes drop in U.S. Rotary

“

Source: Baker Hughes

Yearly Average

average number of directional, horizontal and vertical rigs fell to 106.7, 837, and 157.7 respectively, leaving a total of 1101.4 rigs. There is a widely accepted theory that LTO production should be more price-sensitive and responsive to low prices than conventional oil production, and that the lower prices should shut in some of this production first. This is logical to an extent, since many of these wells are controlled by small to mid-sized drilling companies that make decisions quite nimbly. However, as Figure 5 indicates, horizontal drilling activity remains strong in relative terms. Figure 5 presents the trend in rigs by type in percentage terms. Despite the drop in numbers, horizontal rigs actually increased from 68.5% of the total rigs in 2014 to 76% of total rigs at present. In essence, horizontal rigs increased their “market share” of the U.S. upstream sector. Many of these developments have continuously improved their efficiency, and they are able to remain competitive at lower prices than originally thought.

The horizontal wells in shale plays are highly productive during their lives—once the hydrofracking stage is completed, the wells can continue to produce for years.

*2015 data is Jan.–Aug. 7 average

The drop in crude prices in late 2014 has cut into the number of drilling rigs in the U.S., as shown in Figure 4. According to Baker Hughes, in their indispensable Rotary Rig Count, the number of rotary rigs in the U.S. fell from an average of 1862 in 2014 to an average of 1101 during the portion of 2015 extending through August 7th (Baker Hughes tracks this data on a weekly basis). Figure 4 tracks these averages by rig type: directional, horizontal and vertical. The resurgence of U.S. oil production was made possible chiefly because of the great success in horizontal drilling in shale plays and the resultant boost in light tight oil (LTO) production. Figure 4 shows the tremendous growth in the number of horizontal rigs, which rose from an average of 285 in 2006 to a peak of 1275 in 2014.

In contrast, the number of vertical rigs fell from 980 in 2006 to 376 in 2014. The number of directional rigs declined from an average of 384 in 2006 to 211 in 2014.

With limited export avenues, the bulk of the new crude supplies had to be refined domestically. This backed out a massive volume of imported foreign crudes.

”

Figure 5: Despite the recent price drop and drop in rig

count, horizontal rigs have continued to grow as a percentage of total rigs

Percentage of Total

Number of Rigs

Rig Count (by type, 2006–2015)

During the lower price regime of the January – August 7 period of 2015, the number of all three types of rigs fell. The FMNMagazine

Source: Baker Hughes

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Yearly Average

*2015 data is Jan.–Aug. 7 average

FUELS & SUPPLY

Global Crude Balance: A Rule of Three, and the Rules of the Three

Therefore, U.S. crude production is expected to remain on an upward path in the near term, even with low prices. In North America, Canadian production also is continuing to grow, more than offsetting the decline in Mexican crude output.

The Mexican government hopes to reverse its production decline,finally changing its constitution and enacting laws to allow foreign participation in the oil industry. Its first round offering garnered little interest, but it is possible that the government will improve its offerings and tempt investment in the coming years. In total, the gap between North American crude demand and crude supply is expected to continue to narrow. Figure 6 displays the International Energy Agency’s (IEA) near-term forecast of the crude balance through 2016.

As recently as 2007, the supply-demand gap was 11.3 million barrels per day. According to the IEA, this gap was slashed to 5.3 mmbpd in 2014, and it is forecast to narrow to just 4.4 mmbpd in 2016.

Figure 7: OPEC value of petroleum exports as % of total exports, 2014

Iraq Libya Venezuela Kuwait Nigeria Angola Saudi Arabia Algeria OPEC Iran Qatar Ecuador UAE

Figure 6: North America’s crude import

Source: OPEC

“

requirements continue to shrink

mmbpd

the UAE. Qatar is the largest exporter of liquefied natural gas (LNG) in the world, exporting 103.4 billion cubic meters in 2014, according to British Petroleum. The UAE also is an LNG exporter, and it has worked to diversify its economy to protect it from oil price volatility. The UAE has become a major financial center. Oil export revenues also play a relatively small role in Ecuador. Ecuador has a much larger population than Qatar and the UAE, enabling a more diverse economy and a larger service sector. Its geographic location also allows the development of a significant agricultural sector.

Source: International Energy Agency (IEA)

Petroleum contributed 54% of Iran’s export revenues in 2014, and Iran also is a major natural gas In half of the OPEC producer, though its goals countries, petroleum exports to become an exporter of provide 90% or more of total LNG have not quite been export revenues. Iraq and achieved. International sanctions have been the Libya offer the most extreme main reason behind the examples, with petroleum reduced oil revenues. exports accounting for 99% According to OPEC, Iran and 98% respectively of exported 2537 kbpd export revenues. (thousand barrels per day) of crude oil in 2011, and this was slashed to 1109 kbpd in 2014. As this issue of Fuel Marketer News goes to press, the possibility of a lifting of sanctions is at the forefront of the news. The possible re-entry of Iranian crude to the greater market could exert downward pressure on oil prices. Although the “Iran Nuclear Deal” has not been finalized, and the lifting of sanctions would be selective, many countries outside the U.S. already are behaving as though the sanctions will be gone. Most analyses accept that Iranian crude

*Forecast

OPEC Disunity The OPEC countries are well known for having their oil resources controlled by state-run companies, and oil revenues play a critical role in the operating budgets of the governments. Figure 7 displays how important petroleum export revenues are as a percentage of total export revenues among OPEC countries. In half of the OPEC countries, petroleum exports provide 90% or more of total export revenues. Iraq and Libya offer the most extreme examples, with petroleum exports accounting for 99% and 98% respectively of export revenues. These two countries also are examples of places where ruinous war and violence have stifled growth and diversification of the economy, leaving oil as the only reliable hard currency earner.

At the other end of the spectrum, extensive natural gas resources are partly responsible for the relatively low contribution of petroleum to export revenues in Qatar and FMNMagazine

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FUELS & SUPPLY

Global Crude Balance: A Rule of Three, and the Rules of the Three

14,208 kbpd in 2013, to 13,667 kbpd in 2014. Crude exports to North America fell dramatically, as would be expected, dropping from 5841 kbpd in 2010 to 3148 kbpd in 2014.

Exports to Europe fell from 4274 kbpd in 2010 to 3784 kbpd in 2014. Exports to Latin America have stagnated, and it is possible that they will decline if Brazil raises its production as planned. At the present time, the only growth-oriented market outlet is other markets in the Middle East and Africa.

production could rise by 0.5 mmbpd to 1.0 mmbpd within a matter of months if sanctions were lifted.

Saudi Arabia accounts for nearly one third of OPEC crude production, and Unlike the U.S., Russia is petroleum exports account a major crude exporter, for 76% of export revenues.

Saudi Arabia is also a and its crude transport significant producer and infrastructure has consumer of natural gas, and immense—and growing— it has diversified its economy reach. Many former Soviet by building a number of states still rely on oil and massive petrochemical gas supplies from Russia, plants to add value to its keeping them subject to hydrocarbon resources. As Russian energy politics. the largest producer, largest exporter, and the country with the largest spare production capacity, Saudi Arabia historically has played the role of market balancer within OPEC. When Saudi Arabia indicated in late 2014 that it would alter its policy to defend market share rather than price, prices fell immediately. According to the International Energy Agency, OPEC production rose from an average of 30.28 mmbpd in 2014 to 31.71 mmbpd in June of 2015, a rise of 1.43 mmbpd.

Most of the increase came from Saudi Arabia and Iraq.

However, with the exception of Iran and Saudi Arabia, little spare production capacity now remains.

”

Russia: Steady despite sanctions The fixation on North America’s production boom and events in the OPEC countries sometimes causes us to overlook another critical force in the global crude balance: Russia. Much of the West’s attention on Russia has focused on politics, “Russian adventurism,” and the EU sanctions. But Russia is doing its best to work around the sanctions and its oil exports are expected to continue. Unlike the U.S., Russia is a major crude exporter, and its crude transport infrastructure has immense—and growing— reach. Many former Soviet states still rely on oil and gas supplies from Russia, keeping them subject to Russian energy politics. Some land-locked refineries have little or no access to any other crude oil. Russia also is extending its oil trade into the Mediterranean, Central Asia, China and east to the Pacific Ocean. Russia’s goal is to send 30% of its crude exports to Asia by the year 2020. Many Asian countries view Russian crude as an important alternative to OPEC crude.

Figure 9 presents IEA’s data on Russian crude exports by export mode. The massive Druzhba Pipeline is a mainstay exporter to European refineries, transporting over a million barrels per day of crude. Although the export volumes appear relatively stable at 1.0 – 1.17 mmbpd, the loadings and off-takes are often highly political, and customers have complained that

Figure 8: Recent decline in OPEC crude exports

Figure 9: FSU crude exports by mode: Rise of seaborne exports

mmbpd

kbpd

Saudi Arabia had announced recently that it planned to raise its official crude selling price to Asian consumers. The price increase turned out to be less than anticipated, suggesting that the protection of market share remains the priority. Asia remains the key market for OPEC crude exports, as shown in Figure 8, but even Asia has imported less crude from OPEC in recent years. Exports to Asia fell from 14,385 kbpd in 2012, to

Source: OPEC

Source: International Energy Agency (IEA)

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Russia will direct its oil flows in ways that allow it to exert political and economic pressure— the “oil as a weapon” argument. Russia views the European crude market as saturated, at least for the time being, and it has placed increased emphasis on Asia and the Pacific.

Seaborne crude exports rose from 4.63 mmbpd in 2007 to 5.22 mmbpd in 2010, stayed in the range of 4.7 – 4.8 mmbpd from 2011 through 2014, then rose to 5.29 mmbpd during the first quarter of 2015. Most of Russia’s older producing oilfields are in Western Siberia, but the desire to raise production and diversify export markets has increased development along the Arctic Circle, in Eastern Siberia and in the Russian Far East.

“

”

Russian policy sets the agenda for both upstream and downstream oil, and a complex set of taxes and export duties nudge exports of crudes and refined products in the preferred directions while channeling funds to the government.

In spite of international sanctions against Russia for its destabilizing military activity in the Ukraine, Russia has been successful in raising exports of both crude and products.

According to the IEA, Russia’s total crude exports rose to 6.61 mmbpd and product exports rose to 3.6 mmbpd in the first quarter of 2015, up from 6.1 mmbpd and 3.24 mmbpd respectively in 2014. This occurred despite the reduction in crude prices in late 2014 and early 2015. Many oil-related projects are go-it-alone, and some are joint ventures with China, which opposed the EU sanctions against Russia. Russia is managing to keep crude production roughly stable. Russia also has invested hugely in its refining industry in order to create a higher-value output slate and to switch to EURO 5 standard fuels, which allows it market entry essentially anywhere in the world

According to Prime Minister Dmitry Medvedev in his opening remarks at the March 2015 “Meeting to discuss draft Russia’s Energy Strategy until 2035,” published by the Russian Ministry of Energy:

“The fuel and energy complex accounts for over a quarter of the gross domestic product, almost 30 percent of the national budget, more than two-thirds of export revenue and a quarter of total investments.”

Russian policy sets the agenda for both upstream and downstream oil, and a complex set of taxes and export duties nudge exports of crudes and refined products in the preferred directions while channeling funds to the government. There is a Mineral Extraction Tax at the point of crude production, excise taxes on the consumption side that favor the rapid adoption of EURO 5 standard fuels, and a series of export duties on crude and types of petroleum products that can fine tune the patterns of trade while generating revenue. Although international sanctions are making it difficult to raise capital, many developments are marching forward nonetheless. Also, Russian demand is expected to remain flat and perhaps even decline slightly in the near term, freeing up oil for export.

The Russian government is back to being heavily involved in all aspects of the oil industry. After the collapse of the Soviet Union, private sector and foreign companies became increasingly FMNMagazine

active, and they helped rejuvenate the industry.

Since 2000, however, the government has gradually retaken control. Some assets have been directly renationalized. As a recent example, the Russian government seized the assets of mid-sized oil company Bashneft in 2014. With so many ambitious plans, and with the energy industry contributing so much to the budget, the Russian government appears unwilling to leave much to chance.

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Global Crude Balance: A Rule of Three, and the Rules of the Three

Conclusion: The rules of the Three and continued low prices

the three, and the exporters in OPEC and the former Soviet Union because the oil export revenues are critical to government budgets and national prestige. The Rule of Three allows us to focus on these regions as the key determinant of the future crude supply and demand balance. The Rules of the Three allow us to conclude that low oil prices will continue in the near term.

The direction of the global crude balance is being shaped largely by events in North America, OPEC and the Former Soviet Union (FSU). As Figure 10 illustrates, these big three regions accounted for 67.4% of global crude supply in 2014, according to the IEA. North America is cutting most significantly into the market share of the exporting countries. In 2007, North America accounted for 16.7% of global crude supply. This fell to 16.1% in 2010 before rising strongly to 20.1% in 2014. The FSU accounted for 14.9% of global supply in 2007. This rose to 15.3 – 15.5% in 2010 – 2012, but it receded back to 14.9% in 2014. Overall, OPEC’s role in global crude supply has fallen from 36.1% in 2008 to 32.4% in 2014.

Suppliers in the rest of the world also saw a slight decline in share, which fell from 33% in 2007 to 32.6% in 2014.

In each region, the impact on crude trade is strongly influenced, if not directly controlled, by government policy. For this reason, this article has noted both the “Rule of Three” and the “Rules of the Three.” In the U.S., market factors and technological advances have given birth to the Shale Boom.

But the rules in place severely restrict exports of crude oil.

Consequently, import substitution has reshaped the pattern of crude trade, refinery utilization has soared among refineries with access to discounted crude, and product exports have surged. Among OPEC countries, the rules concerning production quotas and market discipline largely have fallen by the wayside as individual countries pursue their own agendas and focus on maintaining market share. Saudi Arabia appears determined to maintain production at high levels. Iranian exports may rise if sanctions are eased. These policies keep a lid on oil prices. In Russia, the rules have changed, and the foray into privatization has been replaced by a tightening government grip. Russia is determined to keep its oil flowing and to demonstrate that it is not impeded by sanctions. All three regions have incentive to keep crude production high: the U.S. because it remains the net importer of the three, and the exporters in OPEC and the former Soviet Union because the oil export revenues are critical to government budgets and national prestige. The Rule of Three allows us to focus on these regions as the key determinant of the future crude supply and demand balance. The Rules of the Three allow us to conclude that low oil prices will continue in the near term. n

Percentage of global crude supply

Figure 10: Changes in source of global crude supply

Source: International Energy Agency (IEA)

In each region, the impact on crude trade is strongly influenced, if not directly controlled, by government policy. For this reason, this article has noted both the “Rule of Three” and the “Rules of the Three.” In the U.S., market factors and technological advances have given birth to the Shale Boom. But the rules in place severely restrict exports of crude oil. Consequently, import substitution has reshaped the pattern of crude trade, refinery utilization has soared among refineries with access to discounted crude, and product exports have surged. Among OPEC countries, the rules concerning production quotas and market discipline largely have fallen by the wayside as individual countries pursue their own agendas and focus on maintaining market share. Saudi Arabia appears determined to maintain production at high levels. Iranian exports may rise if sanctions are eased. These policies keep a lid on oil prices. In Russia, the rules have changed, and the foray into privatization has been replaced by a tightening government grip. Russia is determined to keep its oil flowing and to demonstrate that it is not impeded by sanctions. All three regions have incentive to keep crude production high: the U.S. because it remains the net importer of FMNMagazine

Dr. Nancy Yamaguchi Nancy is an author and petroleum industry expert specializing in the advanced analysis of energy markets. Dr. Yamaguchi is the President of Trans-Energy Research Associates, Inc. focusing on a wide spectrum of fuel related issues such as economics and the environment. She possesses a strong interest in global oil industry, including supply, demand, trading trends, as well as transport, refining, product blending, alternative and reformulated fuels, product quality and price behavior. Dr. Yamaguchi can be reached at nyamaguchi@trans-energy.com.

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Down, but not out?

Restoring diesel’s damaged reputation in Europe Integer Research, an independent research organization analyzing the global emissions control market, takes a look at what measures are being taken to lessen diesel’s harmful effects.

Can diesel’s damaged European reputation be repaired?

Recent news coverage in France, UK, Germany and other parts of Europe regarding harmful emissions levels has resulted in diesel fuel receiving a very public shaming. Headlines across newspapers and websites have been quick to emphasize the negative impact diesel engine emissions have on our environment and health. Particular attention has focused on passenger cars and SUVs, segments where diesel accounts for more than half of all vehicle sales in many countries in Europe.

However, this must also be balanced with an awareness of how the automotive industry has been working with governments and international bodies to achieve significant progress through global legislation and new emissions reduction technologies—all of which is helping diesel clean up its act.

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The London Assembly (the principal local government body for London, UK) among other European authorities has been at the spearhead of coverage against the use of diesel, recently releasing a policy document entitled “Driving Away From Diesel.” The document recommends the evaluation of the timeline for the compliance with air pollution limits, reviews of the current plans for Ultra Low Emissions Zones (ULEZ), and the review of the Vehicle Excise Duty to reflect pollutants such as nitrogen oxides (NOx) particulate matter (PM) and carbon dioxide (CO2) among other recommendations. While many of the views are solid, there are developments within diesel vehicle technology and modern environmental legislation that are making progress in these areas.

FUELS & SUPPLY

Cleaner emissions Contemporary diesel vehicles have massively reduced NOx and PM emissions compared to their predecessors. European diesel emissions legislation has significantly reduced both NOx and PM from diesel vehicles over the course of several iterations of the standards. The recently implemented Euro VI legislation has prompted the most significant and important strides to date. For instance, legislation for medium- and heavy-duty vehicles has driven to a drop of 50% of PM, and 80% of NOx when compared to the previous Euro V legislation, and a fall of over 97% and 95% respectively since emissions legislation was first introduced in 1988.

“

Diesel engines produce considerably less CO2 than gasoline per mile, and are far more fuel-efficient. European car manufacturers need the efficiency benefits of diesel to meet the 2021 requirement of 95 grams of CO2 per kilometer and are therefore committed to addressing the concerns about real world driving emissions.

Down, but not out? Restoring diesel’s damaged reputation in Europe

Better testing The London Assembly criticized a well-known weakness of traditional regulations: the gap between performance during the test procedures (certification) and actual emissions when vehicles are driven by customers. Improvements in vehicle emissions testing procedures and standards are underway and evolving. The European Commission has responded to the need for more stringent “real-world” driving tests.

Portable Emissions Measuring Systems (PEMS) have also been included in new testing, using a variety of driving conditions, speeds and engine loads. Further tests are expected to develop, and the commission has made it a priority to ensure these tests are as strong and rigorous as they can be when they are introduced for cars in 2017. PEMS testing is already in place in Europe for medium- and heavy-duty trucks.

Greenhouse gas targets Finally, diesel makes up a vital component of the fuel mix to meet impending greenhouse gas (GHG) limits and fuel economy requirements.

Diesel engines produce considerably less CO2 than gasoline per mile, and are far more fuel-efficient. European car manufacturers need the efficiency benefits of diesel to meet the 2021 requirement of 95 grams of CO2 per kilometer and are therefore committed to addressing the concerns about real world driving emissions.

It is clear that emissions from diesel vehicles present problems, and that these need to be rigorously challenged.

But it is important to acknowledge that significant efforts across the industry continue to be made to address these issues while further progress in global legislation and emissions reduction technology is underway.

Integer Research is an independent provider of specialist market research and analysis, conferences and events and tailored consultancy services across three core industries: Environment & Emissions; Fertilizers & Chemicals and Wire & Cable. Headquartered in London, UK, and with offices around the world, Integer offers a variety of information services to meet any client need. From bespoke research projects to in-depth publications and subscription services or attendance at one of our leading industry events, Integer Research is the ideal partner for any company looking to better understand the latest market developments, the major players and future industry challenges and opportunities. www.integer-research.com FMNMagazine

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In recent years, refiners have invested heavily in new capacity to make a range of products known as middle distillates, including diesel, jet fuel, heating oil and kerosene. The widespread expectation was that developing countries would need more of these industrial fuels, while industrialized nations would move from gasoline to diesel as a consumer transportation fuel. The added demand did not materialize.

Refiners are now competing to sell their diesel onto the global market, pushing down prices. Saudi Arabia more than doubled its diesel exports in May from April. Even China’s net diesel exports rose to 160,000 barrels a day in June, a record, according to Citigroup Inc. “All those people sitting around boardrooms for five years talking about how diesel is going to be the fuel of the future and how they’re going to invest in diesel, well, there you go,” said Mark Anderle, director of supply and trading at TAC Energy.

Nicole Friedman, Wall Street Journal, July 22, 2015

READ MORE

at fuelmarketernews.com

FOCUS:

EMV

EMV Costs, and Perhaps a Benefit or Two

by Maura Keller and Keith Reid

RETAIL OPERATIONS

October 1, 2015, is the end of an era.

On that date, the decades-old payment ritual of signing and swiping credit cards will be replaced with EMV technology—potentially saving consumers, banks, and retailers thousands of dollars in credit card fraud.

The term “EMV” is derived from EuroPay, MasterCard and VISA, the original backers of this standard. EMV cards are currently in use in Europe, Canada and in many other regions.

Currently, the credit cards in use in the U.S. have a magnetic stripe on the back that is encoded with two “tracks” worth of data. These tracks are in a standard format and can be read by standard magnetic stripe readers. The data on the tracks is not protected by any type of encryption. Because this data is not protected in any way and because magnetic stripe readers and writers are inexpensive and easily acquired, the track information from one card can be skimmed by a hardware or software device.

EMV is the term for the global standard for integrated circuit (IC) cards utilized for the purpose of authenticating credit and debit card transactions.

EMV cards typically have both a magnetic stripe as well as an integrated circuit (“chip”).

These cards can be read by any standard magnetic stripe reader by swiping them, but they can also be inserted into an EMV terminal. Contacts in the terminal create an electrical connection with the chip on the card. When used in EMV mode, the card stays in the reader for the duration of the transaction.

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“The U.S. is the last major market to adopt EMV standards for payment cards, however, other countries have seen significant reduction in fraud related charges as a result of adopting EMV,” said Michael Cerminaro, president and CEO of Allied Brand Capital. As an example, EMV Chip-and-PIN has been highly successful reducing domestic fraud in the UK. Since 2004, domestic fraud losses on UK-issued payment cards have fallen by over 34%.

EMV, also referred to as Chipand-PIN, has successfully thwarted the primary fraud losses it was designed to prevent—counterfeit and lost or stolen card fraud.

Allied Brand Capital is focused upon building collaborative solutions to assist petroleum retailers with their EMV migration needs. This includes working directly with many of the leading equipment manufacturers to provide costeffective solutions.

fuelmarketernews.com

FOCUS:

EMV

RETAIL OPERATIONS

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EMV Costs, and Perhaps a Benefit or Two

Liability Shift As part of the EMV rollout in the U.S., petroleum retailers must be EMV compliant inside their stores by October 1, 2015, and in their forecourt via their fuel dispensers by October 1, 2017.

One key component for retailers, as it pertains to EMV compliance, is its accompanying liability shift, which means that those merchants (or retailers) using non-EMV compliant POS devices that choose to accept transactions made with EMVcompliant cards assume liability for all transactions at their site that are found to be fraudulent. Currently, payment card issuers take the loss for any counterfeit or other fraudulent charges.

As Joe O’Brien, vice president of marketing at Source North America Corporation explained, EMV compliance will have a direct effect on retailers, primarily because they need to make sure they have the POS terminal and infrastructure necessary to handle the increased data required for proper processing of EMV transactions, while still having the equipment ready to accept magstripe cards for the foreseeable future.

“EMV transactions with a chip in the card frequently have a few additional approval steps with older credit card processing systems, so the consumer may notice a bit of a delay at the register—nothing that would make you think twice about it though,” O’Brien said. “Additionally, consumers will become more acquainted with always keeping the card in their possession—rather than handing it over to a cashier to run it for them.”

It’s important to remember that the migration to EMV is not a mandate in the traditional sense. As Paige Anderson, director, government relations at NACS, explains, it is the credit card companies imposing the October 1, 2015, deadline for EMV— not a government regulator. Also, most POS/card readers will be able to accept both magnetic stripe cards and cards with the embedded chip. So customers who haven’t received their new credit or debit card with the embedded chip will still be able to use their cards and will be accepted by most retailers.

“The only change that happens on October 1, 2015, is that the liability for fraud shifts to the retailer if the retailer has not changed over their systems to EMV,” Anderson said. “In addition, banks need to have 75% of their cards EMV capable for the liability shift to happen. Some revised industry numbers have indicated that less than 25% of cards will by EMV by October 1.”

“The transaction will still be completed, but the retailer has now assumed the full liability of any subsequent theft related to this transaction—including future losses—if the credit card info is stolen and used elsewhere,” O’Brien explained. “Or the retailer could opt not to accept EMV cards—this is entirely impractical for most ongoing businesses of any size. In some ways, it is a bit like taking a calculated risk—why spend $10,000 to cover a risk that you think may only be $5,000 if there is a problem.”

“The transaction will still be completed, but the retailer has now assumed the full liability of any subsequent theft related to this transaction— including future losses—if the credit card info is stolen and used elsewhere,” O’Brien explained.

“Or the retailer could opt not to accept EMV cards—this is entirely impractical for most ongoing businesses of any size.”

Joe O’Brien, Source North America

O’Brien said the people who are compelled to act are major companies that have risk exposure in the hundreds of thousands of dollars and much more. For those retailers that are affiliated with a major oil brand, typically there is a brandspecific payment processing package that the retailer must be connected with—and if this package requires EMV compliance, then the retailer will be compelled to upgrade.

“It is conceivable that some retailers will only make the EMV upgrade for the payment terminals inside the store, and offer mobile payment options at the dispenser,” O’Brien said.

Indeed, as there is no legal requirement to use the equipment necessary to accept EMV chip cards and transmit all the required EMV data at time of purchase, a retailer could simply accept an EMV card and run it through a POS terminal that has old magstripe technology.

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EMV

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RETAIL OPERATIONS

Costs Involved As it pertains to retailers and consumers, EMV is not just about chip cards—it’s about the ability to bring a modern, multifaceted and highly secure payment infrastructure to the U.S. marketplace.

However, there’s no question about it: EMV compliance is going to be expensive.

“The overall spend is going to be something that puts a lot of pressure on smaller dealers and even become something of a significant challenge for larger retailers and marketers,” said Chris Santy, managing director and president of Patriot Capital Corporation. Patriot Capital has been delivering fast and

EMV Costs, and Perhaps a Benefit or Two

Certain newer dispensers have the capability to be retrofitted but many will need to be fully replaced. Site owners should consider the lifespan of their equipment and capabilities of various upgrade kit options in order to avoid regret spend from equipment upgrade limitations on older equipment. The key thing is for retailers to conduct an age assessment of their dispensers and POS terminals. This may help determine which upgrades will have to take place.

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“Retailers need to contact their pump and systems providers now and begin specifying, planning and estimating their upgrade,” Anderson said. “When prioritizing what stores to upgrade first, look at the most fraud-prone stores as the first tier of stores to be upgraded. With interest rates predicted to go up, it also makes sense to start looking for financing now while rates are at an all-time low.”

“Beyond the cost of new equipment or equipment upgrades, there are added implementation costs,” Anderson said. “For example, usually two site visits are needed, with a store down three to five days—not selling fuel. EMV requires much more data capability than magnetic stripe readers (MSR) and oftentimes new island communications lines are needed to be installed, which means new conduits need to be installed and soil testing is required when concrete is broken apart.

An estimated industry cost is over $3 billion, plus lost sales.”

Paige Anderson, NACS

affordable financing solutions to the convenience store and commercial petroleum industry since October 2000.

“I don’t think that anybody but the very biggest of the big companies in our industry is going to be able to look at this and not come up with a strategic plan for how they are going to address the capital side.”

Luckily retailers have options in terms of complying with the requirements. * Payment Card Industry Data Security Standards (PCI DSS)

Systems upgrades can cost around $20,000 to $30,000 per site in equipment.

New dispensers can cost up to $80,000.

“Beyond the cost of new equipment or equipment upgrades, there are added implementation costs,” Anderson said. “For example, usually two site visits are needed, with a store down three to five days—not selling fuel. EMV requires much more data capability than magnetic stripe readers (MSR) and oftentimes new island communications lines are needed to be installed, which means new conduits need to be installed and soil testing is required FMNMagazine

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when concrete is broken apart. An estimated industry cost is over $3 billion, plus lost sales.”

Both retrofitting and installing new dispensers are also options for retailers. Although there are a few retrofit options for retailers, Anderson said many retailers are making the decision to purchase new dispensers with the new readers included.

“It really is up to each retailer to decide what makes the most sense for their company—with the goal of maximizing value,” Anderson said.

Some retailers may decide to only accept cash, perhaps at selected sites.

Similarly, as O’Brien touched on previously, while the market penetration is still developing mobile commerce such as that facilitated by P97 (see page 96), the acceptance of credit through mobile devices can be allowed where the mobile service provider provides the secure connection and assumes liability.

O’Brien stressed that the costs for implementing EMV will vary widely.

“An individual that takes credit cards for a personal business can get a device for under $500, but fuel retailers and c-store operators can’t take this inexpensive option because they need to have their credit card processing tied in with the software system for inventory control,” O’Brien said. “So an upgrade of equipment can run from $2.500 to $7,500 for a single site and then it gets to be much more of a serious investment if the decision is made to upgrade equipment at the fuel dispenser island.”

As far as borrowing goes, the times have not been better, relatively speaking.

“There hasn’t been as much money on the street since 2007, and it’s

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FOCUS:

EMV

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RETAIL OPERATIONS

EMV Costs, and Perhaps a Benefit or Two

“If you are going to be forced to do it, this is almost a perfect opportunity to make these upgrades. There’s been a delay in making such investments with the high gas prices and the uncertain economy and lending issues. And now, with gasoline being cheap and volumes being up, it is not a bad time to spend because there’s extra money available. The longer you wait, the worse the lead times are going to become, and the pricing is likely to increase as well. The financing future is always uncertain, so you might as well jump in now while the lending environment is good.”

Len Baccaro, Ascentium Capital

cheap money,” said Len Baccaro, senior vice president sales at Ascentium Capital.

Ascentium delivers finance solutions to the industry through a unique finance platform that helps companies acquire nearly any new or used business asset: industrial equipment, franchise assets, office equipment, software, specialty vehicles, technology and more. “The prime lending rate has been at 3¼ forever and the lending market is wide open,” he continued. “It’s not been nearly as hard to get financing since 2012 or 2013 as it was when the recession first hit. As long as you are not brand-new in business or brand-new to the industry— you’ve been around a year or longer— you should have plenty of access to capital to take care of this using thirdparty money if you do not want to take care of it using cash.”

Upsides for the Expenditures The capital outlays are going to be significant, but they do bring with them some upsides in return.

As Cerminaro explained, EMV should help to reduce payment card fraud across the industry. The retail petroleum industry was exposed to $250 million of payment card fraud during 2014, while the entire retail industry experienced about $8.6 billion in payment card fraud.

“These figures are expected to rise significantly in the future, particularly given the rise in near field communication (NFC) and mobile payments,” Cerminaro said. “Over 80% of consumer payments in the retail petroleum industry are made via some form of payment cards, so as a result, making payment cards secure has to be job one within our industry.”

Cerminaro pointed out that petroleum retailers who upgrade to new EMV compliant POS systems will benefit from better PCI compliance; fewer charge backs from fraud related transactions; improved payment security; building a foundation for emerging NFC payment technologies, such as Apple Pay and Android Pay; and improved image and

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increased card holder confidence at their store.

And, in general, the equipment upgrades can bring with them new marketing, loyalty and merchandising opportunities. Dispensers, for example, can offer better warranties and interactive marketing and media capabilities.

“If you are going to be forced to do it, this is almost a perfect opportunity to make these upgrades,” Baccaro said.

“There’s been a delay in making such investments with the high gas prices and the uncertain economy and lending issues. And now, with gasoline being cheap and volumes being up, it is not a bad time to spend because there’s extra money available. The longer you wait, the worse the lead times are going to become, and the pricing is likely to increase as well. The financing future is always uncertain, so you might as well jump in now while the lending environment is good.”

RETAIL OPERATIONS

EMV Costs, and Perhaps a Benefit or Two

Item

Volume

Estimated Replacement Cost

POS Devices

15,000,000

$6,750,000,000**

Fuel Dispensers

608,000

$10,944,000,000*

Credit/Debit Cards

1,126,800,000

$1,400,000,000**

Ongoing Concerns According to Anderson, beyond the added time and expense to migrate to EMV for the retailer, transitioning to EMV will be an adjustment for customers to learn how to insert their cards into the POS rather than swipe it.

completed all their software enhancements and upgrades to accept EMV transactions. Basically, EMV data requires greater bandwidth and connectivity to work at the transaction speeds we are accustomed to.

“There needs to be extra attention helping the customer become used to the change,” Anderson said. “The fact is there will be customers walking away and leaving their cards in the POS—especially at the pump—and then driving away.

Clearly, customer education is going to be very important and that effort can’t be on the retailer alone. Card brands and banks need to accept their role in educating the consumer.”

“There is some consensus that a retailer/merchant would not be responsible for any liability until the intermediary companies have completed their software work,” Anderson said. “Or that a major oil parent company—that has a dealer or franchisee—would temporarily absorb any liability in that instance.”

Another concern is that some consumers may have a false sense of security with the new EMV cards. Though the new cards will be more difficult to duplicate if stolen and will reduce some fraud, consumers will not receive the full protection of the chip technology without including a PIN as part of the transaction.

O’Brien has learned that some credit card processing companies have not

There also is a concern that there are not enough installers of EMV upgrades and new installations.

“According to a recent Verifone report, they expect some 41% of U.S. payment terminals to be EMV capable by October 2015,” Cerminaro said. “In the retail petroleum industry these early adoption percentages are expected to be significantly lower. The fact is that anyone who places an order today may not get equipment shipped and/or

installed prior to the October deadline.”

The longer retailers wait to upgrade their equipment, the tighter the supply of in stock inventory will be—as demand will most likely exceed near term supply—and the harder it will be to schedule installers in a timely manner.

That point is reinforced by Bob Renkes, executive vice president and general counsel of the Petroleum Equipment Institute (PEI). “We have the same issues as we had with PCI. If you wait until the last minute, there are not enough installers to handle the demand,” he said. “You’re talking 1.1 million terminals.”

Early adoption also affords those companies some potential marketing advantages. As EMV becomes more the norm, and consumers become familiar with the technology and can easily identify EMV compliant sites vs. those still using magstripe technology, it is not unlikely that early adopters will market the enhanced data security aspects versus their competitors. n

*Allied Brand Capital estimates based upon approximately 152,000 retail petroleum locations said to be in the U.S. with, on average, four fuel dispensers per location, at a replacement cost of approximately $18,000 (fully installed). These figures are specific to the retail petroleum industry in the U.S. ** POS Device and Credit/Debit Card figures (sourced from Javelin Strategy & Research) relate to the entire retail industry in the U.S. We believe that the cost to replace all the POS Devices in the retail petroleum industry is approximately $1.52 billion (or over 22% of the total cost to the retail industry).

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New survey shows that more than half of U.S. adults donâ&#x20AC;&#x2122;t know what a chip card is.

As of October 1, 2015, payment networks including VISA and MasterCard will shift responsibility for credit card fraud onto U.S. merchants who do not adopt EMV cards as their primary method of credit card payment. These smart chips embedded within EMV cards are intended to make credit card fraud less likely. While common in Europe and other regions around the world, the technology standard is just now being adopted in the United States.

While payment networks believe in the security benefits of EMV, only 50.8% of consumers feel the technology will make them more secure. More men (58.8%) than women (41.4%) feel chip-enabled cards will make them more secure.

Source: A Harbortouch study published in NACS Daily

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FOCUS:

EMV

THE RATIONALE AND TECHNOLOGY

BEHIND EMV On October 1, the United

States will be the last G20 country that transitions to EMV. Known by its â&#x20AC;&#x153;chip cards,â&#x20AC;? this technology specification named after EuroPay, MasterCard and VISA was built to significantly curb credit card fraud.

Instead of leveraging decades old magnetic stripe cards, EMV uses smart chips that are supposed to be much more difficult to counterfeit.1 This article addresses implications of this technology for merchants, covers some of its technical details as well as explores its potential benefits and pitfalls.

by Vlad Collak

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LIABILITY SHIFT To start, let me address EMV adoption thus far. To date, the highest acceptance of this technology is in Western and Central Europe where over 96% of credit card transactions are processed using EMV. Not far behind are Canada and Latin America with 85% adoption, followed by Africa and the Middle East with adoption rates of 80%. Other parts of the world only leverage it for 27% – 58% of transactions and the United States is far behind with only about 0.12%.3 However, that’s about to change since all major payment networks including VISA, MasterCard, Discover and American Express are taking aggressive measures to make sure the technology is rolled out and adopted.

Specifically, on October 1, the payment networks are shifting liability for counterfeit credit cards to any party that has yet to adopt EMV. For example, if the issuer (a bank for instance) provides its customers with an EMV card (aka chipped card), but the merchant does not upgrade its payment terminals, the merchant will be liable. On the other hand, if the merchant upgrades its terminals, but the issuer does not issue chipped cards, the issuer is liable. This only applies to in-store transactions, while ATM as well as fuel dispenser transactions are exempt until October 2017. The liability shift also does not apply to “card not present” transactions such as online purchases, nor does it apply to fraud committed because of a stolen or lost credit card.5 It may seem that payment networks are strong-arming everyone, but considering that almost half of the world’s credit card fraud happens in the United States even though it

only represents a quarter of all credit card transactions, perhaps such an aggressive push is understandable.

Despite these liability shifts, according to Forrester Research, EMV will not see a broad adoption in the United States until 2020.7

MAGSTRIPE TECHNOLOGY To understand EMV, one should first consider how the “old” magstripe technology works. The magnetic stripe on the back of a card comes with several pieces of data encoded on it. It contains the cardholder’s name and a card number as well as expiration date and the CVV (Card Verification Value).

When a consumer swipes his or her card, the reader extracts this data and sends it for validation to the issuer system (such as a bank). The request is actually not sent directly to the issuer, but is often passed through several systems, including merchant’s point-ofsale system (and often their backoffice), merchant acquirer systems such as First Data or Heartland (and

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sometimes their third party processors), and payment networks such as VISA or MasterCard.3 However, there are several security flaws with this design. First, private data including the card number (aka the PAN—Primary Account Number) is stored on the card in clear text.

Anyone with rudimentary tools and very little knowledge can extract this data from a card. Also, merchants often store PANs on their point of sale (POS) and back-office systems unencrypted, which could potentially enable hackers to steal them as well.

Further, transactions are sometimes transmitted unencrypted (in clear text) over the Internet, leaving them potentially vulnerable to theft.

Because of these various flaws, it’s possible for criminals to steal consumers’ card data and either leverage them to create cloned cards or simply use them online. In a fuel retail environment, thieves could, for instance, gain access to a fuel dispenser’s internal electronics by simply opening the dispenser with a common key, inserting a skimming device and recording the data as cards are being swiped.

FOCUS:

EMV

RETAIL OPERATIONS

EMV TECHNOLOGY In addition to a magnetic stripe, the current generation of EMV cards comes with a chip. The chip is actually a microcontroller, which not only stores data, but also executes logic—like a computer would. As a card is inserted into a chip reader (terminal), it essentially runs a program that performs certain actions while communicating with the reader. In the case of “online”

The Rationale and Technology Behind EMV

transactions (those that are immediately validated by the issuer), the chip first generates a cryptogram called Authorization Request Cryptogram (ARQC). This cryptogam is basically a digital signature that ensures the card is valid (and not cloned) and that the message has not been altered. The cryptogram is then sent to the issuer along with some additional data. When the ARQC is validated by the issuer, the issuer then responds with a cryptogram of its own called the Authorization Response Cryptogram (ARPC), which is

in turn validated by the chip on the card. This exchange typically occurs for merchants who are “connected” to issuers and are “online.” As with magnetic stripe cards, data actually passes through several entities, including merchant acquirers and payment networks. In scenarios where merchants are not online, cards are still validated. This validation occurs only between the card and the payment terminal. It is accomplished by using digital certificates where the issuers and payment networks generate a certificate, which is then put on the card’s chip. Payment terminals then validate this certificate to ensure the card is legitimate and not cloned.3 As one can see, unlike traditional magnetic cards, the chip cards are actually checked for validity, which makes them much more difficult to clone. One cannot simply create a copy of a chipped card with ease and expect to use it for fraudulent purchases. In cases where cards are stolen, the usual signature verification still applies in the United States. In Europe, EMV uses chip-and-PIN, which means that instead of asking for a signature the terminal will ask the user for a PIN.

EMV CAVEATES While EMV is a significant step in the right direction in terms of credit card security, the standard is not intended to be a complete and immediate security solution to prevent ALL credit card fraud. Specifically, EMV’s intent is to curb counterfeit credit cards being used in card-present situations, such as in stores. However, other fraudulent credit card uses and exploits will remain largely unsolved for a while.

This was apparent when Europe rolled out EMV. Namely, when it was initially implemented in France, the cardpresent fraud did drop by 35% (between 2004 – 2009), but the cardnot-present fraud (such as fraud committed online) increased by 360%.

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The Rationale and Technology Behind EMV

“

implementations. EMV is merely a specification, but every company that creates EMV technology must somehow implement it. The implementers typically do so properly, but there have been instances where software developers were simply The fact that the specification is only careless or uninformed and designed to solve counterfeit credit card unknowingly created security holes. fraud is apparent when it comes to data One such example security. The encryption was when used during the researchers in process is leveraged Europe discovered for credit card that random authentication, but not While EMV is a numbers used to for data transmission.6 significant step in the ensure that credit The transmission of PAN and other data right direction in terms card transactions are unique and thus can still occur in clear of credit card security, cannot be simply text. This makes it the standard is not re-played were in potentially vulnerable fact not so random. to interception by intended to be a These security hackers. Security complete and experts were able to breaches such as the in effect “clone” a Target breach where immediate security valid transaction and credit card numbers solution to prevent ALL re-play it against an were stolen by hackers ATM to withdraw could potentially still credit card fraud. money.2 This was occur because not a flaw with merchants could still issuers or payment store and transmit data network systems. It unencrypted.6 The data was not even a flaw within the card could then be used to create counterfeit firmware. Instead, the flaw rested with magstripe cards or leveraged the software leveraged by the ATM. fraudulently online. To prevent this kind of fraud, the industry should implement Similarly, and even more concerning encryption and tokenization. Encrypting are potential issues with contactless credit card transactions would prevent chip cards because the transmission of hackers from stealing data while being card information to a wireless reader is transmitted or stored on a server. unencrypted. This transmission Moreover, tokenization would replace the typically only works when the card is actual card number with a token, which held 2 – 3 inches away from a reader, would be essentially useless to hackers but there have been some reports that even if they could get their hands on it. In hackers can boost wireless signals up fact, some technologies like Apple Pay to 25 feet and essentially snag the already do this while maintaining card data remotely without the person compatibility with the EMV Contactless ever knowing it. While the contactless specification.4 According to Shift4, maker cards typically do not include of a tokenization gateway, when EMV is cardholder name, address, or the CVV, implemented as part of a complete it’s plausible that hackers could use solution it can make a real difference in social engineering (or other means) to eliminating credit card fraud. obtain a target’s name and address and leverage them on e-commerce Another set of vulnerabilities relative to sites that do not require a CVV.8 EMV centers around actual Likewise, in many countries where magstripe cards were used as a fallback payment mechanism, criminals would simply continue to use counterfeit magstripe cards to make purchases.

”

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Regardless of any potential issues, most experts would agree that EMV is a step in the right direction. There is no doubt that the technology specification will continue to evolve, but at least the payment industry is moving forward.

There will always be an ever-present cat-and-mouse game between the security establishment and criminals, but perhaps these latest technologies will tip the scales in the industry’s—and thus in the consumers’—favor. n References 1. http://www.esecurityplanet.com/mobilesecurity/ emv-is-no-payment-security-panacea.html 2. http://sec.cs.ucl.ac.uk/users/smurdoch/papers/o akand14chipandskim.pdf 3. https://www.emvco.com/about_emvco.aspx?id= 202 4. http://support.verifone.com/fstore/0a463145bbf ccb42_17e67747_1491c67f2a9_6932/Apple%20Pay %20FAQ%20External.pdf 5. http://usa.visa.com/merchants/grow-yourbusiness/payment-technologies/credit-cardchip/liability-shift.jsp 6. http://www.firstdata.com/downloads/thoughtleadership/EMV-Encrypt-Tokenization-WP.PDF 7. http://blogs.wsj.com/cio/2015/04/29/broad-emvadoption-for-plastic-cards-wont-happen-until-2020forrester/ 8. http://www.click2houston.com/news/thieveseasily-stealing-credit-card-info-by-electronicpickpocketing/25026758

Vladimir Collak Vlad currently serves as president and CEO of Ignite Media. Ignite builds mobile and web solutions primarily for the Oil & Gas industry that includes clients such as Mansfield Oil, Enbridge, Total Safety, Universal Plant Services and others. Vladimir holds a BS degree in Information Technology and an MBA from the University of Texas at Tyler. He can be found on his blog at www.collak.net and at vlad@collak.net.

Photo courtesy TransCanada

Results of a poll published by the American Petroleum Institute (API) got both Democrats and Republicans fired up. Per the poll, the majority of Americans support the construction of TransCanada Corp.â&#x20AC;&#x2122;s Keystone XL pipeline that would connect Canadaâ&#x20AC;&#x2122;s oil sands to crude oil refineries on the Texas Gulf Coast.

TransCanada had first applied for a presidential permit for the cross border pipeline in 2009.

Zacks Investment Research, September 18, 2015

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FOCUS:

EMV VENDOR VIEW

by Chris Santy

Liability Shift isn’t the Real Risk with

EMV

The impact of the upcoming deadlines for EMV (EuroPay MasterCard VISA) upgrades—October 2015 for in-store POS and October 2017 for gas pumps and dispensers— has been debated by some in the industry, ignored by others and is seen as a strategic opportunity by a third group.

Though much of the discussion around delaying site level implementation is centered on what the impact of the liability shift might be, two overlooked but perhaps more significant factors are the risk of market share loss as well as price inflation for those who choose to wait.

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The Risk of Share Loss In Europe, Canada and other countries that have completed the shift to EMV, retailers that upgraded their gas pumps early to be EMV-enabled captured share in both increased gallons and inside sales growth from their slower moving competitors.

Estimates across the industry vary: potentially half to two-thirds of U.S. fueling sites will be upgraded to EMV by 2018, leaving about 50,000 c-stores with mag stripe-only payment.

Magnetic Stripe Payment Locations:

36 Million

4.7 Million

168,000

50,000 U.S. Non-EMV

The World 1990’s

Fuel Dispensing Locations 2015

With 66% of Americans afraid their information will be hijacked at the payment terminal, according to a recent GfK research survey, it’s not a stretch, say experts, to expect that Americans, like their overseas counterparts, will vote with their wallets once EMV-enabled terminals are deployed.

“As other markets have adapted EMV, Gilbarco has seen consumers seek out EMV-enabled forecourts and shift their buying behavior to sites that they believe to be secure,” said Parker Burke, director of payment and marketing applications at Gilbarco Veeder-Root. “Consumer EMV awareness and adoption will accelerate as broad retail converts this year, and they will start seeking out convenience stores that offer EMV security.”

A key difference in the deployment of EMV in the U.S. is that fuel dispensers do not have a liability shift until two years after in-store EMV upgrades. This is significant, in that consumers will have started using EMV cards at all other forms of retail—ranging from Wal-Mart and Home Depot to restaurants and QSRs to sporting events—later this year.

If we can agree that the question on the table is not if, but when you will upgrade your pumps to EMV, there are three additional factors to consider:

1 2

Assume

This has the potential to lower your site revenue

3

15%

In support of this argument, consider that Gilbarco recently announced record sales of EMV-enabled dispensers. According to press reports, orders for Gilbarco’s signature Applause TV offering doubled in June 2015. Other equipment providers, including Verifone, also say they are approaching full capacity.

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Increased equipment costs: As demand accelerates,pump manufacturers hint that it may not be out of line to expect price increases on the order of 4 – 5% per year starting in 2016.

Technician capacity: A shortage of factory-trained technicians (ASCs) to handle installation of new pumps and card reader in dispenser (CRIND) EMV retrofit kits will lead to increases in labor costs that may approach double digits, as more overtime has to be employed to complete EMV upgrades.

“All indications,” said John Keller, vice president at Petroleum Solutions, which facilitates such installations, “are that demand for technicians will significantly increase through 2016 and 2017.”

behavior if they are aware of an EMV dispenser near your site

in both gallons and in-store sales, by

Fueling Locations 2015

The Cost Penalty of Waiting

Consider the following equation:

30%of your customers are security conscious Assume 50%of these consumers shift their buying

The U.S. 2010

fuelmarketernews.com

Rising interest rates: For c-store retailers that finance their gas pump upgrades, either through a bank or using dispenser equipment financing, rising interest rates represent a third area of additional cost. A one-percent increase in borrowing costs from your bank or in an equipment financing agreement can be equivalent to a 2.8% price increase over the term of the loan.

RETAIL OPERATIONS

“ ”

Liability Shift isn’t the Real Risk with EMV

Optimizing Marketing Technology On-Site

The final consideration in developing an EMV plan relates to the determination of a site-wide marketing technology strategy. A few years ago, few in the industry were fully considering the need to communicate and entertain customers on the forecourt and instore. There are a number of technologies that have become the new standard, and others that are beginning to gain steam, including:

How Can You Help Your Retailers?

The investment to complete EMV upgrades is much greater than the traditional annual capital spending on gas dispensers and POS for a c-store retailer.

Jobbers are well positioned to partner with their dealers to help implement an EMV plan.

The potential business loss of security conscious customers may be greater than the risk of the liability shift.

• In-dispenser media or

TV at the pump, like Gilbarco’s Applause TV™ and Wayne Fueling’s in OvationTV™;

• Near field communications (NFC), which enables pay-with-phone technologies like Apple Pay and Google Wallet;

• In-store upselling products, such as Verifone’s LIFTRETAIL™ and Gilbarco’s Impulse™; • Enhanced image and security from

upgrading to LED lighting—the cost savings from LEDs can help offset EMV expenses; and

• Loyalty programs—consumers are

38% more likely to use a fuel brand if it offers a loyalty program, according to an NPD group study.

“A pump is an asset with a long useful life, and retailers need to consider their needs for today as well as their offerings five to 10 years in the future,” said Parker Burke. “Therefore, it’s important to ensure that their equipment has the ability to handle marketing applications and other revenue-generating features.”

Though a variety of financing solutions exist, a plan which utilizes upgraded equipment as collateral in a lowinterest financing arrangement can be a win-win for both parties—the jobber captures or extends a long-term supply contract, and the dealer is better able to match expenses and revenue.

4

Section 179 benefits: The expected 2015 renewal of Section 179 tax benefits would allow for accelerated depreciation, creating an almost immediate cash flow impact. This accelerated deduction covers 100 percent of any capital improvement up to $500,000, and 50% of the next $1.5 million. If Section 179 is not used in a particular year, the benefit cannot be claimed retroactively in the following year.

Combining these benefits creates an opportunity for fuel jobbers and c-store retailers to work together to provide programs that benefit both parties.

The potential business loss of security conscious customers may be greater than the risk of the liability shift.

Understanding both of these risks, along with the impact of cost increases and the benefits of a marketing technology plan, should be imperatives for all jobbers in 2015. n

At Patriot Capital Corporation, we see four considerable benefits for jobbers in utilizing equipment financing to grow their supply contracts.

1 Difference in tax rates: Many retailers are often in the 10% to 15% tax bracket, while marketers generally are fully taxed at the 39.5% rate. This creates a significant value difference in the capital cost depreciation benefit that has value to a jobber.

2 Difference in borrowing costs: Often fuel marketers have a more established credit history than C-store dealers, better documentation and a history of larger transactions, resulting in their ability to borrow or finance equipment at lower interest rates than dealers. This difference—over a five-year lease—can generate significant interest savings on a dispenser or point of sale upgrade.

3

Protection against rising interest rates: Unlike bank financing or lines of credit, equipment financing is at a fixed rate that is protected in a rising interest rate environment.

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Chris Santy Chris is the president of Patriot Capital Corporation. Patriot Capital specializes in enabling entrepreneurs to succeed by providing hassle free equipment financing to retailers in the convenience store and retail petroleum fueling industries. Patriot has been recognized as Best in the U.S. by the Petroleum Marketers Association of America. For additional information, please visit www.patriotcapitalcorp.com.

Follow Patriot Capital on Twitter @PatriotCapital

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Connecting Loyalty and Your Customers

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by Maura Keller Like many retail

industries, fuel marketers and convenience store retailers continually struggle with offering the right mix of products in their stores while enticing consumers to purchase those products. Sure, you can invest in effective POS displays and unique sales techniques, but without offering purchasing incentives and loyalty programming to customers, it is often an uphill battle. That said, loyalty programming is continually reinventing itself, with consumers also redefining what they respond to and what loyalty programs mean to them.

Hand-in-Hand Loyalty Loyalty programs play a significant role in today’s customer engagement and retention efforts and they are here to stay.

“Retailers realize that it costs around five to ten times more to acquire a new customer than it does to sell to an existing one,” said Don Yee, vice president at Boston Retail Partners. “Not only that, but on average, current customers spend 67% more than new customers.”

However, building and sustaining customer loyalty at c-stores is extremely challenging, as there are several natural forces impacting customer behavior. As Yee explains, consumers shop at a “convenience store” for its convenient location and the products they offer. It is difficult to get consumers to drive and shop at an inconvenient location.

Another c-store challenge is getting customers to not just “pump and go” for fuel, which offers a low margin, but also to shop for products inside the store.

“C-stores make their money when customers come inside and spend money on high margin products such as coffee, fountain drinks, snacks, candies and grab-and-go fresh foods,” Yee said.

“A well-structured loyalty program that delivers consistent, relevant value to customers can break those natural forces that impact c-stores and drive loyalty to the brand. Doing nothing is making a big mistake, as consumers have numerous choices and prefer to shop with retailers with loyalty programs.”

Loyalty programs at convenience stores are not as prevalent as other retail channels. As Yee said, convenience store shoppers’ participation in c-store loyalty programs lags that of the grocery and drugstore channels, according to two General Mills Convenience & Foodservice research projects.

The research found that: • 89% of shoppers currently participate in some type of loyalty/reward program across a variety of channels and categories • 64% participate in a grocery loyalty program • 52% participate in a drugstore/pharmacy loyalty program • 5% of shoppers participate in a c-store or gas station loyalty program

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RETAIL OPERATIONS

“

Connecting Loyalty and Your Customers

While Outsite Networks pioneered the architecture of the original Speedway loyalty program in 2002 – 2003, Anton Bakker, founder of Outsite Networks, has never seen the market so peaked for loyalty programs as today.

“My advice is to ‘chase the consumer, not the competition,” Bakker said.

While loyalty segmentation criteria are derived from each consumer’s shopper history, it is key to know that not all shoppers have the same loyalty levels. At Outsite Networks, they monitor millions of loyalty shoppers and maintain numbers on the top, middle and bottom tier of loyalty members.

Dollars Spent

”

“Loyalty programs that offer cents-off per gallon cash discounts at the pump, deals, special offers and rewards within the store are most appealing to customers,” Yee said. “Fuel discount programs are changing customers’ purchase behaviors as to where they shop and spend to earn fuel discount rewards and to where they can redeem their rewards.”

Don Yee, Boston Retail Partners

50 45 40 35 30 25 20 15 10 5 0

Also, a retailer’s mobile app is an efficient and effective way to communicate—especially with millennials—and to drive in-store traffic to increase sales. “Mobile apps enable customers to receive digital coupons, alerts for special promotions, track point balances, redeem rewards, make mobile payments and find product information and store locations,” Yee said

Store Loyalty members:

Consumer Transactional Behavior

Fuel Gallons Upper tier

Middle tier

Lower tier

“When looking at the averages of the tiers we can see a vast difference in loyalty value at the pump and in the store,” Bakker said.

Gray Taylor, executive director of Conexxus, believes the next iteration of loyalty programs is going to be: “How can I get very specific about what my customers are telling me they are interested in?” And that is going to require a lot of deep data analysis.

Taking a deeper dive in shopper segmentation, you have to look at the details of basket level purchases and basket level history. “Any loyalty system these days should be able to segment consumers and group them based on their purchase behavior for relevancy,” Bakker said. “Consumers, particularly millennials, expect relevancy of offers and rewards. Gone are the days of treating each shopper equally, they are different.”

Conexxus is a non-profit, member-driven technology organization dedicated to the development and implementation of standards, technologies innovation and advocacy for the convenience store and motor fuels market.

According to Yee, loyalty programs that offer deals, coupons, special offers and/or meaningful rewards on products and services that matter most to customers are increasingly influencing where they purchase gasoline, how much they spend, and the frequency of visits.

“Let’s say an average store is getting 10,000 customers per week,” Taylor said. “The question to ask is, ‘How do I deal with identifying those 1,000 customers who are always in my store? How do I offer them better value, not necessarily better discounts?’”

“Loyalty programs that offer cents-off per gallon cash discounts at the pump, deals, special offers and rewards within the store are most appealing to customers,” Yee said. “Fuel discount programs are changing customers’ purchase behaviors as to where they shop and spend to earn fuel discount rewards and to where they can redeem their rewards.”

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Tracking transactional behavior has long been a focus at Outsite Networks.

“Some like coffee, some prefer fountain drinks, others prefer energy drinks or some like water,” Bakker said.

“Create offers and rewards that fit their behavior.”

fuelmarketernews.com

“

RETAIL OPERATIONS

”

Connecting Loyalty and Your Customers

“Gone are the days where customers discover your specials in the window or aisle. Shoppers look on their mobile device and expect to see your offering before they decide where to go.”

Anton Bakker, Outsite Networks

The key to this is transactional insights and consumer group segmentation based on transaction data. So make sure you meet the customer where he is at and cover your basic three locations: off premise, at the pump and in the store.

“Off premise with a transactional mobile app is a must,” Bakker said. “Gone are the days where customers discover your specials in the window or aisle. Shoppers look on their mobile device and expect to see your offering before they decide where to go.”

Bakker recommends retailers engage with shoppers at the pump and make them an offer to come inside.

“At Outsite Networks we’ve had market at the pump with video screens since 2000, subsequent with audio and near field communication (NFC) tags and we now see that the day of big expensive screens at the pump and cash register is changing to bright private screens in the consumers hands—at the pump and in the store,” Bakker said. “Mobile screens should be consumer activated with tap-beacons for consumer invited content rather than invasive beacon methods that inundate consumers with content just because they can.”

In-store one should have an engagement kiosk where consumers can interact with their loyalty program. These kiosks can aid the cashier in recruitment of loyalty members and facilitate in the more traditional loyalty cards, as not all loyalty consumers are fully mobile quite yet.

According to Yee, in a 2015 Loyalty Report

by Bond Brand Loyalty where more than 10,000 consumers were surveyed, onethird of consumers agree they would not be loyal to a brand if it were not for a loyalty program, and 70% modified when and where they shop to maximize points.

“Loyalty is for everyone, as it is one of the retailer’s best tools to gather customer transactional data and preferences to know the customer. With this knowledge, retailers will have the opportunity to deliver personalized, relevant content and incentives to best reach, engage and cultivate customer relationships which will build and sustain customer loyalty and retention,” Yee said.

Bakker stresses that previously, while loyalty was not for everyone, it now is.

“You are under attack with loyalty programs all around you,” Bakker said.

That said, two main things can go wrong: • If your mobile platform is not transactional, you will not be able to be relevant to the consumer’s transaction history for segmentation.

• The retailer treats loyalty as a “me too” activity and not as the core of their business.

“Loyalty is not a light switch that you put in and flip it on,” Bakker said. “You have FMNMagazine

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to be fully committed to protect and work your most precious consumers every step along the way. From your marketing programs, offers, rewards and messaging and make it part of your brand.”

At minimum, Bakker said retailers need to offer a few clubs for coffee, fountain and beverages to hold those customers that have a high transaction count and habit. These customers now have places to go where they will get rewarded for their loyalty.

Loyalty programs can go wrong if the rewards do not deliver value and are not meaningful to the customer. It is extremely important for retailers to analyze customer data and understand customer behavior to tailor rewards based on those behaviors and customer preferences.

And should your efforts be heavily focused on discounting?

“For the most part, loyalty programs are discounting products to your best customers,” Taylor said. “But it is not a win-win for everyone. If they are already your best customers, why provide discounts for them?”

According to Taylor, loyalty should not be about discounting. Loyalty should be about value.

RETAIL OPERATIONS

Connecting Loyalty and Your Customers

“While they are related, they are fairly distinct things,” Taylor said. “Value is always in the eye of the customer.

What is the value I can offer to a specific customer that resonates with them and makes them realize that makes me invaluable and indispensable?”

When it comes to loyalty, the biggest mistake a retailer can make is to do nothing and not have a customer loyalty program. Yee suggests retailers uphold the following basic principles: • Make it easy for your customers to understand what they need to do and how they can benefit from the program.

• The reward must be attainable and within reach.

• Make it relevant and meaningful—make sure you know what your customers value. The rewards must be relevant and meaningful to them.

• Change your program’s features from time to time—provide new rewards.

• Keep in touch with your customers by communicating information and offers that will appeal to them.

• Analyze, utilize and leverage customer data to continually understand, engage and deliver the experience customers expect from the brand.

What the Future Holds The future of loyalty programs is on the rise, as retailers realize the need to transform their practices, processes and technology solutions to take them to the next level of their customer engagement journey in order to meet and/or exceed customer expectations.

“As consumers continue to push retailers to offer a seamless shopping experience across all channels, and as technology solutions enable retailers to continue to do so, loyalty programs are one of the best tools to know the customer, reach and engage the customer, and deliver the experience that customers expect,” Yee said. “It is imperative for loyalty programs to track and consolidate purchases/rewards from all channels—in-store, Web and mobile—and enable customers to redeem their rewards from the channel of their choice.”

In the future, Bakker envisions loyalty will be ubiquitous, mobile and transactional. Big screens will disappear from countertops and dispensers and will light up the palm of their hands with private, relevant offers based on their transaction history.

“Google and Apple wallets will play a big role,” Bakker said.

“Major oil companies will enable their distribution networks with brand-wide solutions that are simple to execute for the single store operators so they can remain competitive with the large retail networks that are chasing the consumer.” n

READ MORE at fuelmarketernews.com

by Shane Dyer

In our last article, Share of Wallet—Fact or Fiction?* we discussed the risk marketers face when issuing universal fleet cards to customers who are acclimated to fueling at their proprietary locations. In our experience, indiscriminately allowing access to outside locations results in “retail bleed” that will negatively impact your bottom line and will lead to higher fuel costs for your fleet customers. Our goal was to point out that this process needs to be carefully managed.

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Share of Wallet The Rest of the Story There is another side to this narrative, and that is to selectively issue a universal card on an as-needed basis. We strongly support issuing a universal card, such as Voyager, to customers who need a larger geographic footprint than what your proprietary card network offers. Let’s face the facts, there are fleets that need to travel, or have other divisions, in areas where you don’t have any locations. If you don’t identify these needs and provide a solution, those customers will eventually consolidate into a universal card product outside your control.

The key to success is in how you strategically embrace the universal environment.

First of all, a card issuer’s directly owned locations are the most optimal fueling environments for everyone involved, including the fleet customer. In directly owned sites, the card issuer is able to make enough money on the direct sale of the fuel to support the efforts involved in managing a fleet fueling system, such as sales, support, card production, transaction processing systems, billing, credit extension and much more. When the card issuer has to rely upon locations other than their own, particularly retail locations within the universal card network, much less revenue is earned. As a result, fees above and beyond the price of fuel are often assessed in order to make the required return on investment.

fueling locations outside your ownership, you must consider how you are going to earn enough money to make it worthwhile. Unlike the wholesale/cost model that is available in your own locations or the reciprocal cardlock networks, the revenue on a universal card transaction is based on a percentage of the retail price. Under the current programs available for petroleum marketers, they realize on average between 1.25% and 2% of the posted retail price.

The graphic below illustrates this revenue model.

Retail Price

$2.50

$3.00

$3.50

$4.00 $4.50

Marketer Share of merchant fee *

$0.04

$0.05

$0.06

$0.07

$0.08

Per gallon profit after transaction fee (20 Gal Fill) ** $0.03

$ 0.04

$0.04

$0.05

$0.06

Profit after Operational Cost Per Gallon ***

$(0.02)

$(0.01)

$0.00

$0.01

*Estimated merchant fee 2.4%/marketer share 1.75% ** Estimated transaction fee paid by marketer $.35 ***Total cost per gallon for marketer to service and support the sale of the product—Est. $.05

Most universal programs are netting the marketers around 1.75% or less of the retail posted price. After transaction fees and cost of doing business, the marketer may actually lose money, particularly in periods of low retail prices.

Obviously the marketer can seek to lower transaction processing fees and reduce operational costs through efficiency and volume, however, most will find these illustrated values to be fairly accurate.

Typical fees that can be found on invoices from the major fleet card issuers include transactions fees (ranging from $1 – $5), monthly per card charges, card delivery fees, fleet management fees, statement/reporting fees, online access fees, late fees, etc. These can add up to as much as $0.05 per gallon or more (depending upon the situation) that the fleet is paying above the price at the pump. In fact, one of the key metrics considered by stock analysts when evaluating publicly traded fleet card companies is the revenue per transaction.

Adding simple fees to the invoice for retail based transactions can actually make the business model profitable, and marketers need to shift their mindset. It’s also important to realize—as the fleet card industry continues to consolidate due to recent mergers and acquisitions—that universal card fees are likely going to increase as a result of less competition. In a recent earnings

This concept is somewhat foreign for petroleum marketers who have historically avoided adding fees. However, as you increase your exposure to the universal card and the retail

* Read the article “Share of Wallet—Fact or Fiction?” in Fuel Marketer News Magazine, Spring Issue 2015, available online at www.fuelmarketernews.com. While you're there, be sure to subscribe to our weekly newsletter.

$(0.02)

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RETAIL OPERATIONS call for one international fleet card company, the following was stated, “We saw strength in new customer acquisitions and our attrition rate remains at extremely low levels driven by our continued focus on the value we bring to our customers.

We also continue to add income from customer fee revenues.” This statement illustrates the obvious: you must charge fees to make the ROI. So where does this leave the petroleum marketer who owns sites and may (or may not) belong to a reciprocal cardlock network? In order to compete you should make sure you have a universal card product in your tool set, and then begin a systematic approach introducing the option. But remember, as we previously noted in Share of Wallet—Fact or Fiction?, we do not recommend that you give every customer this card.

In our opinion, the first order of business is to begin assessing your customer’s needs through retention calls. In a recent training clinic with a marketer, we called several of their mid-sized customers only to discover that many had other divisions not being served by the marketer’s cards and/or they had been acquired by another company outside their area who was beginning to consolidate the fuel purchasing. In each instance, we were able to introduce the universal card option and explain that we were more than capable of meeting their expanded needs. This represented not only an important chance to retain volume; it resulted in the opportunity to grow volume.

The key is to ensure you illustrate to the customer why your cardlock (or directly owned retail) locations are the optimal fueling environment and that you provide a unique solution not available through the national fleet card options. In addition to having highly controlled and efficient fueling environments, you offer a competitively priced, fee-free option in these locations because you are the actual distributor of the petroleum products. Advise them that the goal is to drive as much of their volume through these optimal locations, and then defer to

“

Share of Wallet—The Rest of the Story

”

The key is to ensure you illustrate to the customer why your cardlock (or directly owned retail) locations are the optimal fueling environment and that you provide a unique solution not available through the national fleet card options.

the less efficient, poorly controlled, higher cost retail locations when the better option is not available. In the end this will provide the greatest value for their company, and for yours.

This approach would be exactly the same when targeting a new customer. It effectively differentiates you from the majority of the competition in the market.

You will also notice that this strategy maintains the principle marketing message of “cardlock locations are better,” so you won’t be reversing your long established value justification in your market. It elevates your locations and diminishes the broader retail fueling option.

I’ve repeatedly used this technique to successfully convert customers from the national card issuers, some buying as much as 250,000 gallons a month. With larger customers, you will also find yourself introducing cost plus pricing as an option. This option is very unique to the petroleum distributors and their reciprocal fueling networks. When rack to retail spreads are $0.50 and the customer is saving $0.35 per gallon, the $0.02 discount the major card issuers are offering becomes almost laughable to those fleets who understand how the business works.

A final consideration before you jump into the universal card world is to ensure your billing system has the necessary functionality to support your strategy.

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Most systems are weak when it comes to this environment. In some cases, how they price these transactions can actually extend your losses. For example, one universal fleet card product is accepted in Arco locations where the marketer’s cost is actually 101% of the retail price. Some systems are pricing the transactions at retail, not recognizing the net loss until it hits the P&L. In other instances, the ability to charge fees is very limited and can’t be assessed based on transaction type or merchant locations. Our recommendation is to conduct a detailed review of your system’s functionality according to your objectives, and then thoroughly test with beta customers before jumping in with both feet. You can always call our company for advice in this area.

If you follow these recommendations, we believe that you will enjoy a rewarding business opportunity in the universal card world. n

Shane Dyer Shane is the president of PowerUp Fleet, Inc. He possesses over 32 years’ petroleum automation, operations, and executive management experience with a focus on commercial fleet fueling and cardlock networks. PowerUp Fleet, Inc. provides sales force automation/CRM solutions specific to the petroleum industry along with sales training, sales management and executive consulting services. Contact: (541) 388-5120 or shane@powerupfleet.com and visit PowerUp Fleet at: www.powerupfleet.com

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Environmental and Consumer

Safety at the Station

According to the National Fire Prevention Association (NFPA), the

number of fires and explosionsâ&#x20AC;&#x201D;which the NFPA classifies in three ways: structure, vehicle and outside/other (garbage/rubbish/vegetation)â&#x20AC;&#x201D;at retail service stations in the United States have been on a significantly steady decline since 1980. There are now less than 5,000 reported incidents in any given year, a decline of more than 70% since 1980.

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by Ed Kammerer

The Challenge The biggest challenge facing service station operators and their customers is the most obvious one: every day thousands of gallons of a highly flammable, volatile, explosive and toxic liquid are unloaded, handled, stored and dispensed. Looking at it that way, it’s actually amazing that there are not more fire or explosion incidents at the nation’s service stations.

Self-service gasoline stations have been a fact of life in the United States and Canada (with a few exceptions) for nearly 70 years.

Historical records show that the first self-service station in the U.S. began operation in Los Angeles, California, in 1947, with Canada’s first self-serve facility coming online in Winnipeg, Manitoba, two years later in 1949.

Depending on the reporting agency, there are anywhere from 122,000 (U.S. Census Bureau) to 154,000 (National Association of Convenience Stores) retail service stations in operation in the U.S. today. That means that fires of some type occur annually at between 3.2% and 4.1% of the nation’s retail service stations.

The downward trend in service station fires is obviously a positive one, but the cold statistics leave out a significant part of the story, mainly that every fire or explosion at a service station is its own little tragedy that adversely affects the lives of the station owner/operator and the customers, while also potentially harming the surrounding environment. In fact, the NFPA reports that service station fires and explosions annually result, on average, in two civilian deaths, 48 civilian injuries and $20 million in direct property damage.

So while the overall statistics may be rosy, ensuring the safety of service station owners, customers and the environment is still an ongoing challenge that will not be overcome until the number of incidents reaches zero.

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That means for almost seven decades a lot of motor fuels have been pumped by a lot of people who have never really been trained for the task, many of whom, in the old days, would actually hold the nozzle in one hand and a lit cigarette in the other as they filled the vehicle tank. Besides the obvious safety concerns, there are many potential distractions when filling up, from the rambunctious kids who are acting up in the backseat to the cell phone that will not stop ringing to the commercials that are playing on the TV on top of the dispenser.

All of these distractions can lead to a mistake, whether leaving the nozzle in the fill pipe while driving away or spilling fuel on the pavement. Human error, unfortunately, is one thing that will never be totally eradicated.

There is potential for human error on the operator end of the fueling equation as well. Service station fueling systems are a complex mix of pipes, hoses, fittings, monitors, sensors and tanks, all of which must be installed, observed and maintained properly.

Even the smallest, seemingly inconsequential leak in a fitting or from an underground storage tank (UST) can eventually result in a catastrophic incident, whether it be a fire or explosion or toxic product release to the environment, which can harm the soil and groundwater of surrounding communities.

Keeping all of this in mind, owners and operators of service stations should know that when they get into the business, their first priority should be keeping the gasoline or diesel fuel out of the ground and out of the air where it can lead to a fire incident or environmental contamination. Helping to achieve this end result are any number of federal, state or local regulations that must be followed. If they are not, the owner/operator can be subject to fines, remediation costs and, in the worst-case scenario, closure.

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The Solution Riding shotgun with service station owners/operators in their quest to make the fueling experience as safe as possible for the consumer and environment (and themselves) are the manufacturers of aboveground and underground equipment, components and systems for use at service stations. The manufacturers of service station equipment have readily risen to the occasion; the technologies used to ensure the safe transfer, storage and dispensing of motor fuels have evolved more since the dawn of the new millennium than in the previous 50 years.

These advances have come in two distinct equipment realms: underground and aboveground. Let’s look at each segment individually.

Underground

“ ”

Environmental and Consumer Safety at the Station

Owners and operators of service stations should know that when they get into the business, their first priority should be keeping the gasoline or diesel fuel out of the ground and out of the air where it can lead to a fire incident or environmental contamination.

factory-assembled components that result in dramatically less field labor and lower associated installation costs and the potential for installation errors. They eliminate the need for time-consuming and costly field fabrications, such as installing entry fittings or welding or gluing joints that will be buried in the ground. The less field fabrication needed, the less potential for contractor error.

The work below grade takes place before the service station is in operation.

It consists of all of the equipment and components that will enable the fuel to be dropped at the site and stored in the USTs before eventually finding its way into the vehicle’s fuel tank. The goal of manufacturers of this type of equipment is to make it smarter than the least, ahem, “accomplished” person who will be installing it. In other words, the manufacturer can create a “bulletproof” system that meets all Underwriters Laboratories (UL) and U.S. Environmental Protection Agency (EPA) requirements, but that system is only as good as the “worst” contractor installing it.

In recent years, a number of technological advancements have helped make that goal easier to achieve, with many of these now considered to be industry-standard technologies, including:

Loop Systems –Completely integrated, environmentally secure underground fuel-delivery systems that, by design, employ pre-fabricated,

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Vapor-Tight and Testable Overfill Prevention Valves –Vapor-tight two-stage valves designed to prevent the overfill of USTs by providing a positive shutoff of product delivery when the liquid level reaches 95% to 98% of the UST’s storage capacity. In addition to being vaportight, these new valves are testable from the surface so maintenance personnel do not have to remove the valve from the UST. The EPA is also now recognizing the fact that this equipment needs to be tested more often than just at initial installation.

Double-Wall Spill Containers –Installed in the same space as single-wall spill containers, but significantly improved reliability, monitoring, leak containment and serviceability. Marketers are required to install double tanks and piping, so it

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Environmental and Consumer Safety at the Station

deal with the cost and unreliability of fiberglass or steel piping and joints that need to be glued. This fitting can be repaired, replaced or maintained from inside the sump versus a welded or glued joint that would require replacing the entire containment sump. The glued or welded entry fittings provide no relief from shifting ground and simply provide a shear or break point for the product piping.

only makes sense to have double-wall spill containers. More fuel is introduced into the ground at the fill point than with any leaking tank or piping. The interstitial space on the double-wall bucket also makes it easy to test the integrity of the bucket by using a vacuum versus filling the spill bucket with water that will then be contaminated and must be disposed of properly. Again, the EPA now recognizes the need to test this equipment periodically instead of just at initial installation. Double-wall spill containers will be much easier and less expensive to test.

In addition to the physical improvements to underground equipment, there has also been a huge leap forward in smart technologies that are giving service station operators a mobile access point to their sites at all times via smartphone and other evolving communication technologies.

These technologies provide the capability for the operator to review and access information instantly, letting the operator know if a UST system is not working properly or even if it has been installed correctly. This fingertip information in real time will help operators identify and correct leaks, spills and overfills before they can even occur, which creates an added level of safety for both the consumer and the environment.

Replaceable Single-Wall Spill Containers â&#x20AC;&#x201C;Affordable, easy-access spill containers that do not require concrete to be broken during their installation and meet all requirements of the 1998 and 2015 UST regulations in the United States.

Rigid Entry Fittings â&#x20AC;&#x201C;Have minimal exposed rubber and the sealing redundancy throughout the fitting provides maximum containment and protection from water intrusion, even after ground shifting. No longer do retailers have to

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Environmental and Consumer Safety at the Station

Aboveground This is truly where the great unknown enters the service station safety equation: consumers with their various degrees of aptitude and that long list of distractions that we touched upon earlier. Once that fuel moves into the dispenser, it is at the mercy of the person operating the nozzle. To improve the safety of the fueling experience, as well as to protect against driveaway incidents, equipment manufacturers have developed a number of landmark solutions in recent years, including:

breakaway’s dual valves seat automatically, stopping the flow of fuel and limited spillage, while simultaneously protecting the dispensing equipment.

No Flow, No-Pressure Devices (B-Cap) In Automatic Nozzles –These have been designed for use in retail

While a goal of zero fires or explosions at service stations is commendable, it is highly unlikely that level of safety will ever be realized, mainly because accidents will always happen and the human element cannot be taken out of the equation. But the level of service station safety has undoubtedly been improved over the past 15 years, thanks to the efforts of manufacturers who have designed, engineered and marketed both underground and aboveground equipment and systems that have helped make the fueling experience a better one for site operators, consumers and the environment. The ultimate trick is to educate marketers about these technological advances and any new industry regulations. The even bigger challenge is getting the marketer to pay the few extra dollars that may prevent a catastrophic event. n

and commercial fueling applications as a way to help prevent fuel spills.

This iteration of fueling nozzle will not open until the dispensing system is pressurized and will close automatically when the pressure is removed, which cuts off the flow of fuel before it can be spilled. UL now requires any nozzles at a selfservice station that wants to use hold-open latches to be equipped with this safety feature.

Emergency Shutoff Valves –These highly sensitive shutoff valves protect against the hazards of undetected shear groove leaks that may have been caused by low-impact incidents, such as a driver backing his vehicle into the dispenser, or a more dangerous pulled over or dislodged dispenser. They also prevent damaged shear grooves from allowing fuel to leak into dispenser sumps, which reduces the risk of fire, explosion, personal injury, property damage, product loss, environmental contamination and cleanup costs.

Conclusion

Dry Reconnectable Breakaways –These dispenser components have been designed to deliver an increased level of safety and security in the event of a driveaway incident. Not only are they fast and easy to reconnect, but their method of operation delivers the greatest peace of mind that the breakaway has been securely reconnected.

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Ed Kammerer Ed is the director of global product management for OPW, based in Cincinnati, Ohio, USA. OPW is a leader in fueling solutions and innovations worldwide. OPW delivers product excellence and a comprehensive line of fueling equipment and services to retail and commercial fueling operations around the globe. Ed can be reached at ed.kammerer@opwglobal.com. For more information on OPW, please go to www.OPWGlobal.com.

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Final EPA UST Rule

What’s Left?

A

fter two years of wrangling over the specific requirements, the Environmental Protection Agency published its final underground storage tank (UST) system testing and inspection rule on July 15, 2015. As EPA rules go, especially those impacting motor fuels, it is seen as being about as good as you could expect. The industry will be impacted, and undoubtedly some operators already on the edge will be forced out of business, but the industry was able to cut the impact significantly from the initial proposals and scored major wins on significant areas of concern. As PMAA noted in its initial announcement on the finalized rule: “The bottom line is the final rule is a major accomplishment for PMAA and petroleum marketers.”

by Keith Reid

Underwood cited three major accomplishments, among a range of EPA concessions:

• First, the final rule eliminates the single most onerous provision in the proposed rule—integrity testing for interstitial spaces in tanks, piping and containment sumps. These requirements were seen as being potentially damaging to equipment with the potential to cause leaks and void manufacturer warranties. The testing would also be expensive and present significant technical challenges.

• Second, testing and inspection requirements were delayed from 90 days to three years.

“What EPA originally proposed was very alarming to us,” said Rob Underwood, president of the Petroleum Marketers Association of America in a subsequent FMN interview. “So we formed our underground storage tank task force made up of marketers across the country as well as some state association executives to thoroughly go into the proposed rule. We went through it piece by piece. At the end of the day, we knew this was going to cost us some money but we were determined to get to a point where it was significantly less than what EPA originally proposed but still maintain that same environmental protection. We thought we had some cost-effective ways of getting there.”

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• Third, the frequency of sump inspections was reduced from every 30 days to once per year.

“Overall, they definitely did lower the cost and we estimate the impact is now around $530 million for the industry,” Underwood said. That is down from the $1.5 billion estimated for the initial proposed rule.

PMAA estimates that from a cost perspective, the annual cost per site was reduced from $6,966 per site to $2,377 per site (with a one-time cost per site of $58,325).

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RETAIL OPERATIONS That this was a successful outcome is echoed by Paige Anderson, National Association of Convenience Stores director, government relations. “We submitted comments during the open comment period and we were pleased that they listened to a lot of our suggestions,” she said. “We want to be able to store our fuels in a safe, sound and efficient manner. We felt the intent was proper but the initial draft had some logistical issues that did not quite make sense. We offered what we thought were some reasonable comments and they really listened. At the end of the day, we feel we have something that’s workable. So we were fairly pleased with how it turned out.”

seven years or older, were likely installed not contemplating that the sumps and/or the interstitial spaces or piping would ever have to be tested. The issue that I have is that these early adopters of secondary containment are almost being punished by EPA for doing that.

What they have to do now is go in and do some work to isolate those piping penetrations so that the liquid or vacuum—it’s primarily going to be liquid—does not go up into the spaces.”

Garrett noted that the pre-test costs can be quite expensive, citing boot and grommet costs to seal the piping, though companies that provide such solutions say product cost concerns are overblown and that much of the labor cost is already in the works just for the testing protocol itself.

Bob Renkes, executive vice president and general counsel of the Petroleum Equipment Institute, similarly sees this as being a positive outcome for both “When doing a hydrostatic test once any A typical double-walled piping run into the industry and agency. “I think it’s fair repairs are completed, the pipe a sump, illustrating the exposure of the to say that the final rule was a scaledinterstitial must be closed over with a interstitial space. back rule from what was originally fitting to keep test water from escaping Photo courtesy Icon Containment proposed,” he said. “I think EPA looked the sump through the interstitial,” said at the comments from not only the Paul Reber, national sales manager for regulators, but the equipment people and certainly the tank ICON Containment Solutions, which makes a variety of owners in the regulated community, and felt comfortable secondary containment repair solutions as well as solutions making the changes they did.” that can facilitate the testing requirements. “The only way to do that without disconnecting the pipe is to use a split-design test/termination reducer fitting that seals to the secondary and primary pipe. That’s the same type of fitting that the For all of the concessions, the final rule is still costly and contractor would use to seal and pressure test the secondary represents a significant burden for many retailers and pipe integrity.” marketers. In fact, the rule surpasses the $200 million mark, which would require a small business advocacy review panel.

Reber noted that once the hydrostatic testing is completed The agency refused to consider that requirement. successfully, the contractor will typically loosen the band clamps and slide the test fitting off of the secondary to One remaining concern is the sump testing issue. The test “open” the system again. Sometimes there isn’t enough requires filling the sump to the top with water to test for leaks. space to slide it back and another alternative must be A sump with double-walled piping typically has had the pursued. Options are to remove the valve stem from the test interstitial space exposed after it enters the sump to allow fitting, or order the test fitting with an optional drain valve fuel from a pipe failure to drain into the sump, to then be that can be opened afterwards (Valero specification). In a detected by a sensor. This open piping would have to be worse case scenario, they can completely remove the test sealed for the duration of the test to prevent the test water fitting from the pipe again. from itself draining into the piping.

Still, all of these costs add up and can be amplified in many Bruce Garrett, vice president of operations at Volta Oil scenarios. Garrett noted that in some instances, the dispenser Company, Inc., Plymouth, Massachusetts, highlights the might have to be removed from the island to isolate those impact. “Although the costs have come down, I think that the fittings, which could add an extra/several thousand dollars to EPA has missed a couple of things that are a bit the project. He stated these are part of the one-time cost disappointing,” he said. “The containment manhole or spill estimates. “Costs are one thing, and obviously small business bucket—it is what it is. You clean it up and fill it and it’s either owners are really going to get hammered,” he said. “And going to pass or not. A containment sump is the big issue. while you have the annual costs, it’s these upfront costs that Some of the earlier containment sumps, the ones that are are really going to kill people.”

Close, But...

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“

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Final EPA UST Rule—What’s Left?

“The guy that replaced the system five or 10 years ago and didn’t spend the extra money that I did to help protect the environment by putting in secondary containment is being rewarded without additional costs or expenses, and in my opinion, they represent a higher threat to the environment.

I think EPA really missed the boat on that.”

Bruce Garrett, Volta Oil Company, Inc.

For sump testing itself, Garrett questioned the need for full sump testing up to the pipe level. The sensor activates below the pipe level; simply testing that for function should be all that is required while eliminating the need for more extensive pretesting work on the sumps.

For the counterpoint, Reber pointed out just using visual inspections (or relying on a sensor indication) won’t necessarily eliminate extra costs. “Frankly, what they are going to find is even the visual inspection on the front end may identify some incidental repairs on some entry fittings or something structural to the sump to make sure that it is watertight for the test,” he said. “But when they test, they will likely uncover some things that are not apparent visually, so it ends up being two-step process anyway. Also, the issue with leaks extends beyond just what’s coming into the sump structure from the bottom.

Surface water can be addressed, subterranean leak issues can be addressed, as well as fittings and structural issues.”

In a related issue, Garrett noted that the rules are currently structured to punish early adopters of secondary containment while letting sites not using secondary containment off the hook until they make an equipment change.

Into the Future And such tweaks might very well be in the works. PMAA fully appreciates the remaining concerns and plans on exploring any options that are still available. The association would still like to see that required review panel preform an analysis. And, a potential future lawsuit is not off the table. But the goal is a less draconian process.

“We plan to follow up with EPA and we have a list of questions,” said Underwood. “One of the biggest concerns we have, and we went into detail in our regulatory report, is related to the sump testing issue. We’re going to be looking into that and hopefully get some clarification from EPA to make sure it’s okay just fill it up to the sensor. There are also some concerns regarding under dispenser containment.”

The testing protocols potentially provide another avenue for tweaks. Much of the final rule hinges on a PEI recommended practice, RP1200.

“We might also be looking at doing some other testing protocol or working with PEI through its RP 1200 to see if we can get some of the minor changes that will significantly reduce costs for marketers and still achieve an equal result on preventing and detecting releases.”

“I believe we helped EPA in the process in that they didn’t have to figure out how to do tests and what tolerances and all of the processes and you can follow this if you want to overstate you can write your own,” said Renkes. “PEI recommended practices were referenced and the states can elect to follow the recommended practice and incorporate that by reference, or they can be stricter. Our recommended practices were written with regulators and equipment people in service contractors and end-users on the committee.”

“When you look at the regulations, if I have an underground storage tank that’s been there for a while I’ve got a submersible pump but I have no sump around it because it wasn’t required at the time,” he said. “And I don’t have dispenser sumps and I don’t have secondarily containment piping and I don’t need to do any kind of inspection around the sump. The guy that replaced the system five or 10 years ago and didn’t spend the extra money that I did to help protect the environment by putting in secondary containment is being rewarded without additional costs or expenses, and in my opinion, they represent a higher threat to the environment.

I think EPA really missed the boat on that.”

He noted that RP1200 will be fully reviewed in the next half-year with an eye on the EPA rule and additional community feedback.

“If people have strong feelings they can request us to change our recommended practices. I haven’t had any comments so far that our recommended practices are unfair, and EPA incorporated them because they were fair.”

He noted it creates an incentive to keep current systems without secondary containment operating as long as possible and prefers a system like the one recently enacted in Massachusetts as a preferable approach.

He noted that some states have already been more onorous in their testing requirements. “As we go through this we will probably have a lot of states do their own thing. The hard work now is at the state level.” n

“The new regulations passed in January have a pro technologybased approach,” he said. “Operators without sumps or with FMNMagazine

sumps that do not have sensors have a more aggressive inspection and testing cycle and only require testing to the level required to determine sensor performance. And they took it a step further, after looking at data that indicated that once a sump is tested it was good for 7 to 10 years after that, so it was basically a one-time test. I think that with just a couple of more tweaks they can make this a win-win for everybody and not a party for some.”

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Final EPA UST Rule—What’s Left?

U.S. EPA Issues Final Underground Storage Tank Requirements (Compiled by PMAA) The Energy Policy Act of 2005–Required states 4 receiving leaking underground storage tank (LUST) money from the EPA to meet certain guidelines. EPA established those guidelines which include: UST inspections as well as operator training, secondary containment and delivery prohibition requirements.

These guidelines were adopted by states and have been requirements for marketers to follow for a number of years now. The final UST rule simply adopts the EPA guidelines as regulatory requirements. There is a procedural change that will not affect tank owners who already must comply with these requirements on the state level.

and sensors, automatic line leak detectors, vacuum pumps and pressure gages, as well as hand held electronic sampling equipment.

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inspections on the following equipment: spill buckets, fill caps and check release detection equipment operability. Once per year, tank owners must check sump areas for damage, release or leaks.

E-15 Compatibility Requirements–The final rule adopts previously adopted EPA guidelines that require tank owners to demonstrate UST system compatibility with ethanol gasoline blends greater than E-10 or diesel fuel blends greater than B-20 by: certification and listing of equipment by a nationally recognized testing laboratory, equipment manufacturer approval or an alternative method developed by a state UST authority. Tank owners who plan to place fuel blends greater than E-10 or B-20 in a UST system must first provide 30-day prior notice to state UST program authorities. This is purely a “housekeeping” measure by the EPA (and does not change the E-15 compatibility requirements), which PMAA believes is inadequate to protect tank owners from liability in the event of a release.

Spill Prevention Equipment Tests–The final rule requires spill prevention equipment testing once every three years. The final rule does not require periodic testing of double walled spill containment equipment if the integrity of both walls is periodically monitored.

Under Dispenser Containment–The final rule requires the installation of double walled under dispenser containment any time the dispenser and all the equipment used to connect it to the vertical riser pipe from the UST system is replaced.

Walk Through Inspections–The final rule requires 4 tank owners to conduct UST system walk though

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Overfill Prevention Equipment Inspections–The 4 final rule requires testing and operation inspection of overfill protection equipment once every three years.

Tank owners must inspect automatic shut-off devices, flow restrictors and alarms. The test requires a demonstration that the equipment will operate or activate properly.

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Secondary Containment Testing–The final rule requires testing once every three years of all sumps that are used for secondary containment and interstitial monitoring of double walled pipes and/or other equipment, including under dispenser containment. The test must show that the sump is water or vacuum pressure tight. Double walled sumps used for interstitial monitoring of piping are not required to be tested if both walls of the containment sump are periodically monitored.

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Release Detection Equipment Tests–The final rule requires annual operational and maintenance tests on electronic and mechanical components of release detection equipment to ensure proper operation. Owners must: check ATG systems and other controllers; test alarm; verify system configuration; test battery back-up; inspect probes

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Statistical Inventory Reconciliation (SIR)–The final rule adds statistical inventory reconciliation as an approved method of leak detection. The final rule also provides performance standards that SIR methods must meet.

Vent Line Flow Restrictors–The final rule requires 4 ball float valves to be tested periodically for

operability. The final rule bans the installation of new ball float valves. Existing ball float valves may continue in service until replaced.

Internal Tank Linings–The final rule requires tank 4 owners to permanently close USTs that use internal tank liners as the sole method of corrosion protection when an inspection determines the lining no longer is performing to original design specifications and cannot be repaired. Lining must be inspected within ten years after lining and every five years thereafter.

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Change of Ownership Notification–The final rule requires tank owners to provide notice to state regulatory authorities anytime ownership of a tank system is changed. The final rule provides a new notification form entitled: Notification of Ownership Change for Underground Storage Tanks.

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RETAIL OPERATIONS

Final EPA UST Ruleâ&#x20AC;&#x201D;Whatâ&#x20AC;&#x2122;s Left?

Tank Testing Tips with the New Rule FMN contacted petroleum tank testing and environmental compliance services provider Tanknology for some tips and best practices relative to the new system testing requirements. Brad Hoffman, Tanknology's vice president engineering and R&D, responded.

What should a retailer be aware of with the new testing requirements?

Retailers will need to provide testing of release detection equipment annually, and testing of spill prevention, overfill prevention and containment sumps every three years. They will also need to obtain training for designated Class A, B and C operators for each of their UST facilities, and implement walk-through inspections to look at spill prevention and release detection equipment every 30 days.

There are also additional requirements that may affect some types of UST systems.

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What are going to be the easiest and the hardest requirements to manage?

Thereâ&#x20AC;&#x2122;s a 3-year implementation period and there are many providers of services for compliance testing and operator training, so retailers should have sufficient time and many choices of how to achieve compliance. However, the regulations may be confusing for some retailers, and it may be difficult if they wait until the last minute to implement their programs.

What would be some best practices suggestions?

For a retailer with multiple locations, it would be prudent to start early, to allow time to understand the requirements and develop a sound program. It will also allow for the testing and potential repairs or replacement of failed equipment to be completed and budgeted over several years instead of all at once. Even for a smaller retailer, it makes sense to get into compliance early to avoid potential delays or higher costs that may occur if they wait until the deadline. In addition, compliance with these new regulations will help to prevent releases from their UST systems, which should be a goal of every retailer.

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New and Interesting Product

P97 Networks Mobile Payment Solution

by Keith Reid

To say there is a “buzz” with mobile payments is an understatement. But,

there has been a buzz—at least at some level—for over a decade now.

There is good reason to believe though, that a tipping point has passed.

A November 2014 report from Business Insider’s research arm indicates that mobile in-store payments will grow at a five-year compound annual growth rate of 154%, to $189 billion in 2018 from $1.8 billion in 2013.

But, while the growth will be explosive, in-store mobile payments will still account for less than 4% of brick-and-mortar transaction value by 2018.

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RETAIL OPERATIONS

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Even so there are compelling reasons to get out in front of the trend. The transaction can be more convenient than traditional payment methods and similarly bring that convenience to loyalty, helping overcome a traditional hurdle. Mobile payment can also help work around oppressive credit card fees. Bringing all of those capabilities together with seamless payment should help drive consumer adoption.

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means that the company does not store, process or transmit any cardholder information within the system. This has an increased element of security.

To integrate its payment and loyalty support with the needs of the marketer, P97 has developed “white label” or private label applications so each of the brand and oil marketers will actually have their own branded apps for their consumers. This allows the different fuel marketers to be able to customize both the user interface with how they interact with their customers and also how they want to deliver loyalty programs, reward programs, customer incentives and digital offers.

“It’s a bit of a chicken and an egg,” said Don Frieden, P97’s president, CEO and chairman. “We first need to be able to get merchants to accept mobile payments and then we need to provide a really great user experience for consumers so they will actually use that.”

“It’s a bit of a chicken and an egg. We first need to be able to get merchants to accept mobile payments and then we need to provide a really great user experience for consumers so they will actually use that.”

P97 was founded in late 2011, and since then has been primarily working with the major oil companies to integrate effective mobile payments and mobile commerce on the oil company networks. While this was going on, P97 set up a cloud infrastructure based on the Conexxus and International Forecourt Standards Forum (IFSF) Mobile Working Standards. This allows it to support up to about 1,000 transactions per second. The company also developed a token vault capability and works with token service providers to make sure that all of the transactions are basically tokenized. For those unfamiliar with this term, it

Don Frieden, P97

Reducing Transaction Fees

“We provide the platform, and then we work with these oil companies to be able to determine what programs they want to customize and deliver specifically around their brands to their customers,” Frieden said.

Frieden defines a great user experience as first making the payment invisible for the consumer. The second point is providing incentives for consumers to use this payment method. He noted that while Apple pay got off to a good start its adoption has slowed down after the initial “wow” factor wore off. “There is no real incentive for consumers. So one thing we focused on working with oil companies and branded marketers is to basically combine mobile payment and mobile commerce,” Frieden said.

Reducing overhead and cost typically provides strong incentives for merchants.

“Crypto-present transactions are similar to a card-present transaction, but a physical card is not used,” Frieden said.

“A crypto-present transaction is the equivalent of an EMV-type transaction with enhanced data. This allows the lowest possible rates on traditional card accounts, but it can also be supplemented with other types of payments like debit card or ACH payments, which ultimately have the lowest interchange rates.”

Frieden noted that the consumer can load many different payment instruments and the marketer can then “tender steer” or incentivize consumers to use the payment method with the lowest interchange rate.

This technology also provides a safety valve for some operators with sites that are not worth upgrading to meet EMV requirements. Instead of shutting them down, or only making them “cash only,” there is now an option to allow that cash-only site to accept credit as well through a mobile platform.

The platform is compatible with a wide range of mobile wallet providers.

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RETAIL OPERATIONS

Loyalty The company’s PetroZone platform allows for such enhancements as free music downloads for the mobile phone or linking to the traditional loyalty platforms that the companies have already established. “When we pass the payment credentials/token, we also pass along loyalty so that the consumer is recognized and rewarded,” Frieden said.

The technology also enables a retailer to push digital offers to move consumers off of the forecourt into the c-store. These can be either internal offers or consumer packaged goods offers (P97 supports the major consumer packaged goods [CPG] companies with offers for the consumers to get them to come into the convenience store). “We do this in a very sophisticated way which allows for location-based, relevant offers linked to the time of day, weather or past buying habits. The benefits to the merchants include increased wallet share, or dollars within their facilities and lower transaction fees,” Frieden said.

P97 is also rolling out its 360 digital marketing platform. This allows marketers to communicate with consumers through their mobile devices using a variety of channels such as e-mailing and text messaging to provide real-time feedback to consumers based upon the consumer’s interests and the different programs the consumers opt into. Frieden noted that the oil company, CPG brands or marketers could develop almost personalized one-on-one relationships with consumers through their mobile devices.

“

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FYI: P97 Networks Mobile Payment Solution

“A crypto-present transaction is the equivalent of an EMV-type transaction with enhanced data.

This allows the lowest possible rates on traditional card accounts, but it can also be supplemented with other types of payments like debit card or ACH payments, which ultimately have the lowest interchange rates.”

Don Frieden, P97

Across Brands How does the solution play out between the branded marketer, unbranded marketer or mixed network?

We are currently working with a number of different types of operators,” Frieden said. “We work with branded marketers that represent a single oil brand, and in that case we coordinate with the oil company so that we can support their card deck.

“For multi-branded, we provide a single cloud infrastructure that allows them to support a white label or a branded mobile app for their c-store brand so they can build regional-based customer rewards and loyalty programs promoting their c-store brand, but also coexist with the major oil company network.

“For unbranded marketers we support the different point of sale systems, and offer white label apps to promote their convenience store brand and proprietary fuel brand.

We can work with marketers that have six or eight sites, to oil companies with 10,000 sites.”

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The Process How does the process work in the field?

A first-time customer will download the app for the particular brand. The customer will then set up the various payment methods and loyalty programs to get the maximum rewards and incentives.

Once set up, the customer can then use voice commands to find the nearest retail site in the network. Once at the location, the customer is geolocated or “geofenced” so the system knows the physical location, and then all the customer has to do is declare the dispenser that is being used. Once that is done, in as little as three seconds a preauthorization is accomplished which is about as fast as the consumer can get out of the car and walk around to start fueling. Also during that time the digital offers are downloaded to the phone and the customer is informed of any rewards available for discounts on fuel or inside the convenience store. No code scans are acquired.

As soon as the customer completes fueling, he or she can leave the island having already selected the type of receipt in a preferences process (from one printed at the dispenser, to an electronic receipt or text sent directly to the phone). Frieden noted that this can streamline the authorization process between 30% and 60%.

With in-store, the geolocation feature effectively checks the customer into that convenience store so he or she can take advantage of the offers that were delivered to the mobile phone and linked to the site’s point-of-sale system. Once the product scanning is complete, the clerk will scan a QR code from the phone, which basically matches the consumer to loyalty offers and payment.

P97 currently has six oil companies under contract at different levels, from publicly announced programs through various trials leading up the market launches later this year or early in 2016. For example, Kwik Chek is on board, which operates locations across Texas and Oklahoma. n

For more information visit www.p97.com.

ADVERTORIAL

PCI compliant credit card processing customized for petroleum companies While processing transactions and ensuring contracts are faithfully adhered to, fuel and lube distributors must also meet the demands of all of their customers for easy, safe transactions and speedy service. FireStream's PaymentStream is brand new software that allows downstream operators to manage transactions and payment processing in a secure and efficient way.

With online bill pay and text-to-pay functionality, PaymentStream furnishes the latest designs of payment options for the modern consumer, and rather than hosting costly and potentially unsecured servers on site, companies can utilize PaymentStream to move financial information and critical credit card data to the cloud. For complete PCI compliance, all credit card-related data is tokenized and kept in hyper-secure vault software in the cloud where petroleum accounting software can access it for transactional purposes without actually storing any sensitive data.

PaymentStream is an included feature of FireStream's Ascend Back Office and it also integrates with any other ERP system.

The cost-free implementation of this costsaving measure frees up resources so that companies can reduce the number of personnel needed to process payments and handle customer data. Between the customized model of PCI compliance and the savvy functional design of Payment Stream, FireStream has brought the best of its expertise in facilitating operational best practices in downstream and midstream petroleum to credit card payment processing.

In today's fast-paced, ever-evolving economy, businesses must operate at full capacity at all times. And with heightened

attention paid to cybersecurity and data protection, companies need a diligent and expert provider of credit card payment processing software. PaymentStream utilizes the secure Avatas gateway and promises to pass along the lowest possible transaction rates to fuel wholesalers and retailers. In fact, it was Avatas that spearheaded the victorious lobbying effort against Visa/MasterCard for the groundbreaking congressional legislation which re-classified certain segments of downstream petroleum under the utilities sector, cutting processing fees by 50% and saving the industry more than a billion dollars to date.

Unfortunately, unlike PaymentStream, not all credit card payment processing providers pass these savings along to their customers, choosing to instead pocket the difference without any disclosure.

Moreover, oftentimes, fuel wholesalers and retailers are working with another credit card payments provider that is simply not taking advantage of every opportunity to get them the best possible rates. The lowest transaction-rateguarantee from PaymentStream provides immediate hard-cost savings to more than 9 of 10 companies over their current providers in the U.S. and Canada.

Along with cutting processing fees to the actual minimum, reducing AR staffing hours and trimming the IT burden of maintaining PCI-compliant credit card data security, PaymentStream allows companies' customers to take advantage of a plethora of other user-friendly features. For instance, customers who receive home heating fuel can pay their bills online or they can enroll in text-to-pay billing, whereby they receive an SMS notification of upcoming bills and can FMNMagazine

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simply respond with a four-digit security code via text to pay their monthly balance. This code is linked back to the provided credit card information so that customers no longer have to repeatedly re-enter the same information over and over each billing cycle. As people read incoming text messages within the first minute of receiving them 80 percent of the time, companies that send bills via text have a higher chance of getting their payments on time, which increases capital and revenues and decreases costs associated with collections.

Roughly 17 percent of credit cards expire every year, which means companies that rely on automatic billing cycles have to staff personnel to both collect new credit card data and recoup each customer's unpaid balance. Each turn where a customer has to re-up with new credit card information is a chance for them to consider giving their business to a competitor.

PaymentStream solves these issues by automatically updating credit cards backed by all major U.S. banks, providing a seamless transition to the new card without any costly and generally tedious efforts to chase down customers for their new information. n

For more information: email marketing@firestream.com

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VENDOR VIEW

by Brian Reynolds Where’s the Beef!

The fuel business is an ever-

changing set of rules and regulations, rising and falling oil prices, competitive challenges, etc. I’ve been asked over the years: “Where do you go to learn all this stuff?” Unfortunately, there is no formal education that I am aware of that breaks down the Petroleum Marketing business in segments such as in a university setting. You just have to jump in and start swimming. For those of us yearning for the old days of a simpler time when nobody thought of success in terms such as “high volume retailing,” and “24/7” wasn’t even a concept, here is an attempt to make the complex simple.

The Retail Fuel

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If you can’t make your point in less than 30 seconds, such as in a clever television commercial, your audience isn’t going to invest any time trying to understand the problem.

Business Broken Down in 30 SECOND ” Sales Pitches FMNMagazine

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Most people are in a hurry these days. If you can’t make your point in less than 30 seconds, such as in a clever television commercial, your audience isn’t going to invest any time trying to understand the problem. Therefore, I am going to use old advertising slogans as the theme for quickly making a point.

WHOLESALE & FLEET OPERATIONS

Melts in your mouth, not in your hand.

This refers to the nature of petroleum regarding expansion and contraction and its relationship to Net and Gross Gallons. The easy to understand version is that fuel shows up in gross gallons and goes out in gross gallons. For environmental and statistical inventory reconciliation (SIR) purposes, it is reconciled in gross gallons because that is the way it is dropped into the tank, and the way it leaves the tank. Then it goes through the underground plumbing and leaves the dispenser, and is still reported in gross gallons. Since the number of gross gallons changes with temperature change, financial

“” accounting should be performed with net gallons. Because net numbers are fixed, they do not expand and contract.

Here is the easiest way to think of this.

Fuel starts out at the terminal as a gross gallon. Then using the temperature of the fuel, it is converted to a net gallon for accounting/payable purposes. The product then leaves the terminal as both a gross and a net gallon. It is then transferred to a petroleum storage tank as a gross gallon and is changing in volume as the temperature changes.

The product is then dispensed as a

“Remember one number, which is 60: 60 net gallons equals 60 gross gallons at 60 degrees!”

Brian Reynolds’ dad

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gross gallon. So, why all the confusion?

The fact is that fuel, milk, water and just about anything you can pour out as a liquid expands and contracts. The need for standardization for payable purposes was tremendous. Therefore, the standard of creating a fixed average temperature was created, which is 60°F. Why 60°F? Well, 60 degrees is the average temperature of an underground storage tank in many parts of the globe.

This is the only method that allows the Marketer at time of purchase to ensure that the amount purchased is exactly how much was received. If it is warmer than 60°F, the fuel will have already expanded, and when it cools off, less product will be what shows up.

Here is the way my dad taught me this back when a wooden stick with baby powder on it was the preferred measuring system. He said, “Remember one number, which is 60—60 net gallons equals 60 gross gallons at 60 degrees!”

WHOLESALE & FLEET OPERATIONS

The Retail Fuel Business Broken Down in 30 Second Sales Pitches

Good to the last drop.

This slogan refers to the fact that the EPA has an acceptable margin of error of +/- 1% and 100-gallon variance in fuel inventory. This is an expensive and unacceptable number for acceptable error. Today there are ways to determine the likely source for losses, such as temperature, meter drift, theft, leaks and delivery errors. 1% of an 8,500-gallon delivery is 85 gallons. If it is possible to accurately draft an invoice based on a bill of lading delivery, then it should be acceptable to determine if a delivery was accurately made, and if not, take measures to remediate the difference.

You got your chocolate in my peanut butter.

Nothing sucks like Electrolux.

And, the same can be said for pumping gas from a dispenser that is barely going! Flow rates and meter drift can cost an operator money, from giving away product to losing a customer. Having the ability to determine dispenser conditions in realtime is no longer a guessing game.

Brian Reynolds

From time to time it does happen where a load (or partial load) unintentionally makes it to the wrong location or the wrong tank. Both are bad, but when either happens, it can be detrimental to the business that the wrong product goes into the wrong tank or a delivery magically goes to the wrong location without documentation.

Today, with technologies such as continuous fuel monitoring, it can be determined in moments that these events occurred.

A mere 30 seconds isn’t a lot of time to learn and understand something. However, not taking the time to learn something and just guessing is not only expensive, but it can lead to a “heap of trouble”! n

Where’s the Beef!

Don’t you hate it when your customers are the only people who know when a dispenser is down! Creative Dashboard mapping can determine, at a glance, dispensers that are down in a mission control-like setting.

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Brian has been a petroleum marketing professional for over 40 years. He began his career as a youth working in family owned petroleum marketing company in Cisco, Texas. Reynolds was a pioneer in the field of high volume supermarket fueling. The business model invented has been one of the most copied in high volume supermarket petroleum retailing for the past 20 years. He is currently a major account representative at Simmons Corporation for continuous fuel monitoring, regulatory environmental compliance and automatic tank gauges.

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E85 Fueling Equipment What You Don’t Know Could Hurt Your Bottom Line

E85 As the U.S. looks for ways to

reduce its carbon footprint and its dependence on petroleum, renewable ethanol-based fuels deliver an alternative fuel at a price point that is accessible to most consumers.

As such, the market for E85 has grown substantially over the past decade, and is projected to continue to grow. There are now over 2,600 retail fueling locations for E85 in the U.S., as marketers compete to entice this additional segment of consumers to their stations.

According to the 2014 Fuels Institute report “E85—A Market Performance Analysis and Forecast,” the number of outlets selling E85 annually increased an average of 14.3% from 2007 to 2014. By 2023, there could be between 8,907 and 11,151 stations selling E85. And although the cost-benefit of ethanol production has been a source of public debate, recent studies cited by the Alternative Fuels Data Center (AFDC) about corn production methods indicate that corn ethanol has in fact demonstrated a positive energy balance, meaning that the energy required for fuel production does not exceed the amount of energy contained in the fuel itself.

by Joe O’Brien

Notwithstanding these forecasts, there are competing factors impacting the market for E85. The recent Renewable Fuel Standards suggest that ethanol is not as critical to federal long-term plans, but various governmental and proethanol entities are providing significant financial incentives to encourage infrastructural development. And ethanol is often seen as a fuel that has strong influence in the Midwest and the Corn Belt, rather than a fuel that benefits the entire nation equally, so adoption of E85 has followed a regional growth pattern. In this environment, most vehicle manufacturers will likely maintain the current relative percentage of E85 flex-fuel vehicles in their fleets, and wait for the market demand to justify any increased production.

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Despite the potential for market growth, investing in E85 equipment upgrades can be a daunting task— from both a financial and logistical perspective. The chemical properties of ethanol pose a significant challenge for retailers looking to add E85 compatible systems to their forecourt. For example, ethanol blends can damage soft metals including aluminum, lead, brass and zinc, as well as affect the functional properties of natural rubber, polyurethane, cork gaskets, leather, polyvinyl chloride, nylon, and certain thermoplastic and thermoset polymers. Additionally, as a conductor of electricity, ethanol can cause galvanic corrosion in piping, pumps, tanks and dispensers.

Therefore, only ethanol-compatible materials can be used to store and dispense the fuel.

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WHOLESALE & FLEET OPERATIONS

Upgrading the forecourt to offer E85 can be an expensive investment—especially with EMV conversions on the horizon.

Depending on site-specific and state code requirements, the cost of installing new or converting existing equipment can vary widely: from a few thousand dollars to install approved dispenser retrofit kits up to hundreds of thousands of dollars to retrofit underground systems.

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Upgrading the forecourt to offer E85 can be an expensive investment—especially with EMV conversions on the horizon. Depending on site-specific and state code requirements, the cost of installing new or converting existing equipment can vary widely: from a few thousand dollars to install approved dispenser retrofit kits up to hundreds of thousands of dollars to retrofit underground systems.

A retailer who poorly executes an E85 equipment upgrade— or fails to properly maintain it—risks damaging expensive equipment, diminishing customer loyalty and, ultimately, sacrificing profits. Here are five “best practice” considerations that all retailers should keep in mind if they decide it is right for them to add E85 to their forecourts:

3. Be sure installation technicians use thread

1. For retailers converting existing

underground infrastructure, proper preparation of compatible tanks and the entire fuel handling system is essential.

sealant designed for E85 on any and all threaded mechanical joints throughout the entire fuel system.

In many cases, existing gasoline and diesel storage systems can be used to store ethanol blends. However, E85 will absorb contamination left behind by petroleum. Insufficient tank cleaning can result in tainted E85. Contaminated fuel can affect vehicle performance or, in extreme cases, damage automotive fuel systems and result in diminished customer loyalty. And although the AFDC reports that E85 dispenser failures have been rare, when they occurred they were attributed to either poor tank cleaning or failure to use compatible filters, nozzles or hoses.

In addition to utilizing piping and storage tanks that can withstand the corrosive properties of ethanol blends, it is essential to use a thread sealant engineered for E85. A pipe dope that is not specified for E85 is likely to degrade, making the infrastructure susceptible to leaks. A Teflon-based pipe thread sealant will provide corrosion protection for black-iron and galvanized pipe. It is critical that the proper thread sealant be used not only on externally visible and easily accessible mechanical joints such as nozzles, hoses and dispenser fittings, but also on mechanical joints throughout the entire fuel system, such as pipe fittings that are underground or buried.

2. Become familiar with current

4. Update blender pump control systems as

Underwriters Laboratories (UL) and manufacturer standards for E85 equipment to ensure your equipment is operating both safely and according to regulation.

the spec for E85 varies.

Just as gasoline and diesel are adjusted for seasonal and geographic variances, E85, which can contain anywhere from 51 to 83% ethanol, is adjusted to address temperature differentials to ensure performance. Fuel retailers who fail to update blender pump control systems when the fuel spec changes risk distributing fuel that is not meeting American Society for Testing and Materials (ASTM) international standards.

Retailers who dispense fuel through equipment that is not properly listed for that fuel risk violating federal and state regulations, as well as tank insurance policies and bank loan covenants, which could result in litigation. Be aware that UL listings only certify that various products meet the UL’s fire safety standards, and that manufacturer assertions of product compatibility with E85 may not necessarily meet all local and state fire codes. Recent UL standards for ethanol equipment include 2586A, 567A, 842A, 87A, 79A, 331A and 25A. In addition, the Alternative Fuels Data Center provides equipment lists denoting ethanol blend compatibility for tank manufacturers; compatibility with ethanol blends for other equipment such as pipes, sumps, vents and valves; and ULCertified E25 and E85 Fuel Dispensing Equipment.

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WHOLESALE & FLEET OPERATIONS

E85 Fueling Equipment—What You Don’t Know Could Hurt Your Bottom Line

5. Deploy an E85 dispenser filter as a last

With fuel sales spurring purchases inside c-stores at convenience stores across the country, stations offering E85 position themselves to attract new customers and, ultimately, drive profits. Fuel retailers who partner with a trusted fuel equipment adviser and follow best practices for installing E85 equipment will align their operations to not only capture revenue from the growing E85 market segment, but maximize their return on investment. n

line of defense.

A quality dispenser filter that is regularly maintained will help prevent possible contaminants from reaching customers’ fuel tanks. The U.S. Department of Energy’s “Handbook for Handling, Storing and Dispensing E85 and Other Ethanol-Gasoline Blends” issues the following guideline for E85 dispenser pumps: E85 and blender pump dispensers require filters with a nominal rating of 50% for particles 5 microns or larger and an absolute rating of 99% for particles 10 microns or larger.

The E85 market has been on the precipice of growth for the last decade and some retailers may be intimidated by the prospect of infrastructure upgrades. But with c-stores realizing record profits in 2014, now may be a fortuitous time to make capital investments. Experienced equipment suppliers can not only help retailers analyze the compatibility of their current infrastructure, they can provide cost-effective equipment and installation recommendations that will fit into their operation’s overall plans.

Joe O’Brian Joe O’Brien is Vice President of Marketing at Source™ North America Corporation. He has more than 20 years experience in the petroleum equipment fuel industry. Contact him at jobrien@sourcena.com.

READ MORE at fuelmarketernews.com

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The number of retail fueling stations offering motor fuel that can be up to 85% ethanol, known as E85, has grown rapidly since 2007. According to the Alternative Fuels Data Center, Minnesota continues to lead the nation, with 336 E85 retail locations. However, in recent years, states outside of the Midwest have experienced some of the fastest growth. Currently, 2% of all retail stations in the United States offer E85, serving the approximately 5% of the U.S. light-duty vehicle fleet capable of running on E85.

Energy Information Administration, March 7, 2015

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at fuelmarketernews.com

WHOLESALE & FLEET OPERATIONS

VENDOR VIEW

OBCs for Carriers:

Cut the Cord!

by Kirby Smith

My attitude about technology has changed dramatically in the last few years, and while it has stirred occasional anxiety, it is dominantly for the better. I recall a time in the mid-eighties as a fledgling headhunter fighting writerâ&#x20AC;&#x2122;s cramp keeping my Rolodex and Plan-A-Date current. In 1987, my executive search firm purchased an IBM PC-XT for around $5,000, and the inexorable quest toward the paperless work environment ensued.

Fast forward to today, and my trusty paper-based trappings have been replaced by one device I carry in my pocket and charge every night. It is orders of magnitude more powerful than that first IBM PC of yesteryear. I have conceded memorizing countless phone numbers for a contact list that even responds when I talk to it! Now if I could just remember my own home phone number. But I digress.

Your drivers are no different. In their personal life, their spouse and kids know how to reach them at all hours of the day. The tough reality for many is that they re-live (a not so desirable) history as soon as they arrive in the yard to clock in and start their pre-inspection on the truck. Paper inspections and logs, a list of work for the day (or maybe first load-out), a stack of preprinted delivery tickets, and the ever-present wire top flip pad stuffed in their left front pocket are the traditional tools of their daily commerce.

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“

WHOLESALE & FLEET OPERATIONS

Vendor View: OBCs for Carriers: Cut the Cord!

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Your choice: Should you make the work experience superior for your drivers, or should you allow your competitors to provide it to them when they change fleets?

Proper use of technology is one more way to remind your drivers that you want their day to be efficient, simple and error-free.

For some, in addition to the manual tools, an additional device is included in the mix. It is the now ubiquitous OBC, or OnBoard Computer. These are typically fixed-mount, hardwired legacy devices originally designed for over the road (OTR) and less than truckload (LTL) applications. They often interact through a series of abbreviated prompts and button-based or numeric responses. Many of these devices have been “shoehorned” into the tanker truck space—and it shows. The driver interaction makes talking to overseas customer service phone banks a walk in the park.

Retaining drivers can be a challenge in many markets. Retaining great drivers is a challenge in every market! Drivers desire certainty in their shifts, and excellent replenishment planning systems with easy-to-master OBCs facilitate that certainty. Your choice: Should you make the work experience superior for your drivers, or should you allow your competitors to provide it to them when they change fleets? Proper use of technology is one more way to remind your drivers that you want their day to be efficient, simple and error-free. Here are a few “Rules of the Technology Road” to consider when evaluating OBC solutions:

Make it simple—You don’t want to replace a

driver with “Bill Gates with a CDL.” One fleet owner said this profoundly; “I want to train my team in 30 minutes.”

Make it comprehensive—You don’t want two, or three, or four devices with which the driver must interact. Not every function may work in standalone mode, but every feature must be accessible through a single device.

Make it fun—A fleet owner shared an

interesting anecdote with me. He stated that, “My drivers show off their tablets when they are talking to other drivers at the rack. I like that! It improves my brand value to make their lives easier.”

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Make it safe—You don’t want a driver to have the ability to read or respond to a message from dispatch while the truck is in motion. You can’t allow the technology you deploy to cause the driver to take their eyes off the road while underway. Period.

Make it profitable—Consider every

minute in the order management process, and how to reduce or eliminate it. Never ask a driver to provide a single piece of data that can be collected from another source or a prior step.

Consider timeliness: what is the elapsed time from product entering the tank to an invoice delivered to the customer? Think in minutes, not hours or days.

Make it a commodity—If a driver

breaks their tablet, you should be able to run to a local discount or electronics store and pick up a replacement. As new versions of the tablet appear on the market, you should be able to buy version 2 and use it in new trucks while version 1 continues to meet needs in prior trucks. Obsolescence is no longer an acceptable alternative.

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WHOLESALE & FLEET OPERATIONS Like it or not, the future is mobile devices for today’s applications and others we have not even conceived of yet. For OBCs, the future is in outfitting your fleet with low-cost, easily replaced commoditized appliances that drivers not only master quickly, but actually embrace. We are experiencing a significant paradigm shift that has been underway in our industry for a good three years now. This shift is taking us away from the fixed mount, hard wired legacy devices to portable tablets that can be carried outside the vehicle for pre- and post-vehicle inspection reports (VIR) and sticks, as well as signatures for paperless delivery tickets.

Apple and others have done a terrific job with their readily available photo and scanning capabilities that have major implications for BOL capture and commercial fueling operations. For instance, BOL photos with PDF formatted delivery tickets can be e-mailed to the customer within minutes of a delivery.

Vendor View: OBCs for Carriers: Cut the Cord!

Furthermore, there are many scanning apps that can be incorporated into a fuel delivery application that are quite good at picking up a bar or QR code on a tank within a couple of seconds (be it a skid or even a vehicle tank when wet-hosing).

With the advent of Bluetooth printers, there is no longer a need for a driver to write down load-unders and product quantities to be lifted before he puts his OBC to sleep at the terminal.

These advancements have profound implications for your fleet, and should be considered when evaluating OBCs. The bottom line for carriers is that it is not partially about the driver, or even mostly about the driver. It’s all about the driver! Make it easy on them and you will reap the rewards. n

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Kirby Smith Kirby Smith is GM Sales for Intellifuel Systems, Inc., which provides automated operational process solutions to the petroleum and biofuels industries. With deep roots in the petroleum industry, Intellifuel has the experience and knowhow to create, deliver, and implement tools that enhance our customers’ profitability. Contact: www.intellifuel.com or 321.264.8707

First, the author Mr. Abramson notes that “more people will be killed in traffic accidents involving large trucks this year than have died in all of the domestic commercial airline crashes over the past 45 years,” implying the trucking industry is responsible for all these deaths. This simply isn’t true. Per the most recent federal data available, upwards of two-thirds of all serious crashes involving large trucks are caused by the actions of someone other than the professional driver.

Speeding, impaired driving and other aggressive behaviors by non-commercial drivers cause far more truck crashes than do fatigue or other issues cited by the author. This is why ATA supports highway safety programs like America’s Road Team and Share the Road where our professional drivers educate the best ways for trucks and autos to interact on the roadways safely.

American Trucking Association rebuttal to an August 29 New York Times article on trucks and highway safety

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Entrepreneurship

BUSINESS OPERATIONS

by Joe Petrowski

After working for a few years

out of college, so many young people desire to start, own and operate their own businesses.

While most are likely inspired by the Steve Jobs and Bill Gates of the world, and many other tech tycoons who started in their garages or basements, this desire is perfectly understandable and should be encouraged. While achieving mega wealth like Gates, Jobs or Bezos is rare, the desire to be your own boss and the pride in creating a product, service or process is universal and as American as apple pie.

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In fact, the great majority of jobs, wealth and better living were created by American entrepreneursâ&#x20AC;&#x201D; not by established corporations, and not by governments. While community organizing and public service is noble, individual entrepreneurs have done more to improve living standards for the common person worldwide than all the governments and political agitators put together.

Steve Jobs, Bill Gates, Thomas Edison, Henry Ford, Will Durant, Jeff Bezos, Clarence Birdseye, JP Morgan, John

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Rockefeller, Ray Kroc, Sam Walton, Cyrus McCormack, George Mitchell and Andrew Carnegie are the real heroes of progress and quality of life improvement.

The question is often asked: How do I get started? The following is a primer that I think is helpful. Iâ&#x20AC;&#x2122;ve started, grown and sold several businesses in my career and the following is what I have learned.

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BUSINESS OPERATIONS

Entrepreneurship

First, remember the essence of a new business is one of three things that must be present. If you have all three call me and I will invest “pari passau” (on equal terms).

• Fulfill a need • Satisfy a desire • Do something more efficiently, faster or of a higher quality If you cannot identify quickly and in one paragraph any of the above you may not have a business opportunity.

What is your cost of infrastructure to deliver the service or product (people, plant, equipment)?

Who are your competitors?

How will you finance between debt and equity, and how much capital will you need, and where can you source both? Debt for entrepreneurs is hard to get and expensive, especially early on when interest payments need to be made before profits roll in. But, giving others equity loses your control, which is the very reason you launched a start-up.

Next, generate a realistic business plan. That starts with some good research on understanding the following:

Who will you be taking business from?

What is the demand for your product or service?

What is your competitive advantage over others?

Who is your customer and size of the market?

What are your barriers to entry and what barriers can you create to forestall imitators?

What is your pricing point?

What is your cost of service or product?

What is your ramp up time and the level of sales to breakeven? That is, if your total operating cost is $100,000 and your gross margin is 10% how soon can you get to $1 million in sales or revenue.

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All entrepreneurs need start-up assistance, legal, regulatory, financial and operational.

Identifying those needs early and building a team of advisers is essential.

Remain Patient and Confident Some 500,000 businesses start every month in this country. Half of them survive five years, one-third last 10 years and 25% last 15 years or more. Roughly 65% of all net new jobs in the last 20 years were created by start-up entrepreneurs, so tell our political leaders: “Yes, I did build that.”

Of the 14 all-star business entrepreneurs listed earlier, all were billionaires and all of their businesses have survived to today. n See Joe’s bio, page 17

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Obtaining Convenience and Gas Bank Assetsâ&#x20AC;Ś

by Corey Henriksen

A Great Acquisition Opportunity, But You Have to be Prepared.

BUSINESS OPERATIONS

Lenders often approach me greatly agitated about nonperforming gas station and convenience store loans. Talk about a motivated sellerâ&#x20AC;&#x201D;the thought of a retail petroleum loan becoming nonperforming makes a banker very nervous, but the possibility of an operator turning in the keys and having the site(s) go dark causes the banker apoplexy.

Hence, the opportunityâ&#x20AC;Ś

My Perspective.

Please note. My business focus is not on Buy-Sell brokerage. My focus is on financing. Only financing.

And, only downstream petroleum financing. I do not represent banks. I spend my days helping petroleum wholesalers and convenience store retailers secure financing, which does mean that I spend a great deal of time talking with lenders and educating them on the virtues of lending to downstream petroleum operators. I have been doing this for over 20 years, so many lenders will call me when they have troubled convenience and gas assets that they want to restructure. Therefore, I also help my borrowers finance their purchase of restructured convenience and gas assets from lenders.

The purpose of this article is to give you a basic understanding of the lender process of managing nonperforming assets and a basic plan of attack in taking advantage of the opportunity.

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Understanding the Opportunity.

The General Lender Process.

As a general statement, lenders make loans to borrowers and either hold the loans in their own portfolio or participate them out to other lenders. In addition, they usually retain the servicing and receive a fee. As long as the loan is performing, the loan is in general servicing.

Once the borrower goes into default, which is not immediately cured, the loan then goes into a special servicing group, which deals with nonperforming loans.

The loan is assigned to a special servicing asset manager who then puts together an Asset Management and Disposition Plan (AMDP). The AMDP details the strengths and weaknesses of the asset and a plan of action for the lender in managing and, if necessary, disposing of the asset. The AMDP is then approved by a higher signing authority or credit committee as the guideline for managing the asset.

The asset manager can recommend, among other things, to: (a) sell the non-performing loan, (b) foreclose and attempt to sell the underlying asset at a foreclosure sale to obtain proceeds to pay off the loan and its attendant costs, or (c) take the underlying asset back as a bank real estate owned (REO) if the foreclosure sale is unsuccessful and then attempt to sell the bank REO to pay off the loan and its attendant costs.

The asset manager can also recommend for the lender to enter into a pre-foreclosure negotiation to have a third party buy the underlying asset from the borrower and either: (a) step into the shoes of the borrower and assume the loan, or (b) pay off the loan with cash or from proceeds of financing with a different lender.

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BUSINESS OPERATIONS

“

”

Obtaining Convenience and Gas Bank Assets

A Basic Plan of Attack One. Before looking for an

Negotiate hard, but also have a personal go/no go term sheet in mind so that you know at what point you will walk away from negotiations with peace of mind.

opportunity, have your team in place and your books in order on your existing business.

Have your team in place. Your lawyer, CPA, financial advisor, broker, operations advisor, environmental advisor, etc., all fulfill a distinct niche in giving you reasoned advice about an opportunity. A word about advisors: you can’t be the smartest person in the room on all topics. Instead, hone your skills in finding and utilizing competent advisors for your decision-making in all facets of an opportunity; they will save you money and costly mistakes with their experienced guidance.

Finally, set up your strategy. With the reasoned guidance of your team and the continually updated information in your negotiations, the path will become clear. Is this a transaction that makes sense for your operational strengths? Negotiate hard—based on the pressure points that you discern—but also have a personal go/no go term sheet in mind so that you know at what point you will walk away from negotiations with peace of mind.

Have your books in order on your existing business. Have your financials together and everything up to date and ready to submit. Have a package in place with your basic materials prepared, just as if you were doing a submission for a refinance.

When you find an opportunity, you will have to move quickly.

The sale does not always go to the highest price, but rather to the best-positioned operator.

Throughout the United States, there are always lenders looking to move convenience and gas loans off their books.

The reasons for loans becoming nonperforming are as many and varied as the individual borrowers and lenders. There is no “one-size-fits-all” strategy for obtaining these assets.

However, being prepared with your team in place, your books in order, and a method for planning and executing your strategy enables you to address the issues of an opportunity quickly and decisively, and come away with a great acquisition from a lender.

Two. Once you find the opportunity, then you need to understand fully the site(s) and the pressure points of the participants, and then plan your strategy accordingly.

Hence, be prepared if you want to take advantage of the opportunity. n

Understand the site(s). Will you need to obtain additional funds from the lender to do certain upgrades (or even deferred maintenance)? What will it take to season up the sites? You will need to quantify the opportunity by putting together a pro forma-best case scenario/worst-case scenario. Environmental issues? Supply contract issues? Not only does this investigation include everything in your checklist for the acquisition of any site from a third-party, but also how these sites will affect your existing business.

Corey Henriksen

Understand the pressure points of the participants. Where are you in the lender process? Are you purchasing a nonperforming loan? The underlying asset at a foreclosure sale? The underlying asset as a bank REO? Or are you going to negotiate a preforeclosure purchase with the current borrower with the approval of the lender? If you need extra funds for upgrades, from where will they come? The current lender? A new lender?

Will you refinance some of your other sites and pull equity, or negotiate better terms because of diversity of collateral? What about the lender? Are they willing to provide you financing? Are they interested in taking a short sale? If you’re doing a preforeclosure purchase, how motivated is the borrower/seller?

The questions that you ask will be dictated by where you are in the lender process and the nuances of the particular transaction.

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Corey Henriksen is Managing Director of Acquisition and Refinance Capital, Inc., a firm founded for the sole purpose of obtaining numerous capital alternatives for wholesale and retail owners and operators in the petroleum industry.

Corey is a member of NACS, SIGMA, CIOMA and WPMA and is a regular speaker on financing for petroleum retailers and wholesalers.

Corey can be reached at 949.481.8500 or www.AcqRefCap.com.

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6

Six Tips for Reducing Workers’ Compensation Costs

In the increasingly complex and litigious world of workers’ compensation claims, managing costs remains a priority for many companies. Industry experts agree that successful management of these expenses must be comprehensive—from the time of the injury through recovery and eventual return to work.

Throughout the claim resolution process, there are many opportunities to both engage the injured employee and manage costs. Here are six best practices for reducing your workers’ compensation claims.

by Greg Cushard and Ryan Brown

1

Cost Management Begins at the Point of Injury to the Worker

brain specialist, not a general practitioner. If it is someone who has complex pain issues, a specialist is better equipped to treat the case than a general practitioner, saving time and unnecessary medical costs.

Early intervention from the time of the initial injury—to provide guidance and gather facts—is important to managing workers’ compensation claims.

What occurs in the first 24 hours post injury is critical.

Studies confirm that the longer it takes to report a claim, the higher the cost.

It is estimated that 30% of all injured workers require medical guidance instead of medical care. This means that 30% can be resolved with self-treatment, and a claim does not have to be filed. It eliminates a costly visit to the emergency room, where expenses can quickly climb to $1,000 or more.

Prompt treatment and proper guidance to direct the patient to the right provider help deliver the best outcome for the employee. If it is a brain injury, the worker needs a

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An injury is frequently a new experience for many employees who are looking for guidance. Where that guidance comes from, whether on the employer’s side or the claims-handling side, makes a difference. A recommended best practice is to use a nurse triage process. Nurses will record initial interviews at the site of the accident, a critical time when facts can be clarified and confirmed. A worker is likely to be more forthright in sharing information with a nurse than with a claims professional. A nurse triage also determines whether treatment is even necessary and then guides the patient to the appropriate medical provider.

Early engagement by an employer with an injured employee following an incident also aids in setting the expectations of the process, which can ease certain frustrations and anxious moments that could prompt the employee to contact an attorney.

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BUSINESS OPERATIONS

WORK ER S’ COMPEN SATION RESOLUTION PROCESS

Workers’ Compensation Resolution Process Supervisor Review

Medical Management

Reserving

Claim Setup

Settlements

LITIGATION ATION MANAGEMENT A 1

Intake

2

3

Adjuster Assignment

4

5

6

7

Compensability Determination

Resolution Strategy

3 2

Initial Documentation of the Facts Should Be Reviewed Regularly Throughout the Lifespan of a Claim In cases that extend 12 to 18 months, the adjuster and the employer need to continually refer to the original recorded statement or detailed interview. Employers should go back and review what was documented up front, paying particular attention to the direction of the claim from the original statement and procurement of the facts that helps resonate with the rest of the case. It is important to take into account demonstrated risk, examining the increase in exposure as the claimant continues treatment, particularly for conditions not related to the original injury.

4

Setting a claim on the right trajectory, too, can improve the chances of controlling costs and reaching a mutually desired outcome for both employee and employer. Focus should be on those claims that lead to the highest cost and highest risk. Typically, 6% of all claims comprise up to 50% of the overall costs. These tend to be complex catastrophic claims, such as brain injuries, spinal column injuries or amputations. However, managing all claims as soon as an injury is reported is paramount.

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8

9

Disability Management

10

11

Cost Recovery

Monitor Activity Closely During Recovery During the recovery process, it is important to maintain frequent contact with the employee and to perform activity checks. Employees should follow the recommendations of the treating physician for optimal recovery and cost containment.

Social media accounts are useful in monitoring employees’ activity during recovery. Employees can be surprisingly candid in describing their daily activities and may include things such as bowling, hunting or softball. While not routinely necessary, targeted surveillance may show activity outside restrictions.

Controlling Drug Costs Is Key to Managing Spending Having analytics in place to intervene early when prescription drug overuse is detected can prevent a case from heading into a costly spiral.

It is no exaggeration that there is a national epidemic regarding certain drugs in the U.S.; 99% of the hydrocodone supply, the active ingredient in Vicodin, is consumed in the United States. About 10 years ago, pharmacy was about 6% of overall medical cost in workers’ compensation. Today, statistics show it has soared to nearly 20%, of which narcotics comprise approximately 35%. If not managed appropriately, it can grow out of control.

Overutilization can occur when patients take drugs to combat other drugs. For example, a worker suffers a minor back injury while on the job. After taking an antiinflammatory drug, most workers return to their job with no issues. Another worker, however, may start on a lowerstrength narcotic and then request a stronger drug from his or her doctor.

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BUSINESS OPERATIONS

“

Six Tips for Reducing Workers’ Compensation Costs

”

Both the employee and employer benefit when an injured employee is able to return to work.

6

5

In these cases, it is important for the employer to adopt a holistic approach by looking at the psychological part as well as the social aspect of the claim. The better the case can be managed up front can determine how easily costs, as well as clinical outcomes, are managed.

The Value of a Successful Reentry

Cost Management Follows the Life of a Claim

Medicare set-asides (MSAs) can be expensive, especially when someone is taking medication. Decreasing just one prescription medication, which is the biggest cost factor in MSAs, can be very significant in reducing the MSA. If an employee is not benefiting from a medication and the settlement discussions are underway, reducing the drugs and extrapolating lifetime costs can be significant. This needs to be demonstrated to Medicare for it to approve a reduction for the prescriptions.

Older claims may be considered for settlement just to resolve them; the longer a claim stays open, the more costly it becomes. Compensable claims should be evaluated early on for settlement opportunities.

Employers have historically taken an adversarial approach to workers’ compensation. Strategically, the best approach is to set expectations and engage the employee. n

An employee’s return to work has a major impact on indemnity payments as well as on the medical portion of a claim.

Employees have a social purpose in returning to their job: they want to get back to their normal routine.

Employers should consider whether the employee was engaged socially. Did he or she have a difficult relationship with his or her supervisor? Also, how far does the employee live from work? These and other factors can add up to hurdles to bringing an employee back to work and must be managed because when the employee is back on the job, the medical spend decreases.

Greg Cushard Greg is vice president /producer at Lockton, leading a strategy and consulting practice. His practice expertise at Lockton is in high risk energy companies, focusing on corporate insurance brokerage, enterprise risk management, captive insurance consulting and employee benefits. Cushard’s petroleum and crude oil industry expertise resides with refiners, terminal and storage facility operators, gas and convenience store operators, wholesalers, private fleet haulers and rail exposures. Contact: gcushard@lockton.com or www.lockton.com

Both the employee and employer benefit when an injured employee is able to return to work. While management may have concerns that the employee will brag to coworkers about his or her settlement, claim settlements should not include requiring an employee to resign. All reasonable accommodations should be made to return an employee to his or her job.

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Annualized turnover rates at large and small truckload fleets each fell 12 percentage points in the first quarter of the year.

“Clearly, the decline in driver turnover in the first quarter was significant,” Bob Costello said, “but what is less clear is why it dropped so much and whether turnover will continue to remain low.”

In the first quarter, annualized turnover at truckload fleets with more than $30 million in revenue fell to 84%, the lowest it has been since the second quarter of 2011 and marks the first time the rate fell below 90% since 2011. For fleets with less than $30 million revenue, the turnover rate dipped to 83%.

“Drivers continue to be in high demand, so we still see the risks posed to the economy and our industry by the shortage of drivers,” Costello said. “The drop in turnover was likely, at least partially, connected to a temporary slowdown in freight movements in the quarter, as well as improved retention efforts of fleets across the board. But I would not be surprised if turnover edges higher in the quarters ahead.”

American Trucking Associations Chief Economist Bob Costello

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PRODUCT ROUNDUP

PRODUCT NEWS

ROUNDUP AIMS, Inc. Advanced Fuel Solutions Established in 1996, Advanced Fuel Solutions has developed strategic relationships with business partners at each level of the petroleum supply chain including major fuel terminals, fuel wholesalers, diesel and heating oil dealers, fuel quality service companies and strategically located laboratories.

Advanced Fuel Solutions, Inc. specializes in formulating proprietary performance fuel additives for middle distillates. Based on our patented Optimum Discovery strategic planning sessions, our technical team can custom build additives specific to a fleet’s individual needs. Our Optimum Performance Technology (O.P.T.) is formulated to meet the demands of common rail fuel injector systems. O.P.T. is a combination of a next generation detergent balanced with twin stabilizers, corrosion inhibitors and moisture dispersants to clean and protect sensitive fuel injectors and the entire fuel handling delivery system. O.P.T. is effective in all diesel-powered equipment and is engineered to support the use of biodiesel in all ultra-low sulfur fuels. AFS offers counsel to national and regional fleets on all aspects of fuel management including buying principals proven to save fleets thousands of dollars on wasted fuel expenditures. Beyond the chemistry, AFS has a proven track record helping fleets, fuel wholesalers, fuel dealers and jobbers operate at maximum efficiency with profitable outcomes. www.yourfuelsolution.com

For over forty years AIMS has worked diligently to design software for the wholesale petroleum distributor that boosts the operational performance and profitability of their businesses. Our flagship product, COMPAS Commander, is a comprehensive and technologically advanced petroleum accounting software that provides a complete and totally integrated wholesale accounting and fuel management system. Our integrated process automation modules interface directly with Commander’s core system, delivering increased office efficiency and productivity. Commander is used by hundreds of marketers—from small, fast growing companies ready to graduate from QuickBooks to large multi-state companies.

In addition, AIMS has developed AutoTax, a stand-alone electronic tax filing solution; AutoSend, a specialized UST fuel inventory management and dispatching system; and AutoSIR, an in-house Statistical Inventory Reconciliation solution. AIMS becomes your long-term technology partner and as your business grows, our software expands with you.

Our mission is simple: make our technology an asset for your business. www.aims1.com

Allied Brand Capital, LLC Allied Brand Capital, LLC, is a specialty equipment finance company focused on the retail petroleum industry. Allied Brand Capital has been a leader in FMNMagazine

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specialty equipment financing since it was spun out of VP Racing Fuels in 2014. The name, Allied Brand Capital has become synonymous with high quality, value added, integrated vendor financing solutions. We provide the capital that is the engine of growth in an industry underserved by traditional lenders. Allied Brand Capital works closely with all the major retail petroleum brands, equipment manufacturers, fuel marketers/jobbers and dealers (where the value of financing is most appreciated—at the pump). One example of our commitment to high quality customer service is our production of a series of educational videos addressing EMV migration, which may be viewed online at https://alliedbrandcapital.com/emvcompliance/. We are EMV experts and can help you finance the EMV solution that’s right for you. We also provide financing for car wash equipment, reimaging/signage, USTs, franchise fees, foodservice equipment and much more. www.alliedbrandservices.com

Applied LNG Technologies, LLC Applied LNG is the second largest producer and distributor of liquefied natural gas for alternative fuel use in North America. Established in 1995, the Company markets LNG to trucking, oilfield, marine, mining, construction, rail, industrial and agricultural customers. Applied LNG provides full-service solutions that, depending on customer needs, can include LNG supply, delivery from a fleet of 49 LNG trailers, temporary or permanent fueling stations,

PRODUCT ROUNDUP equipment leasing and training.

Applied LNG supplies LNG produced with renewable natural gas to help customers improve their carbon footprint. The Company added a second LNG production train to the Needle Mountain LNG Plant located near Topock, Arizona in 2014. Applied LNG is currently building a new LNG production Plant located in Midlothian, Texas. www.appliedlng.com

Ascentium Capital Ascentium delivers innovative equipment finance solutions through a unique finance platform combined with an exceptional service offering that makes access to capital quick and easy.

With affordable financing up to $1.5 million, you can easily finance one or multiple locations to meet EMV requirements. Ascentium Capital has developed customized payment options that allow you to meet the EMV deadline without impacting your cash flow. You may finance dispensers, POS systems, technology and more. Plus: 100% financing is available to wrap tax, shipping, installation, maintenance and other costs enabling you to avoid out of pocket expenses. Ask about special deferred payment options for Fuel Marketer News readers and take advantage of our simple one-page application for up to $250,000 with credit decisions in 2 hours or less.

this 50-year span, an unrivaled pedigree of approvals and recommendations has been held from many of the largest diesel and turbine engine manufacturers themselves. Biobor JF effectively kills microbial growth in diesel fuel when present and with consistent use will prevent bacteria and fungi from establishing a foothold. Additionally, Biobor JF adds lubricity to ULSD, exceeding OEM spec and further protecting injection systems and pumps.

When it comes to the quality of fuel you consume, store or deliver, trust Biobor JF. Contact us directly for more information on the complete line of Biobor diesel conditioners, winter products and detergents and distribution opportunities. Products include: Biobor JF®, Biobor MD®, Biobor EB®, BioborDC® Summer, Biobor DC® Winter, BioborDC® Plus Cetane, Biobor ColdFlo®, Lubribor®, Turboline® and Biobor Hum-Bug Detector Kit®. www.biobor.com

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Comdata With over 45 years of experience processing fuel card transactions on both its proprietary fleet card and MasterCard networks, Comdata has revolutionized the technology behind capturing and analyzing fuel transaction data. Since bringing its point-of-sale device to the market more than 20 years ago, Comdata has been able to produce a POS system that provides the technological components necessary to the retail fuel market while capturing the most critical transaction data for the cardholder. By combining its expertise in both technology and transactions, Comdata’s SmartSite™ product is one of the most robust on the market. No other similar product on the market incorporates the needs of end users in the innovative way that Comdata’s SmartSite product does, using an enhanced web portal to provide up to the minute transaction data, fraud reduction measures and the ability to perform real-time system maintenance. www.comdata.com

www.AscentiumCapital.com

Biobor JF—Diesel and Jet Fuel Biocide and Lubricity Additive Microbial growth is often recognized as the number one cause of engine breakdown and fuel tank contamination.

Since 1965, Biobor JF has eliminated and prevented microbial growth in diesel and jet fuel for refineries, airlines and fleets alike across the globe. During FMNMagazine

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PRODUCT ROUNDUP property, tax and third party liability. At Cummins & White, we are committed to providing quality legal services and follow a tradition of vigorous and creative representation. www.cumminsandwhite.com

Dennis K Burke Dennis K. Burke offers remote tank monitoring on fuel, lubricant and DEF tanks, so no matter what industry you are in and what products you use, chances are we have a remote monitoring solution that will solve your product needs. No more sticking your tanks, calling in orders, or handling unexpected run-outs. We monitor your inventory remotely, wirelessly and seamlessly, allowing us to bring the right amount of product at the right time. Dennis K. Burke, Inc. runs continual remote tank monitoring to constantly monitor your inventory levels and automatically schedule deliveries, ensuring you always have adequate product on hand and allowing you to spend your time focusing on your business, instead of your inventory. Wireless and paperless so you can worry less. www.burkeoil.com

Cummins & White, LLP Cummins & White, LLP, is one of Southern California’s premier business transaction, business litigation and insurance law firms, successfully serving clients for more than 60 years. We are committed to resolving our clients’ issues and helping them to achieve their goals in a responsive, courteous and efficient manner. We do this by offering sophisticated and personalized legal services, no matter how complex the issue may be. In addition to our expertise in insurance coverage and defense, our transactional practices include business, acquisitions, estate planning, real estate, tax planning, labor and employment and healthcare. We also have tremendous expertise in all areas of civil and commercial litigation, including but not limited to disputes in the fields of construction, employment, intellectual

DM2 Software, Inc. DM2 Software, Inc., a Sage Software Master Developer and Reseller since 1991, uses Sage 100 and Sage CRM, ERP (enterprise resource planning) and CRM (customer relationship management) systems designed for general wholesale distribution applications, to develop, sell and support Petroleum Insights, a fully integrated accounting/ERP and CRM system designed specifically for petroleum marketers. DM2’s Petroleum Insights system offers all of the core financials, fuel, lubricants, home heat/propane, cardlock, c-store, supply chain automation, business intelligence, customer relationship management, human resource, fixed assets, paperless office and ecommerce modules petroleum marketers need to manage and grow their businesses.

DM2’s new DeliveryLink In-Truck Dispatch/Driver Communications System can help improve your cash flow using any off the shelf mobile device, like Android, Apple and Microsoft tablets and Smartphones. www.dm2.com

Drop Tank Drop Tank introduces fuel discounts that drop the price at the pump instantly. Available as physical cards or digital codes—and fully customizable to work with any existing loyalty program—our fuel discounts are new and unique in the marketplace. Drop Tank’s fuel discounts are now available at thousands of gas stations across the country as we’ve partnered with recognizable fuel and convenience store brands. Our products and technology allow any business to offer FMNMagazine

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PRODUCT ROUNDUP fuel discounts as a promotional item, employee incentive or loyalty program reward. Fuel discount rewards are popular and practical, with a high-perceived valueâ&#x20AC;&#x201D;and are now available to anyone looking to use to fuel their business. www.drop-tank.com Gorman-Rupp Company For more than 80 years, Gorman-Rupp has manufactured the high performance, high quality pumps and pumping systems required for lasting service in the municipal, water, wastewater, sewage, industrial, construction, petroleum, fire FireStream WorldWide FireStream WorldWide provides elite petroleum wholesalers and retailers with end-to-end ERP software and technology solutions. From back office accounting for fuel marketers and cstore chains to truck technology and credit card processing, FireStream outfits growing companies with automation across the spectrum of midstream and downstream operations to improve efficiency and enhance profitability.

With FireStream, the days of an executive sifting through heaps of reporting every day to identify profit scenarios and problem areas are over.

With real-time reporting and customized alerts for executives, FireStream software equips modern petroleum companies with a capacity to situationally adapt to opportunities and problems in a timely manner, allowing decision makers to set rules in the software that automatically trigger emails or text messages which promptly deliver time-critical business information. FireStream boasts automation for inventory monitoring, order creation and dispatch and features a seamlessly integrated PCI compliant credit card processing software that gets wholesalers and retailers the best possible rates available. www.firestreamww.com

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and OEM markets. When you specify Gorman-Rupp, you benefit from worldwide service centers, knowledgeable engineers and application assistance. Gorman-Rupp has over one million square feet of the most modern manufacturing and warehousing facilities found throughout the world. Gorman-Rupp has been manufacturing pumps, pumping systems and providing superior fluidhandling solutions since 1933. Many innovations introduced by GormanRupp have become industry standards and the Petroleum line of pumps is no exception. Gorman-Rupp manufactures self-priming centrifugal pumps

PRODUCT ROUNDUP designed for pumping clean, nonabrasive petroleum products. Common applications include bulk plants, tank farms, barges, tank cars, trucks and aircraft refueling. Pumps are designed for jet fuels, gasoline, fuel oil, petrochemicals, biofuels, ethanols and other petroleum based liquids. www.GRpumps.com

scheduling, transloading, inventory position management and customer/stockholder portal solutions.

With deep roots in the petroleum industry and best-in-class technologies, we provide our customers with tools that help them scale their operations while reducing operational costs, resulting in a positive ROI on their investment. www.intellifuel.com

Lock America For over thirty years, Lock America has designed, developed and manufactured high security locks and hardware for industries that rely on security. For the petroleum industry, Lock America has designed and manufactures a high security retrofit kit, which provides a virtually pick-proof lock for gas dispensers that protects against inserted card skimmers and meter manipulation.

Each Lock America customer’s key code is unique and registered to only that one company. Keys and locks, with over three million usable key codes, are cut and hand assembled at Lock America’s plant in California and can be provided in keyed alike and keyed different versions, along with a master key option. Lock America Petroleum industry products are sold direct and are also distributed by Petro Defense (www.petrodefense.com). www.laigroup.com

Intellifuel Intellifuel provides fuel management and logistics solutions to a majority of the fuel supply chain. Downstream, we help petroleum marketers automate the entire order life cycle—data capture, dispatch and shift planning, driver load closure via on-board computers, BOL reconciliation and robust data integration into back office systems. Complementing order life cycle automation is a suite of solutions for freight billing, driver payroll, complete environmental compliance services, commissioned agent settlement and street price control. Midstream, we provide terminal automation systems, custody transfer, terminal and railcar

Matrix Capital Markets Group, Inc. Matrix’s Downstream Energy & Retail Group (DER) is recognized as a national leader in providing financial and transactional advisory services to companies in the downstream energy and multi-site retail industries. Our DER Group is a team of twelve investment banking professionals dedicated specifically to these industries. Team members draw upon complementary finance and industry experiences to complete sophisticated merger and acquisition transactions including the sale of entire companies as well as the divestment of select markets or divisions.

Our services also include buy-side M&A advisory, recapitalizations, the private placement of debt and equity, corporate restructurings, corporate valuations and fairness opinions. Our clients include convenience store chains, petroleum marketers, fuels distributors, Master Limited Partnerships, propane distributors, heating oil distributors, lubricants distributors, terminal operators, fuels transportation companies and petroleum equipment distributors. Our dedicated group has successfully completed more than 150 engagements, with a total transaction value of nearly $6 billion. www.matrixcmg.com

Meridian Manufacturing Inc. Meridian Manufacturing Inc. is all about solving industry issues with technology and a commitment to the highest quality.

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commodities that drive your industry.

We design our products to make your job easier and safer, while saving you time and allowing you to capture valuable market opportunities.

Innovation and quality are top of mind for Meridian and it is with this in mind that we develop new products for your operation. Getting our start over 65 years ago, we’ve been developing storage and handling solutions that take quality and craftsmanship to a whole new level since 1947. Since then, we have grown to include six world class manufacturing locations across North America: Lethbridge, Alberta; Camrose, Alberta; Regina, Saskatchewan; Winkler, Manitoba; Cambridge, Ontario; and Storm Lake, Iowa. With industry leading designers and engineering staff we have the capabilities to help you design the right solution for your needs. www.MeridianMfg.com

OILCO Liquid Handling Systems Since 1935, OILCO Liquid Handling Systems has continued to pioneer and manufacture an extensive line of swivel joints available to the bulk industries worldwide. The utilization of proven mechanical platforms and increased carrying abilities has allowed OILCO to maintain a foothold in the petroleum industry while at the same time branching out to metal manufacturing, dry goods transfer and even “green” projects centered at domestic water treatment facilities. Highlights: swivel joint sizes range from 2" through 24" internal diameters; materials of construction include carbon steel, stainless steel and aluminum; all modern packing compounds are available throughout the production line; and multiple O-ring and V-ring seal designs in stock with variable spool arrangements. With staff experience of nearly 150 years in the field, OILCO Liquid Handling Systems has the practical know how to help configure the proper loading assembly or swivel joint to best fit project specifications with assured performance and reliability. www.oilco-usa.com

PRODUCT ROUNDUP

P97 Networks P97 Networks provides secure cloud based mobile commerce and digital marketing solutions for the convenience retail and fuels marketing industry under the brand name PetroZone®.

P97’s mCommerce solutions enhance the ability of convenience store operators, marketers and oil companies to attract and retain customers by providing technology that securely connects millions of individual mobile phones and connected cars with identity and geo-location based software technology to create truly unique connected-consumer experiences. P97’s software personalizes the “find-buy-save” experience for every mobile consumer. www.p97.com

OPW Global OPW is a global leader in fully integrated fluid handling, management, monitoring and control solutions for the safe and efficient handling of critical petroleum-derived fluids from the refinery to the commercial and retail points of consumption, including loading systems, rail and transport tank truck equipment, tank gauging equipment and automated fuel management systems, valves and fittings, underground and above ground storage tank equipment, spill containers, overfill prevention devices, secondary containment sumps and flexible piping, fuel dispensing products, including swivels, breakaways, industrial and automatic dispensing nozzles for vapor recovery, gasoline, diesel and alternative fuels, and clean energy fueling nozzles and accessories for LPG, Hydrogen and CNG. OPW also manufactures automated vehicle wash systems. OPW has 1,650+ employees with manufacturing operations in North America, Europe, Brazil, China and India and sales offices around the world. OPW is an operating company within the Fluids segment of Dover Corporation (NYSE: DOV). www.opwglobal.com

Paragon Solutions Paragon Solutions is your one-stop shop provider for innovative consulting, design and branding services. Paragon has designed solutions for retail and commercial applications such as convenience stores, quick serve restaurants, restaurants, travel centers, specialty retail, corporate identity and much more since 1986. From total rebranding and prototype design to site-specific remodels and brand refresh, we are the answer.

No job is too big or too small for great design. Our objective is always to provide the best experience possible to maximize the customer interactions and increase your sales. www.paragon4design.com FMNMagazine

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PRODUCT ROUNDUP

Patriot Capital Patriot Capital is solely dedicated to meeting the financing needs of the retail and commercial petroleum industry. Easy EMV is a financing program designed to help c-store owners and fuel marketers meet the capital equipment investment requirements of the EMV liability shifts.

The Easy EMV program is designed for fuel marketers and jobbers to help their dealer networks handle the challenges of the coming EMV changes for point of sale systems and fuel dispensers / gas pumps. Easy EMV is a five-step program that enables dealers to meet the EMV payment requirements of their major oil brand or regional brand, helping them to take action and have their equipment upgraded in accordance with brand and EMV timelines. Easy EMV provides financing for Gilbarco Encore Dispensers and Passport Point of Sale, Verifone Ruby, Sapphire, Commander and Topaz Point of Sale, and Wayne Ovation Dispensers and Nucleus POS. Our experience as the leading equipment financing source in the c-store industry ensures a hassle free financing experience. www.patriotcapitalcorp.com

PIUSI USA Since 1953 PIUSI SPA has been in the forefront of the lubricant and fuel transfer market, specializing in pumps, meters, compressors and measurement devices.

PIUSI USA is excited to bring their new universal and durable DEF transportation and storage system to market. The Piusi Carry Tank (PCT) offers an effective solution to deliver DEF to on-road and off-road vehicles. The PCT ensures a safe and quick DEF transfer utilizing its SuzzaraBlue DC pump, shock resistant polyethylene construction, ventilation cap and stainless steel accessories. The lightweight, lockable tanks are UV resistant and can be effortlessly loaded

onto your delivery vehicle. Most importantly, the SuzzaraBlue is now secured and easily accessible. PIUSI USA provides a wide range of reliable and durable fluid handling equipment.

From pumps and nozzles, to complete transfer kits and management systems, PIUSI has your needs in mind, allowing you to operate efficiently and confidently on the job site.

outright and new replacement products such as: pay at pump displays, motors, card readers, keypads & overlays. Now with three convenient locations: Nebo, North Carolina; Denver, Colorado; and Sanford, Florida—all fully stocked with ready to ship inventory. www.rdm.net

www.piusiusa.com

PriceAdvantage PriceAdvantage creates “Software to Fuel Your Pricing Strategy™.” Execute your unique fuel pricing strategy faster and more accurately by reducing manual processes and human errors.

Maximize margins, increase volumes and improve customer service. With PriceAdvantage, you can manage your fuel pricing strategy anytime, anywhere – even from a mobile device! View realtime competitive information and store performance data. Apply business rules and pricing strategies to each location and commodity. Execute one-click price changes to the POS, pumps and electronic signs and then receive price change confirmation – all in just minutes. Our pre-built integrations with industry-leading POS and back-end systems provide rapid, easy installation allowing most customers to be and up and running in just a few weeks.

PriceAdvantage is a privately held U.S. company singularly focused on fuel pricing software. Our parent company, Skyline Products, produces software solutions and thousands of Americanmade gas price and transportation signs annually. www.PriceAdvantage.com

RDM Industrial Electronics RDM Industrial Electronics, Inc. is an industry-leading remanufacturer of petroleum electronics and car wash equipment. Specializing in circuit boards, displays, printers, POS systems, consoles, VFDs, tank monitors, probes, FMNMagazine

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RINAlliance RINAlliance® is a web-based renewable fuel compliance program open to qualified blenders and marketers registered under the EPA’s Renewable Fuel Standard (RFS). The comprehensive RINAlliance program provides assistance with EPA registrations, convenient access to compliance experts, easy to use online RIN tracking system, quarterly reporting, annual attestation and RIN quality assurance tools. Upon RIN Separation, our blenders may aggregate with millions of other RINs for pooled sales or they may market their own RINs. We have a 100% client satisfaction rate and clients are able to discontinue the use of RINAlliance services at any time as no long term commitments are required. www.rinalliance.com

Rockhill Insurance Group The Fuel and Propane Distribution unit in Rockhill is designed to write down stream petroleum products, including petroleum distributors and retail operations, propane wholesale and retail, bulk oil distributors, used oil recyclers, crude oil haulers and common carriers of propane and petroleum products. Our team, located in Conway, Arkansas, is made up of professional risk engineering services, 24 hour claims services and customized loss prevention in order to provide superior pricing and coverage options to our independent agency partners. This team is led by Doug Strange. Rockhill is a specialty

PRODUCT ROUNDUP insurance company offering admitted and non-admitted insurance in select market niches where our underwriting teams are positioned to offer creative insurance solutions, underwriting expertise and top tier service to our brokers and managing general underwriters. www.rhkc.com

Roth Industries The Roth Double-wall Storage Tank is a uniquely designed oil tank that is one of the safest and most reliable on the market.

The outer tank is made of leak-proof, weldfree galvanized steel and roll-seamed with an oil and fire-resistant seal. It can contain at least 110 percent of the capacity of the inner tank for maximum protection. The inner tank is made of blow-molded, highdensity, seamless polyethylene that is leak proof and will never corrode. And, our compact tanks are available in several different sizes, providing more flexibility for placement in any garage, service station or lube shop. Roth oil tanks exceed the industry standard safety regulations. They are rust resistant inside and out and are signed to prevent spills, leaks and fires caused by defective pipes, couplings or fittings located underneath the tank. Each tank undergoes thorough testing, including ultra-sound and pressure testing, to ensure optimal thickness and sealing. The Roth DWT can be used for heating oil, diesel and bio fuels, motor oil, DEF and ATF.

be the No. 1 choice for DEF systems because we can manufacture the product to your customer’s specific needs. We can manufacture the product with different carrier pipe types, any size, any insulation thickness, multiple heat trace conduits, different jacket types as well as custom painted jackets. Rovanco even carries the heat trace to make us the one stop shop.

These piping systems are made by Rovanco under strict quality standards— assuring you years of trouble free operation. With the new EPA regulations in place, the number of DEF filling stations across North America will continue to grow. Rovanco has provided miles of DEF piping already for several hundred stations—so look to Rovanco for the experience you need and DEF piping systems that work.

Simmons’ TMW-650 features include: PC or wall mounted, simple dashboard graphical displays, phase detection, and real time water detection. Simmons’ clientele includes: The Global 50 (private and public), Fortune 500, NACS/SIGMA members, jobbers, consigned dealers and municipalities. www.simmons-corp.com

Skyline Products

Scully Signal Company, established in 1936, is a family owned engineering and manufacturing business specializing in liquid detection and delivery equipment.

Products include tank truck delivery nozzles, flow controls, tight fill adaptors and overfill prevention, grounding and identification systems. All products made in the USA and backed by technical service support.

Skyline Products has been designing and manufacturing signs for safe highway notifications and accurate fuel pricing since 1970. Skyline Products’ now offers LED cash/credit signs in 6" and 12" to complement fuel price signs with numeral sizes of 8" – 86". Skyline’s innovative cash/credit signs are a flexible solution for fuel marketers across the nation. Signs in the product line will include a cash/credit display, available with red or green LEDs, with the ability to toggle between “cash” or “credit” while being synced with its associated price displays. Customers will also now be able to adjust cycled time of the Cash/Credit display. The new LED cash/credit signs will allow for a variety of configurations, allowing customers to customize the solution to their business needs. For more information about Skyline, please visit our website.

www.scully.com

www.SkylineProducts.com

www.rovanco.com

Scully Signal Company

www.RothLubeTanks.com

Simmons Rovanco Piping Systems Rovanco manufactures Diesel Exhaust Fluid (DEF) piping systems designed to transfer fluids from your holding tanks to dispensers in either an Above Ground or Below Ground operation. All of Rovanco’s DEF piping systems can be constructed utilizing any of the approved materials for the carrier pipe—HDPE, FRP or stainless steel. Rovanco’s most popular Above Ground system is made with a HDPE carrier pipe with electrofusion fittings. Rovanco also has DEF approved plastic compression fittings that do not require any special tools. Rovanco should

Simmons has the solution for reconciling a transport load of fuel with every dispenser pumping at full blast. Today a transport load of fuel is worth over $30,000.00 and accounting for every drop is more than just a good idea. Marketers that use Simmons’ ClearView Continuous Fuel Monitoring (CFM) can: reconcile a fuel delivery and compare with a BOL; detect meter drift; detect dispenser/fuel theft; record ATG alert and alarms; detect leaks and report EPA compliance; and determine which dispensers are off line across the entire chain. In addition to reconciling over 30,000 tanks daily for CFM and Environmental (SIR) Reporting, Simmons manufacturers the TMW-650 ATG. FMNMagazine

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SMARTLOGIX SMARTLOGIX offers real-time digital dispatch and delivery solutions. The SMARTANK digital monitor measures tank levels and integrates with the SMARTLYNX forecasting module.

SMARTLYNX digital dispatch, auto generates routes, scheduled, forecasted, degree day and tank monitored orders.

Dispatch can map, plan and generate the most efficient routes and review the real time status of BOLs and deliveries for true inventory reconciliation.

SMARTLYNX can be easily interfaced with virtually any back office system.

PRODUCT ROUNDUP SMARTRUCK digital delivery interfaces with registers to digitally capture gallons, totalizers, lat/lon and signature for true proof of delivery and can digitally capture BOL images and load data in real time.

P2PFUEL.com enables a Peer to Peer Digital Fueling Network. Digital service level agreements can be assigned to 3rd party haulers and then SMARTRUCK can digital capture the BOL and delivery data and transmit the data to the hauler, master seller and fuel buyer. www.smartlogixinc.com

Source North America Corporation Source North America Corporation provides solutions as a distributor of petroleum/liquid-handling equipment for the construction and maintenance of convenience stores, fueling facilities and gas stations. With strategically located stocking capacity in excess of 130,000 square feet across the United States and a fleet of Source trailers for extended use

on jobsites, Source delivers anytime, everywhere for you. We offer a multimillion dollar real-time, computer-linked inventory and an online B2B ecommerce portal in order to provide an extensive product selection. We also offer a suite of niche services. We offer programs to manage logistics for multiple jobsites across multiple regions.

We offer assistance in generating an estimate of materials needed for a jobsite from customer specifications and drawings. We offer our expertise of regulatory requirements. We proudly support the petroleum marketers, oil companies and premier service and construction contractors throughout the country by providing quality products, services and information. www.sourcena.com

construction products and their suppliers.

Member companies produce steel storage tanks, field erected water tanks, pressure vessels and heat exchangers, and pipe and pipelines. Their customers are from the petrochemical, power generation, food, pharmaceutical, fuels, wastewater and water transmission industries. With todayâ&#x20AC;&#x2122;s new fuels, that means keeping the water that can contaminate your fuel out of your tank.

STI/SPFA has several options to help you with tank maintenance on our website.

Get free documents from our Store: Keeping Water Out of Your Storage Tank and R111 Recommended Practice for Storage Tank Maintenance. Take our online certificate course in Tank Integrity Management. Listen to our webinar Petroleum Fuel Storage Tank Maintenance. www.steeltank.com

Steel Tank Institute/Steel Plate Fabricators Association (STI/SPFA) STI/SPFA is a trade association representing fabricators of steel

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PRODUCT ROUNDUP reducing credit write offs, improving cash flow by getting invoices out faster, stronger staff efficiency and satisfaction and improved customer service.

Tanknology Tanknology is a leading provider of tank compliance solutions in the world, providing testing and related services at more than 50,000 sites each year—across the U.S. and through licensees around the globe. Our services range from total Compliance Management Services, in which we can manage for you as much of your UST compliance program as you would like; to compliance testing for tanks, lines and leak detectors; to site inspection services for both AST and UST sites, including Class B inspections and Class C operator training; to remote visual tank inspections using our PetroScope™ and TankCam™ video inspection services; secondary containment testing and much more. We provide secure remote access via the Internet to all your testing reports and key site data via our proprietary system. For tank site compliance, you would be hard pressed to find a company in the world is better equipped to help you than Tanknology. www.tanknology.com

Total Meter Services Inc. TMS is a software and automation service and design/build company specializing in storage and handling of liquids. Our low cost TMS6000 suite of software products provides enhanced security, control and data management for fluid custody transfer systems. We can combine our software product with PLC and SCADA controls for complete systems integration with online monitoring and support. TMS has the facilities and resources in house to design, fabricate, assemble and install systems for loading racks, transport/dispensing vehicles and custody transfer dispensing for all applications from locomotives to individual vehicles. We do modular skids, loading racks, tank farms, bulk plants, small terminals, marine, rail and locomotive fueling systems. TMS has automated, designed, built, or installed its custom systems at over 150 locations across North America (Canada, USA, Mexico), Chile, France and the UK. TMS has over 30 years’ experience in the petroleum and propane industries. www.totalmeter.com

Tecmark LLC Tecmark offers flexible loyalty programs for convenience stores that focus on driving traffic in-store to increase customer spend on higher margin items.

Our solution includes POS integration with quick and simple implementation, accurate and easy enrollment for customers, ongoing account management and the ability to send email and texts to members—all for a flat monthly fee. We provide strategic expertise, extensive loyalty industry experience, solid industryleading technology platforms and a commitment to exceptional execution to implement and support loyalty programs that deliver proven bottom line results for our clients. As your all-around digital marketing expert, we offer web and social support to our clients as an optional added service. Our programs offer a lot of flexibility to change and adapt to the needs of your customers throughout time so that as their needs change, so does your loyalty program. www.loyaltymarketing.com

www.triniumtech.com/fuel

ValvTect Petroleum Products ValvTect Petroleum Products is a leading supplier of high performance diesel, winterized high performance diesel, heating oil and gasoline additives to fuel distributors, truck stops, fleets, marinas, railroads and refiners nationwide. Our registered trademarks Diesel Guard, AgriGuard, BioGuard, ThermoGuard and ValvTect Marine Fuels represent not only quality fuels sold to millions of consumers but are also supported by marketing programs, in field technical expertise and the most current advanced formulas to meet the demands for the ever-changing fuels that are available.

We specialize in providing solutions for you and your customer’s ultra-low sulfur diesel and biodiesel problems at an economical cost. www.valvtect.com

Verifone’s Commander Platform Trinium Technologies Trinium Technologies provides cloudbased business software to fuel marketers of all sizes. The company is recognized as an industry leader in providing software based solutions to fuel companies ranging from single site, three to five user deployments, to multi-site operations encompassing over 100 users. Trinium’s product suite is a complete enterprise system that manages wholesale fuel, packaged products and cardlock operations with integrated accounting for companies throughout the U.S. and Canada. The company’s primary focus is on driving industry best practice to assist its customers in improving their financial results. Trinium has enabled improvements to various aspects of its customers’ operations including; growing revenue, reducing administrative costs, increasing margins, FMNMagazine

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Verifone is a global leader in secure electronic POS solutions. Verifone’s Commander platform is the EMV ready, POS technology platform of the future.

Commander brings modularized software to a new level by separating payment, forecourt and store control functions into individually upgradeable components. This brings the added benefits of: increased security for payment transactions, increased speed of processing, quicker software feature upgrades and universal application across all oil brands and credit card processing networks simultaneously.

Verifone has relied on its purpose-built solutions to provide the convenience retail industry reliable, durable solutions built specifically with the petroleum retail environment in mind. Our point of sale solution utilizes a security-hardened Linux operating system, avoiding the amount of malware issues in Windowsbased solutions. Our hardware is constructed with premium plastics and

industrial grade components to offer superior longevity and a better return on our clients’ payment infrastructure investment. Verifone has moved to a single platform that supports all oil networks, allowing for quicker feature releases to be simultaneously available regardless of branded network. www.verifone.com

increasing overall efficiency and profitability. The Warren Rogers system is very flexible with an onsite processor that can complement virtually any existing electronic fueling system. It is compatible with most any manufacturer’s automatic tank gauge to provide a more precise accounting of fuel inventory and an additional layer of protection.

Austin, Texas, Wayne also has major design and assembly operations in Sweden, Brazil and China. www.Wayne.com

www.warrenrogers.com White Tucker Company

Warren Rogers Founded in 1979, Warren Rogers specializes in precision fuel system diagnostics for the retail petroleum industry. As the inventors of continual reconciliation, the company provides large, multi-site fuel retailers, c-stores, supermarkets and travel centers, with the most precise fuel monitoring available today. With its proprietary all points monitoring system, Warren Rogers has the ability to monitor more than 2.7 millions of gallons of fuel per month.

Issues like inaccurate meter calibration, meter drift, slow flow rates, dispenser inactivity, delivery shortages and theft are all rapidly identified in real-time. This continuous and in-depth monitoring by expert analysts averts loss, ultimately protecting valuable fuel inventory while

Wayne Fueling Systems Wayne Fueling Systems is one of the world’s largest suppliers of fuel dispensers, payment terminals, forecourt control devices, point-of-sale and other measurement and control solutions to the retail and commercial fueling industry.

Wayne has been at the forefront of innovation since it was founded in 1891 and is responsible for many of the breakthrough technologies that have transformed fuel retailing. More recently, Wayne is leading the way with technological advances for EMV-readiness and compliance, payment security, mobile payment and cloud-based remote management and diagnostics solutions.

Through a global network of distributors and service partners, Wayne products are sold and supported in over 140 countries around the world. Headquartered in FMNMagazine

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White Tucker Company has been a trusted provider of materials and petroleum equipment to the service station market for 105 years. Throughout the years, we have partnered with more than 100 manufacturers to bring our customers the most innovative, reliable, products available. We have grown to over 48,000 square feet of warehouse inventory and more than 15,000 stocking items, including many of the top brands in the industry such as OPW Retail Fueling, Veeder-Root, Franklin Fueling Systems, Verifone and Wayne Fueling Systems. We have three branches conveniently located in north, south and central Texas offering petroleum related products to customers throughout the nation and around the world. We pride ourselves on our strong commitment to provide personal attention to our clients and maintain lasting customer relationships. White Tucker’s reputation of trust and dependability can be seen in our successful partnerships with our manufacturers and our customers. www.whitetucker.com

FUEL MARKETER NEWS

INDUSTRY NEWS Dover to Acquire Dispenser and System Businesses from Tokheim Group S.A.S. Dover has made a binding offer to acquire Tokheim’s dispenser and system businesses for a purchase price of EUR 425 million (approximately USD $465 million). The Tokheim Businesses will become part of OPW, a business unit within Dover’s Fluids segment. Tokheim’s sales and service divisions are not a part of this transaction and will become a stand-alone company remaining with the current owners of Tokheim. The transaction is subject to completion of discussions with certain of Tokheim’s works councils, certain customary regulatory filings and other customary conditions, and is expected to close early in 2016.

Headquartered in Paris, France, Tokheim is a leading manufacturer of fuel dispensers, retail automation systems, and payment systems. The Tokheim businesses have manufacturing operations in Europe, China, India and Brazil. The addition of the Tokheim Businesses’ product offerings will further enhance OPW’s position in retail fueling equipment. Through this acquisition, Dover will establish OPW as a leading retail fueling systems provider, featuring a full “Station-in-a-Box” offering with unrivaled product breadth.

“We are excited about the acquisition of Tokheim’s dispenser and systems businesses,” said Robert A. Livingston, Dover president CEO. “The acquired technology fits perfectly with OPW’s strong suite of products and systems, and Tokheim’s strong presence in Europe, Africa and Asia complements OPW’s global presence. Together, the combined business will offer unparalleled solutions for the growing retail fueling market.” n

Wayne Fueling Systems Works with Ascentium Capital to Offer Financing on Products and Services

“This new financing option allows our customers the opportunity to take advantage of newer equipment and innovative technologies, preparing the site for the future without interrupting cash flow,” stated Wayne’s Director, U.S. Distribution & National Accounts, Dave LaCaille.

Wayne Fueling Systems, a global provider of fuel dispensing, payment, automation and control technologies for retail and commercial fuel stations, joins forces with Ascentium Capital to offer c-store and fuel retail customers innovative equipment finance options for Wayne products, technologies and services, and set-up costs.

“Our unique credit platform allows us to meet the strategic business requirements for Wayne Fueling Systems, their distribution channel, jobbers, and the retailers that they service. We anticipate many shared successes,” said Len Baccaro, Senior Vice President of Sales at Ascentium Capital. n

“As part of our business strategy, we are choosing to work with leaders in the industry to provide our customers the best retail fuel technology,” noted Wayne’s VP of North America, Bill Reichhold. “We are pleased to collaborate with Ascentium Capital on this initiative to give our customers another option to purchase our industry leading products and services.”

Fuel retailers in the U.S. are eligible for this financing at competitive rates for products such as the Wayne Ovation™2 fuel dispenser, Wayne Helix™ fuel dispenser, Wayne Fusion™ site automation server, payment upgrades, media programs, services, Wayne Genuine Parts and more.

Through the convenience of same-day financing, and Ascentium Capital’s consultative approach, terms are tailored to the client’s specific cash flow needs including many creative and affordable options. “Ascentium Capital is focused on providing solutions that enhance growth and profitability. It is rewarding to see our organizations come together and develop a finance offering focused on the success of Wayne Fueling Systems,” comments Tom Depping, CEO at Ascentium Capital.

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Sunoco LP Completes Acquisition of Susser Holdings Corporation Sunoco LP announced that it has completed the acquisition of Susser Holdings Corporation (SHC) from ETP Holdco Corporation and Heritage Holdings, Inc., wholly owned subsidiaries of Energy Transfer Partners, L.P. The transaction is valued at approximately $1.93 billion. SUN paid $966.9 million in cash and issued ETP’s subsidiaries approximately 21.98 million SUN units, valued at approximately $966.9 million. In addition, there will be an exchange for 11 million SUN units owned by SHC for another 11 million new SUN units to a subsidiary of ETP. The transaction is expected to be slightly accretive to SUN with respect to distributable cash flow in 2015 and significantly accretive thereafter.

SHC’s assets consist primarily of approximately 680 Stripes® branded convenience stores that sell motor fuel and merchandise in Texas, Oklahoma

INDUSTRY NEWS and New Mexico. Stripes® is a leading independent operator of convenience stores in Texas based on store count and retail motor fuel volumes sold. The majority of the Stripes® locations include food service, primarily through its proprietary Laredo Taco Company™ concept, which serves fresh, hot, madeto-order Mexican food.

For SUN, the addition of significant size and scale will deliver new organic growth opportunities and enhance its ability to focus on a broad range of third-party acquisition opportunities. n

“My co-founder, Boone Pickens, let me know that he has filed a Form 144 to sell a small portion of his overall holdings in Clean Energy, up to 3 million shares. He emphasized that he still remains as bullish as ever on the company’s future and the benefits of natural gas as a transportation fuel, validated by the growing number of vehicle fleets fueling at Clean Energy stations. Boone will continue to be our largest shareholder, an active member of the company’s board of directors and a valuable energy expert for us to tap into.”

Clean Energy Co-Founder T. Boone Pickens Remains Bullish on the Company

Natural gas fuel costs up to $1.00 less than gasoline or diesel, depending on local market conditions. The use of natural gas fuel also reduces greenhouse gas emissions up to 30% in light-duty vehicles and 23% in medium to heavyduty vehicles. In addition, nearly all natural gas consumed in North America is produced in North America.

The following statement should be attributed to Andrew J. Littlefair, president and CEO of Clean Energy Fuels Corp.

Clean Energy Fuels Corp. is a leading provider of natural gas fuel for transportation in North America. n

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GSTV Network Launches Six-Second Reviews with Former “Mr. Moviefone,” Russ Leatherman The Gas Station TV (GSTV) video network at the pump, and Six-Second Reviews, the short-form entertainment reviews from America’s most popular movie personality, announced their partnership with the premiere of SixSecond Reviews on the GSTV network, with Slim Jim as the exclusive launch sponsor.

Six-Second Reviews provide audiences with short videos that feature a brief synopsis and a final verdict of ‘I’m in’ or ‘I’m out’ featuring Russ Leatherman, (aka “The Movie Man”) founder of Moviefone and Six-Second Reviews.

“Our fast-paced reviews of movies, TV shows and other entertainment is absolutely perfect for the millions of

INDUSTRY NEWS busy on-the-go consumers that GSTV reaches,” said Leatherman.

In partnership with their planning and investment agency, Spark SMG, Slim Jim was the first brand to take advantage of this all-new content segment on GSTV with the review of the movie Ted 2. The complete fifteen-second pod ran the movie review followed by a custom brand integration driving viewers to “Slap into a Slim Jim.” “Six-Second Reviews is a truly unique segment from GSTV that speaks to the essence of the Slim Jim brand,” said Heather Dumford, Global Marketing Director, Media at ConAgra Foods, Inc. “It’s quick, appealing and something people want again and again.”

GSTV will fill its network with a wide variety of reviews, ranging from TV and movies to music and video games. SixSecond Reviews is an ideal complement to entertainment content already popular with GSTV’s audience. n

Patriot Capital Corporation to Launch “Easy EMV” Program at 2015 NACS Show At the forthcoming National Association of Convenience Stores (NACS) Show, Patriot Capital Corporation will showcase an unique equipment financing program—called “Easy EMV”—to assist NACS members with their upcoming EMV upgrades to gas pumps and pointof-sale systems.

The program, devised for multi-site fuel jobbers and convenience store operators, provides a selection of financing and leasing options to assist in upgrading gas pumps for EMV prior to the October 2017 forecourt liability shift.

The program can also be of assistance to retailers who need to finance in-store payment equipment upgrades (POS) – especially in light of the recently passed October 1 deadline for EMV compliance.

The deadlines will be enforced with a liability shift impacting retailers if they become victims of credit card fraud by accepting credit or debit cards at a legacy “mag-stripe” terminal.

“Fuel jobbers, marketers and site operators have been asking how they can make their investments in EMV equipment match their cash flow and sales, rather than being saddled with a one-time capital cost,” said Chris Santy, President, Patriot Capital Corp. “In response to these inquiries, we have developed ‘Easy EMV’ as a way that fuel marketers and dealers can have options in financing their gas pump EMV upgrades or in completing their POS upgrades for EMV.” The program provides three levels of participation for financing new or EMVupgraded gas pumps, along with funding that addresses the related costs of installation, shipping and taxes, and, if needed, underground storage tank upgrade financing. n

G&M Oil Partners With Gilbarco Veeder-Root on EMV Upgrade at 120 Sites G&M Oil Co., Inc. has chosen Gilbarco Veeder-Root as its partner for an extensive EMV-certified technology upgrade at 120 locations across Southern California. Recognized consistently in Chevron’s Retail Excellence Programs for outstanding operations, G&M is seeking to further enhance this performance with Gilbarco’s integrated Passport point-ofsale and media at the pump solution, Applause TV with VNET®.

G&M Oil leadership had been searching for a turnkey in-store and forecourt marketing solution that would support evolving credit networks, dynamic media, and remote management. They also wanted to provide a technology foundation for pending changes due to the EMV liability shift.

The rollout is part of G&M’s broader strategy to standardize all point-of-sale and dispensers with Gilbarco technology.

Gilbarco President Steve Moule said that G&M Oil is one of a growing number of large retailers who are adopting Gilbarco’s technology to realize a return on the upgrade investment required to meet EMV requirements.

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“In order to meet the tight deadlines established by the card brands, retailers will need to advance their EMV plans in 2015,” Moule said.

“G&M will be pleased with the efficiencies they gain by standardizing on Passport, as well as the additional revenue generated by marketing with Applause TV.” Founded in 1969, G&M Oil Co., Inc., operates over 140 G&M, Chevron and Extra Mile branded c-stores and fueling stations throughout Southern California. n

Renewable Energy Group to Acquire Imperium Renewables Renewable Energy Group, Inc. and Imperium Renewables, Inc. announced that they have signed an asset purchase agreement where REG would acquire substantially all the assets of Imperium, including a 100-million gallon nameplate capacity biomass-based diesel refinery and deepwater port terminal at the Port of Grays Harbor, Washington.

Under the terms of the agreement, REG will pay Imperium $15 million in cash and issue 1.5 million shares of REG common stock in exchange for substantially all of Imperium’s assets. In addition to these payments, REG will pay either $1.75 million in cash or 175,000 shares of REG common stock at closing as elected by REG. For two years post-closing, Imperium may receive up to a $0.05/gallon payment for biomass-based diesel produced and sold. In addition at closing, Imperium will retain its net working capital value of approximately $25 million. REG will also assume $5.2 million of Imperium’s debt from Umpqua Bank, which has agreed to provide REG Grays Harbor, LLC with an additional loan capacity of up to $5 million to fund capital expenditures and improvements at the Grays Harbor facility. Closing is subject to satisfaction of customary closing conditions.

“Bringing the Imperium assets and their team into the REG network is a

”Being breached is not a question of ‘if’ but ‘when.’ Breach prevention and threat monitoring can only go so far and do not always keep the cyber criminals out. Companies need to adopt a data-centric view of digital threats starting with better identity and access control techniques such as multi-factor authentication and the use of encryption and key management to secure sensitive data. That way, if the data is stolen, it is useless to the thieves.”

Tsion Gonen, vice-president of strategy for identity and data protection, Gemalto

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INDUSTRY NEWS tremendous addition to our business,” said REG President and CEO Daniel J. Oh. “As we combine our companies, we will expand the reach of REG along the west coast, including production and distribution. We already sell into these markets as they have responded to the call for more clean, advanced biofuels through low carbon fuel standards. This will enable REG to be more efficient and timely in our delivery and improve our supply assurance. We look forward to working with Imperium’s experienced staff and plant employees, maintaining operational activities at Grays Harbor, and becoming active members of the community working with the Port of Grays Harbor and the cities of Hoquiam and Aberdeen.” n

stores and has grown over the years through acquisitions of individual sites and building new-to-industry gas stations. Kit Austin, the company’s president, continued to manage day-today operations up until the closing of the transaction. The sale represents a complete exit for him from the motor fuels business.

Matrix Announces the Successful Sale of GOGAS Corporation’s Assets to Quality Oil Company

Kit Austin, president of GOGAS said, “We are fortunate to have found a buyer that is based in North Carolina and matches GOGAS’s culture of customer service, employee relations and vendor relationships. This will make for a seamless transition. We are very grateful for the wonderful loyal customer support that GOGAS has received over the last 39 years.” n

Matrix Capital Markets Group, Inc. announces the successful closing on the sale of GOGAS Corporation’s assets to Quality Oil Company, LLC. Prior to the sale, Wilmington, N.C., based GOGAS directly operated 20 high volume retail motor fuel outlets in southeastern North Carolina with total annual fuel volumes of over 53 million gallons.

Nineteen of the sites were owned fee simple with the remaining site leased from a third party. The GOGAS portfolio consists of large, well-maintained fueling facilities with modern equipment designed to maximize fuel traffic. Each site features a kiosk style building for accepting fuel payments and selling toptier cigarettes at the lowest prices in their markets. As part of the transaction, Quality Oil has also acquired the GOGAS brand, which is very well respected and a primary reason for the Company’s loyal customer base. All of the company’s eligible store employees and field staff were retained by Quality Oil. GOGAS is a wholly owned subsidiary of K. E. Austin Corporation, a private company founded by Kit and Deborah Austin in 1976. The Company started with two

Matrix provided merger and acquisition advisory services to GOGAS, which included valuation advisory, marketing of the Company through a customized, confidential, structured sale process, and negotiation of the transaction. The transaction was co-managed by Cedric Fortemps, managing director and Vance Saunders, director. Kyle Profilet, analyst, also advised on the transaction.

Pro Food Systems, Inc. Selects Ascentium Capital as its Preferred Finance Partner Pro Food Systems, Inc., known for providing Champs Chicken®, Cooper’s Express® branded hot food programs and foodservice equipment for supermarkets, convenience stores and retailers, announced it has selected Ascentium Capital as its national preferred financing resource.

“Our number one goal is to assist our customers in operating profitable locations. To ensure success, we are offering the best financing options available that enable retailers to acquire all the proper equipment. This undertaking was not taken lightly. After vetting several companies, we chose Ascentium Capital as our primary finance partner. Ascentium has proven they can provide high levels of service and they have been very flexible in meeting our FMNMagazine

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business needs. We are confident in this partnership and the benefits Ascentium is able to provide our retailers,” said Trevor Monnig, Chief Financial Officer at PFS. Ascentium Capital’s finance solutions will assist PFS and their client network to drive growth by enabling retail locations to acquire the right foodservice equipment that maximizes ROI and optimizes space and operational efficiencies. The customized finance program will be available to the entire PFS client network throughout the United States.

As PFS pioneers new products and services, Ascentium Capital’s finance program will evolve to meet the changing business requirements.

Through the convenience of financing and Ascentium Capital’s consultative approach, the finance terms are tailored to the clients’ specific cash flow needs.

“Our unique finance platform allows us to meet the strategic business requirements for PFS. We look forward to sharing our expertise in financing and anticipate many shared successes,” said Len Baccaro, Senior Vice President of Sales at Ascentium Capital. n

NCR Named a Leader in Independent Research “Point of Service” Evaluation NCR Corporation, a global leader in consumer transaction technologies, received the highest score in the current offering category in Forrester Research’s recent report (The Forrester Wave™: Point of Service, Q3 2015).

Forrester Research, Inc., a global research and advisory firm, evaluated 10 top point-of-service companies against 59 criteria across three categories: “current offering,” “strategy” and “market presence.” In each category, Forrester scored criteria such core POS, product vision, security, international capabilities and geographic deployment.

Forrester scored NCR’s current offering a 4.33 out of 5.00.

INDUSTRY NEWS According to the report, NCR “with its vast experience and range of retail application assets, delivers a wide range of deep current capabilities, including specialist capabilities to serve the fast-growing convenience retail subvertical. Its investments in loyalty, convenience, and hospitality provide the assets to orchestrate differentiating customer experience across multiple retail sub-verticals and to respond to the changing retail environment.” n

Allied Brand Services and CBE Partner to Offer Comprehensive EMV Solutions for Petroleum Retailers Allied Brand Services (ABS), a leading specialty equipment finance company, has partnered with CBE, Inc., an industry leader in VeriFone point-ofsale solutions, to provide petroleum

retailers with comprehensive and affordable EMV solutions inside their stores. “Petroleum retailers have to act now, because the Payment Networks’ Liability Shift associated with EuroPay, MasterCard, and VISA (EMV) is due to take effect in the United States on October 1, 2015,” said Mike Cerminaro, President of ABS. “Retailers who are not EMV compliant inside their store by that date will expose themselves to the Liability Shift.” The Liability Shift means that retailers who accept transactions made with EMV-compliant cards while using nonEMV compliant POS devices assume liability for any and all transactions at their store that are found to be fraudulent.

According to Cerminaro, the main driver behind this EMV migration is card-related financial fraud. The Petroleum Marketers Association of America estimates that the annual cost of card fraud in the U.S. retail petroleum industry is growing, and totaled $250 million in 2014. “This is what led ABS to partner with CBE, to offer a fully financed POS solution that helps qualified retailers achieve compliance by providing

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them with discounted equipment pricing, no money down and low monthly lease payments.”

Kim Sellers, POS & Security Consultant at CBE said, “Our Verifone RubyCi POS systems meet the unique needs of fastpaced petroleum and convenience store operations, where quick customer turnaround, ease-of-use, compatible equipment and minimal downtime are imperative. ABS is the right partner for us to team with as we work to assist our petroleum retail clients with their funding needs to acquire EMV-compliant devices.”

According to Sellers, the RubyCi is the latest POS solution offering from VeriFone and is equipped with a functional site controller included in one piece of hardware providing a complete store management system. “The combination of POS and site controller makes this EMV-ready solution the only one of its kind in the marketplace. Now, petroleum retailers have the ability to consolidate as well as upgrade their operating technology at the same time.” n

INDUSTRY NEWS

NRC Completes MultiTiered Sale for Westex Capital and Bohica Investment of Texas NRC Realty & Capital Advisors, LLC announced the completion of a multitiered sale of substantially all of the assets of Westex Capital, LTD and Bohica Investment, LTD of Del Rio, Texas. The assets consisted of 26 convenience stores in several markets in South Central and West Texas, as well as a fuel and propane distribution business with six bulk fuel plant locations and five propane storage yards. The six bulk plants are located in Del Rio, Uvalde, Carrizo Springs, Boerne, Kenedy and Floresville, Texas. The five propane storage yards are located in Floresville, Smiley, Bandera, Castroville and Pearsall, Texas. NRC acted as exclusive financial advisor to Westex and its affiliates in connection with the sale.

“We were extremely pleased with the services provided by NRC. The sale of the assets of Westex and its affiliates was very

complicated and it quickly became obvious that we would not be able to find a single buyer for all of the retail and fuel/propane distribution assets,” stated Robert Kusenberger Jr., Chief Executive Officer of Westex Capital, LTD. Kusenberger continued, “NRC came up with creative solutions that proved highly efficient and successful, allowing us to ‘clear the market’ on all of the company’s assets within a reasonable period of time. In addition, NRC provided invaluable assistance on legal and environmental matters, which served to reduce our costs of the transaction and our potential liability.” n

Clean Harbors Announces Revisions to Used Oil Pricing Policies in Safety-Kleen Waste Oil Business Clean Harbors, Inc., a leading provider of environmental, energy and industrial services throughout North America, today

announced that its Safety-Kleen subsidiary is revising pricing related to managing used engine and industrial oils.

Effective immediately, Safety-Kleen is expanding its charge-for-oil (CFO) program to full implementation across its used oil customer base, as well as increasing its service stop-fee program.

Jerry Correll, Safety-Kleen President, said, “The recent decline in crude oil pricing, along with associated decreases in fuel and base oil pricing, have materially affected the values of our recycled fuel oil (RFO) and re-refined products. Given the impact of these falling prices, we are now charging disposal rates in order to mitigate the market-derived pressure on our margins and avoid further deterioration in the existing spread. The announced rate adjustments reflect full implementation, effective immediately, of the CFO program in both the U.S. and Canada. In addition, we are significantly expanding our stop fee program to help recoup transportation and labor costs associated with oil collection services, with an emphasis on remote service locations.

“We continue to see margin pressure in our waste oil collection business due to the ongoing energy market deterioration,” Correll said. “As we did last December when we announced ZeroPay, Safety-Kleen is continuing to address energy market drivers that affect those margins. We believe these rate changes and stop fees are needed for SafetyKleen to be fairly compensated for the safe, reliable and quality service we provide to more than 200,000 customers throughout North America.” n

Sheetz Will Offer Customers First Private Label Credit Card through Partnership with First Bankcard Sheetz, a family-owned convenience store chain with over 500 locations across six states, is partnering with First Bankcard to expand credit card options, discounts and rewards to its customers by offering its first private label credit card, the Sheetz® Personal Credit Card.

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INDUSTRY NEWS First Bankcard is a division of First National Bank of Omaha and a leading issuer of credit cards.

The new Sheetz® Personal Credit Card is designed to be used exclusively at Sheetz stores and offers customers’ automatic savings at Sheetz fuel pumps, as well the ability to earn points on every qualifying purchase in Sheetz stores. Customers will save five cents per gallon at the pump using the Sheetz Personal Credit Card; when the Sheetz Personal Credit Card is used in conjunction with the company’s loyalty card, the MySheetz Card®, customers will save an extra three cents per gallon for a total savings of eight cents per gallon at the pump. Customers will also receive five points for every $1.00 spent in store using the Sheetz Personal Credit Card. Each time customers earn 1,000 points, they will automatically receive a $10 Sheetz gift card.

“We are a consumer driven company and we work hard to find the best products and vendors for our customers. At Sheetz, every experience the customer has with us helps shape the reputation of our brand.

First Bankcard will help ensure that our customers have the best experience with the Sheetz credit card and we look forward to this partnership,” said Richard Steckroth, Director of Business Development for Sheetz. n

The integration is even more beneficial to those retailers that utilize multiple POS systems as it provides complete fuel pricing synchronization among disparate systems.

“The Fiscal POS system is a strategic addition to our list of validated, prebuilt integrations,” said Chip Stadjuhar, CEO of Skyline Products.

“As with most of our product enhancements, this integration was requested and guided by our customers. This solves a very critical business problem for our retailers who operate multiple POS systems across their business, especially truck stops that must synchronize pricing between commercial and passenger pumps and price signs.”

“PriceAdvantage and Fiscal share the same philosophy that software solutions should be easy to install and easy to use,” said Tony Burks, Vice President of Sales for Fiscal Systems.

“This integration supports our joint goal to streamline workflows and provide greater insight and accuracy for day-to-day operations.” n

PriceAdvantage Fuel Pricing Software Announces Integration with Fiscal TravStar1 Point of Sale System PriceAdvantage, a fuel price management software company and division of Skyline Products, announced today that the newest version of PriceAdvantage now fully integrates with the Fiscal TravStar1 point-of-sale system.

The integration allows fuel marketers who operate a combination of convenience stores, trucks stops and unattended card lock locations to quickly determine and post new fuel prices simultaneously across their entire operation—with price confirmation—in just a matter minutes.

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Gulf Signs New Fuel Licensee in Canada Gulf Oil International has signed a longterm brand use license agreement with the Canadian XTR Energy Company Limited. The agreement was signed by Gulf Oil Vice President International, Frank Rutten, and XTR President, Ken Wootton, at the recent Le Mans 24 Hour race, and the partnership means the return of Gulf branded service stations to Canada, after an absence of 30 years.

Gulf Oil International Business Development Manager, Paul Stannard, comments. “XTR, under the guidance of its President, Ken Wootton, has all the experience required to undertake the task of rolling out the Gulf network across Canada over the next few years and once again bring the familiar Orange Disc Gulf logo back to the highways of Canada.

“Gulf service stations are already present in 20 countries and Gulf Oil International is committed to growing networks in as many countries as possible throughout the world.

Therefore, the new entry in Canada is another step towards achieving this target.”

INDUSTRY NEWS The reaction to Gulf’s return as a retail fuel brand in Canada has been incredibly positive. Conversations are currently underway with a significant number of potential customers, and the first Gulf retail site in Canada is already up and running.

“We are extremely excited about representing Gulf for retail petroleum in the Canadian market,” explains XTR President Ken Wootton. “The Gulf brand has a strong reputation and will provide us a competitive advantage when talking with potential new sites.

“We have come out of the gate strong, and have opened our first Gulf site only days after contract signing, with many more sites under active solicitation. We still need to build out the full implementation model and loyalty programs to attract sites and customers, but the research is already well underway.

“XTR looks to leverage Gulf’s strong affiliation with the Aston-Martin Racing team and the endurance that the Le Mans demands of its cars and drivers.”

XTR will be working in conjunction with Gulf’s official Canadian lubricant distributors, Teklub, in order to help further develop retail lubricant sales in Canada and so the prospects are bright for the further strengthening Gulf’s presence in the Canadian market. n

FleetCor Wins Uber Fuel Card Contract FleetCor Technologies, Inc., a leading global provider of fuel cards and workforce payment products to businesses, announced today the signing of a contract with Uber to provide the Partner Fuel Card, a universal card program for Uber’s U.S. driver partners.

Under the program, eligible Uber drivers will be able to make fuel purchases that will automatically be deducted from their weekly earnings. In addition to having the convenience of making purchases at any fueling locations where MasterCard is accepted, partners will also enjoy cents off discounts at every station along with additional discounts at participating Exxon Mobil locations.

This Partner Fuel Card program has been in development for several months, and is now being launched nationally to hundreds of thousands of Uber’s driver partners.

“Uber and FleetCor have developed a first of its kind offering for driver-partners enabling them to gain instant savings at gas stations nationwide,” said David Righter, VP of strategic initiatives at Uber.

“Now, driver partners will have access to a variety of discounts applied automatically with every transaction.” n

CHS Now Sole Owner of McPherson, Kansas, Refinery CHS, a leading energy, grains and foods company and a leading farmer-owned cooperative, has completed its purchase of the National Cooperative Refinery Association petroleum refinery and related operations based at McPherson Kansas, and is now its sole owner. The refinery has been renamed the CHS Refinery at McPherson, Kansas.

“As the nation’s leading cooperative energy company, becoming the sole owner of this refinery and its related pipelines and terminals is a critical step in adding value for our member-owners and other customers,” said Jay Debertin, CHS executive vice president and chief operating officer, Energy and Foods.

“Given our 70-year history with this wellrun operation and its 700 dedicated employees, we’re proud to make this operation fully part of CHS.” Today CHS sells more than 3 billion gallons of gasoline and diesel fuel products annually and markets the products under the Cenex brand at more than 1,500 Cenex branded retail locations. Combined, the CHS refineries at McPherson, Kansas, and Laurel, Montana, help meet their customers’ growing needs for both diesel fuel and gasoline.

“We are continually in the market for diesel fuel to meet our member-owners’ demand,” said Jim Loving, CHS senior vice president, refining, pipelines and terminals, and past president of NCRA. FMNMagazine

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“Through sole ownership of this operation, along with additional investment to increase capacity, we’re essentially adding the equivalent of a third refinery to serve our owners and customers who highly value the additional diesel supply.” n

C&H Financial Services, Inc. Acquires Regal Payment Systems, LLC C&H Financial Services, Inc. announced the acquisition of Columbia, Tennesseebased Regal Payment Systems, LLC. C&H is an international Financial Services firm that specializes in merchant services and data processing.

Established in Chicago, Illinois, C&H is one of the fastest growing privately owned companies in America.

With over 5,000 merchants in its network, processing over $1 Billion in transaction volume each year, C&H is a top 50 payment processing company.

In the United States, C&H maintains offices in California, Illinois, Florida, Texas, and with the addition of Regal Payment Systems, Tennessee. C&H also has an international presence with operations in Canada, Australia and New Zealand. n

Discover to Bring Samsung Pay to Cardmembers Discover has announced plans to allow Discover card members in the U.S. to use Samsung Pay, a simple way to make payments through Samsung brand mobile phones.

Samsung Pay combines Magnetic Secure Transmission (MST) technology with Near Field Communication, making it compatible with nearly all existing payment terminals and allowing Discover’s card members to quickly and easily make payments through their Samsung phones at millions of merchant locations.

INDUSTRY NEWS Samsung Pay will be available on the Samsung Galaxy S6, Galaxy S6 edge, Galaxy S6 edge+, and Galaxy Note 5 this fall in the United States and Korea. Discover card members will obtain access to Samsung Pay in 2016.

“Discover remains committed to providing card members with simple, convenient and versatile payment options,” said Diane Offereins, Discover’s president of payment services. “Adding Samsung Pay expands our ability to offer innovative and secure mobile payment services, enhancing the customer experience that card members have come to expect from Discover.”

Samsung Pay uses tokenization instead of payment card information for every transaction, and consent for payment must be authorized by the cardholder with a fingerprint or a PIN. To make a purchase at the point-of-sale, Discover card members will simply swipe up on eligible Samsung devices, scan their fingerprint and pay. When Discover card members use Samsung Pay, they will continue to earn rewards and will continue to have protection against unauthorized purchases on their Discover card account. n

ATEK Access Technologies Expands U.S. Presence with Nine Sales Firms ATEK Access Technologies has entered into partnerships with nine manufacturers’ representative firms to meet the growing demand for its TankScan wireless monitoring solution. The firms will be responsible for selling ATEK Access Technologies’ TankScan products into new and existing accounts, and identifying new applications for those products.

“We like the TankScan product because it addresses several of our customers’ pain points,” said Tad Cooper, executive vice president of Acterra Group, one of the newly added partners with offices in Iowa, Illinois, Colorado and Wisconsin. The other sales firms include: Allied Ott Petroleum Equipment: Indiana.

• Bassco Services: Texas, Kansas and

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Oklahoma. • Dockendorf Equipment Co. Inc.: South Dakota. • Douglas Electric Cooperative: Michigan. • Newberry Tanks and Equipment, LLC: Texas. • O’Day Equipment, LLC: North Dakota and Minnesota. • Southern Company: Tennessee and Arkansas. • U.S. Petroleum Equipment: Wisconsin.

• Westmor Industries: Minnesota.

The TankScan TSM8000 and TankScan Cellular Ultrasonic liquid tank monitors provide the tools necessary to accurately monitor fluid levels in multiple tanks, across numerous sites, from anywhere an Internet connection is available. The TankScan monitors are ideal for petroleum product distributors and others managing liquid assets. They provide the tools necessary to accurately monitor fluid levels in multiple tanks, across multiple sites. n

READ MORE at fuelmarketernews.com

INDUSTRY NEWS

John Adrian Appointed as New VP, Sales for Americas at Franklin Fueling Systems Franklin Fueling Systems, a global leader in total system solutions for the petroleum equipment market, announced today the promotion of John Adrian to the position of VP Sales-Americas. Adrian has a total of 27 years of experience in the retail petroleum industry. Over the last eight years, he has led the strong market growth for FFS in the Western Region, as well as leading and developing the Western Region sales team.

Adrian has a BA in business administration from Point Loma University and a MBA in business management from Pepperdine University. When asked about the promotion, he said, “I’m excited to have the opportunity to continue the development of a world-class sales team within the Americas, to passionately support our customer needs and to deliver the results our shareholders expect.”

Describing himself as an “Industry Kid,” Adrian’s first job out of college was with ARCO Products Company in California, where his father worked for 33 years. He stayed with ARCO for 11 years, establishing a track record of outstanding performance and increased responsibilities.

By 1997 Adrian had worked his way up to AM/PM Regional Sales Manager and was managing all Arco retail facilities within the San Diego market. n

Synchrony Financial and Chevron Introduce More Fuel Savings with Enhanced Credit Card Loyalty Programs, Sign Multi-Year Agreement Synchrony Financial and Chevron U.S.A. Inc. announced the new Techron Advantage™ Fuel Credits Program for consumers. Both new and existing personal private label and dual-branded

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Visa® cardholders can earn additional Fuel Credits on their fuel purchases at nearly 8,000 Chevron- and Texacobranded stations nationwide. The new Fuel Credits program is part of a multiyear extension signed between Chevron U.S.A. Inc. and Synchrony Financial for Chevron’s personal credit card program.

With both the personal Techron Advantage Credit Card and Visa® card, cardholders can earn 3 cents per gallon in Fuel Credits—every fill-up, every time—at participating Chevron and Texaco stations throughout the U.S. In addition to the 3 cents per gallon Fuel Credits, Techron Advantage Visa® cardholders can earn 10 cents per gallon in Fuel Credits when they purchase $300 or more outside of fuel merchants each month, or 20 cents per gallon in Fuel Credits when they purchase $1,000 or more outside of fuel merchants each month.

Every new cardholder who opens an account between July 1 and September 30 can also earn a promotional offer of 30 cents per

INDUSTRY NEWS gallon in Fuel Credits for the first 60 days from their account open date.

In addition to offering more savings on fuel purchases, all Techron Advantage credit cards feature exclusive cardholder savings throughout the year, zero fraud liability and the convenience of mobile and online account management. Issued

by Synchrony Bank, each new Techron Advantage Visa® Card also includes chip-enabled technology for improved fraud security. n

CMKG Announces the launch of a New “Category Management in Your C-store/Small Store” Training Program in Partnership with b2b Solutions Category Management Knowledge Group (CMKG) and b2b Solutions, LLC are introducing an On-Line Category Management Training Program specifically developed for c-store and small store retailers. The training will help Retailers move to a more strategic, fact-based approach in their business.

CMKG is known in the Retail, CPG and FMCG industries for high quality, certified category management training with a blend of online, hands-on, and custom live programs.

“We are very excited to work with b2b Solutions,” said Sue Nicholls (President, CMKG). “Teaming up with b2b Solutions to provide online and custom training solutions to the Convenience Store Industry is an exciting development for our company.” The addition of this partnership reflects the desire of both companies to collaborate on a shared vision of building capability and capacity in organizations to meet the needs of the changing convenience store industry and their Shoppers.

“We saw a perfect ‘fit’ for both organizations in our like-minded approaches and visions to build the skills of c-store/small store owners around the world in order to help them compete with the increasingly competitive marketplace through a more strategic

approach to their business. Our focus is on real world, actionable learning, not just theory. The foundations of Category Management certified training, coupled with a strong knowledge and understanding of c-stores and how they work has led to an incredible and unique learning program that will benefit c-store owners around the world,” stated Steve Montgomery, b2b Solutions President. n

Samco/Express Mart Selects AIMS’ COMPAS Commander AIMS, Inc., a provider of strategic accounting software for Wholesale Petroleum Marketers announced that SAMCO/Express Mart, located in Oxford, Alabama, has purchased AIMS’ COMPAS Commander accounting software. AIMS will provide SAMCO with a comprehensive accounting solution that includes process automation that will assist with their business and their business’s growth.

Sam Mousa, President & Co-Owner of SAMCO/Express Mart, said, “We continue to grow in order to better serve our communities. We needed a system that would be able to grow with us. As a Windows based solution, COMPAS Commander has all the features we need in order to meet the demands of this challenging industry.”

“We are pleased to welcome SAMCO/Express Mart to the AIMS family.

We look forward to assisting them with their business’s growth and success. Our system will be able to meet their demands as they continue to serve their customers,” said David Dorries, director of sales & marketing of AIMS. “Their decision to go with Commander, once again, demonstrates how AIMS continues to offer an adaptable solution to a wide variety of wholesale marketers.” n

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Acumera Appoints Chief Security Officer Acumera, a leader in trusted connections services for retail organizations, has hired Tabitha Greiner as chief security officer.

Greiner is a Payment Card Industry Data Security Standards (PCI-DSS) expert and will be responsible for leading all cybersecurity-focused initiatives for the business, including maintaining internal security practices and acting as an expert resource for customers and the retail community.

According to Dirk Heinen, Acumera’s chief executive officer, cybersecurity is a critical piece of the Acumera platform, particularly for convenience store operators who are struggling to keep up with and meet the latest PCI standards.

“Convenience store IT professionals don’t have the time or internal resources to keep up with the latest trends in the evolving cybersecurity industry, which is why we’re committed to doing it for them,” said Heinen. “Tabitha’s background as a Qualified Security Assessor for the Payment Card Industry and her knowledge of both compliance requirements and best practices will be a valuable resource to customers and to our team.”

Greiner is a Certified Information Systems Security Professional and a PCI Security Standards Council Internal Security Assessor. She is active in the cybersecurity community and participates in multiple committees, working groups and special interest groups. She was appointed as vice chairman of the Conexxus zone router data security working group in July and serves as the director of community outreach and sponsorships for the Austin chapter of Information System Security Certification Consortium, Inc. (ISC)2, a global non-profit that educates and certifies information security professionals.

Prior to joining Acumera, Greiner served as director of security services at ComplyGuard Networks, a systems and network security provider. She also has held notable security consultant, security architect and security engineering positions at Verizon, Trustwave, Chicago Public Schools and Regence. n

INDUSTRY NEWS

National Truck Protection Announces Expanded After-Treatment Protection Bundle for Class 8 Trucks National Truck Protection Inc., a leading North American independent provider of extended service contracts to the trucking industry, announces the launch of a new aftertreatment coverage option for Class 8 trucks.

The new after-treatment option bundles six key components into a single package that can be added to most National Truck Protection and American Truck Protection (ATP) extended service contracts. The new bundle contains coverage for: the EGR valve (exhaust gas recirculation valve), the doser injector (“Seventh Injector”), the DOC (diesel oxidation catalyst), the DPF (diesel particulate filter), the DEF Tank (diesel exhaust fluid tank) and the SCR (selective catalytic reduction).

The complexity of modern emission control systems has contributed to the overall cost of

diesel engines and has consequently created significant interest among used truck buyers when they purchase their vehicles. Anyone who owns or operates a Class 8 commercial vehicle will find value in protection against potential failures of these after-treatment components. n

Bart Johnson Joins Simmons as Fuel Solutions Evangelist Simmons Corp., a leading international fuel management solution provider, announced the addition of Bart Johnson to its sales team. Johnson brings 35 years of experience in the petroleum industry.

Simmons Corp. Vice President of Sales, Kevin Dockery, stated; “We are very pleased to have Bart join the Simmons team. I have known Bart for many years and am confident his knowledge, experience and passion for our industry, and he will be a great asset not only to Simmons but also our customers.”

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Johnson joins Simmons with extensive experience in the petroleum industry helping marketers, c-store chains and hypermarket fuel retailers leverage technology to drive business improvement. His early experience running a petroleum distribution company included developing a pioneering automated accounting system that was eventually implemented by more than 100 other petroleum marketing companies.

In addition, Johnson was instrumental in the design, development and deployment of enterprise level fuel management, POS, retail back-office and headquarters accounting/financial systems that achieved widespread adoption. Prior to joining Simmons, Johnson worked outside the industry as Vice President of International Services for Veritas Press, an on-line school and curriculum publisher for children grades K-12. Most of his work for Veritas focused on establishing the Veritas brand in Asia, especially China.

Prior to joining Veritas Press, Johnson held the position of Vice President of Sales for the Pinnacle Corporation. n

Test Your FMN Acumen

The list below represents acronyms used in this issue of Fuel Marketer News. $/b AFDC AMDP

Dollars per Barrel Alternative Fuels Data Center Asset Management and Disposition Plan ARPC Authorization Response Cryptogram ARQC Authorization Request Cryptogram ASC Authorized Service Contractor ASTM American Society for Testing and Materials BTU British Thermal Unit CAFE Corporate Average Fuel Economy CO2 Carbon Dioxide CPG Consumer Packaged Goods CRIND Card Reader in Dispenser CVV Card Verification Value DDA Dynamic Data Encryption DEF Diesel Exhaust Fluid DOE Department of Energy DOT Department of Transportation EIA Energy Information Administration/DOE EMV EuroPay MasterCard VISA EPA Environmental Protection Agency EU European Union EURO VI European Emission Standards FHWA Federal Highway Administration FSU Former Soviet Union GHG Greenhouse Gas GSTV Gas Station TV

IC IEA IFSF IT kbpd LED LNG LTL LTO LUST MST Mmb/d Mmbpd MSA MSR NACS NFC NFPA NOx OBC OECD OPEC OTR PAN PCI

What Does That Mean

Integrated Circuit International Energy Agency International Forecourt Standards Forum (UK) Information Technology Thousand Barrels per Day Light-Emitting Diode Liquefied Natural Gas Less Than Truckload Light Tight Oil Leaking Underground Storage Tank Magnetic Secure Transmission Million Barrels of Oil per Day Million Barrels per Day Medicare set-asides Magnetic Stripe Readers National Association of Convenience Stores Near Field Communication National Fire Prevention Association Nitrogen Oxide On-Board Computer The Organisation for Economic Co-operation and Development Organization of the Petroleum Exporting Countries Over The Road Primary Account Number Payment Card Industry

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PCI DSS PEI PEMS PIN PM PMAA POS Ppm QR QSR RBOB REO RFS RVO SCR SIR UAE UL ULEZ ULSD UST VIR VIR WTI

?

Payment Card Industry Data Security Standards Petroleum Equipment Institute Portable Emissions Measuring Systems Personal Identification Number Particulate Matter Petroleum Marketers Association of America Point of Sale Parts per Million Quick Response (Code) Quick Service Restaurant Reformulated Blendstock for Oxygenate Blending Real Estate Owned Renewable Fuel Standard Renewable Volume Obligation Selective Catalytic Reduction Statistical Inventory Reconciliation United Arab Emirates Underwriters Laboratories Ultra Low Emissions Zone (UK) Ultra-Low Sulfur Diesel Underground Storage Tank Vehicle Inspection Report Volume Inventory Reconciliation West Texas Intermediate

ADVERTISER’S INDEX

Our Advertisers Company

Page

Company

Page

Advanced Fuel Solutions

22

PAPCO

123

Afton Chemical

13

Paragon Solutions

70

AIMS

87

Patriot Capital

19

Airtab

115

Peak

24

Allied Brand Capital

55

Performance Ink

29

Ascentium Capital

Inside Front Cover

PIUSI

43

Biobor Fuel Additives

89

PriceAdvantage

131

Blue1USA

108

Proqyr

143

Comdata

5

RDM

137

Cummins & White

103

RINAlliance

152

Dennis K Burke, Inc.

119

Rockhill Insurance

141

DM2

74

Roth

129

FireStream

100 – 101

Rovanco Piping Systems, Inc.

150

FPPF

60

Scully Signal Company

146

Fuel Marketer News

117

Simmons Corporation

92

Gorman-Rupp

105

Sinclair

33

Hose Master

149

Skyline Products

64

Howes

82

SMARTLogix

Back Cover

Innospec Fuel Specialties

40

Source North America

66

Intellifuel

27

Steel Tank

113

Keystone Structures, Inc.

111

Tanknology

95

Liquid Controls

35

Total Meter

145

Lock America

130

Trinium Technologies

10

Matrix Capital Markets Group

Inside Back Cover

ValvTect

79

Meridian Manufacturing

77

Verifone

16

MidContinental Chemical Company, Inc.

49

Warren Rogers Associates, Inc.

45

OILCO

133

Wayne

57

OPW

9

WEH Technologies, Inc.

47

P97

98

White Tucker

147

WPMA

134

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