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Reversal of Misfortune Oil in the U.S. Part 2

The Green New Deal Failure is Not an Option

$200 Per Barrel Oil? Fuel Logistics Processes

Stuck in the ‘90s

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New Deal

by Keith Reid

14 $200 Per Barrel

Oil? Bunker Fuel Regulations Coming Soon

by Keith Reid

16 Reversal of

Misfortune, Oil in the U.S., Part 2 by Nancy Yamaguchi, PhD

38 Are Your Fuel

Logistics Processes Stuck in the ‘90s?

by Richard Browne

46 Truck Classes:

Special Feature

54 Failure Is Not an Option

by Brian Reynolds


8 The Green


The Carbon Tax and Transport Fuels

contents by Department





The Carbon Tax and Transport Fuels by Joe Petrowski


34 48 50


Propane Bulk Plant Maintenance Moves All Fleet Managers Should Be Making in 2019 Weigh Stations and Bypass Evolve with Technology

Claims Denied


Should I Stay or Should I Go? by Roy Strasburger


Gas Pos Offers a New Approach by Keith Reid


Propane Bulk Plant Maintenance by Foster Fuels



The Cost of Non-Compliance by Steve Smith and Matt Zeise



Exchanging Aging Truck Fleets by Brian Holland


Moves All Fleet Managers Should Be Making in 2019 by Bernie Kavanaugh


Weigh Stations and Bypass Evolve with Technology by Brian Mofford



A Look at OPW’s Acquisitions and Market Strategy by Keith Reid


Claims Denied by Kelly Flannery, Hallie Cooley, Christopher Gledes, Kelly Billings






EDITORIAL STAFF CEO & Group Publisher Gary D. Bevers Editorial Director & Digital Publisher Keith Reid Director of Production & Managing Editor Kathy Bevers Digital Editor Scott A. Croom Industry Analysts/Editors Frank M. Hunter Nancy Yamaguchi, Ph.D. Columnists and Contributors Greg Cushard Vladimir Collak Shane Dyer John Eichberger Doug Haugh Corey Henriksen Maura Keller Alan H. Levine Joseph H. Petrowski W. Brian Reynolds Fred M. Whitaker Editorial Board Ed Burke Lisa Calhoun George A. Overstreet, Jr. Joseph H. Petrowski Art Director Jeff Beene Marketing Director Joe A. Martinez Advertising Representative Bill Kaprelian 262-729-2629

A note from

Gary Bevers, Group Publisher As I was growing up in Texas, half my family worked in petroleum, trucking and automotive-related businesses. The other half were family farmers toiling away in South Dakota. Every year we would make the long drive from Corpus Christi to visit the South Dakota relatives. I remember each Spring my uncles looked forward with anticipation to the new growing season, watching for any early indicators, or “signs,” to tell them when to start planting their crops. They looked to The Old Farmer’s Almanac, took note of Groundhog Day to see if the groundhog saw his shadow, paid attention to the last big day of snow and any signs of early warm weather, etc., to guess if it would be a good crop year or not and when to start planting. It is interesting to see how similar and imprecise this process is compared to the methods economic analysts use for predicting the coming market performance. The market storm clouds that gathered at the end of 2018 quickly dissipated with the start of the new year, causing most economic prognosticators to quickly revise their 2019 prediction misses. This is most evidenced by the Fed calling off their scheduled rate hikes for the rest of the year. So, as most analysts missed on their 2019 predictions of an impending Bear Market economic slowdown, here are a few of their new, revised headlines… The U.S. economic outlook is healthy according to the key economic indicators. The most critical indicator is the gross domestic product that is expected to remain between the 2% to 3% ideal range. U.S. manufacturing is forecast to increase faster than the general economy. The markets and the overall economy are up as Mainstreet continues to create jobs at a record pace not seen in decades. The jobs unemployment index is at a 49-year low. The actual number of employed workers continues to rise. Increased wages have brought workers who previously left the workforce off the bench and back into the economy, exceeding what technically is considered by experts as “full employment.” Risks of economic disruption—in particular, interest-rate hikes and major trade disputes—are receding, so another positive sign for growth. And closer to home, the NACS’s State of the Industry (SOI) report stated that total U.S. convenience store sales surged 8.9% to $654.3 billion in 2018, according to data released today. The boost was led by a 13.2% increase in fuel sales, while in-store sales grew 2.2% to a record $242.2 billion. With the reversal of the economic flatlining predictions, 2019 should be another great year for the convenience and fuels market. Consumer spending is up with renewed optimism about the economy. Miles driven and gallons consumed are up. Retail fuel margins are climbing. And, finally, crude prices are predicted to remain moderate, keeping gas prices low for the rest of the year. Overall pretty good news for 2019.

Mailing Address 15201 Mason Road, Suite 1000-288 Cypress, TX 77433

Gary Bevers CEO & Group Publisher © Copyright 2019, FMN Media, LLC All Rights Reserved



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The Carbon Tax

seems inevitable and what it means for

Transport Fuels





With the alternatives being far worse, a carbon tax would be the least disruptive to markets, the easiest to administer and the least distortive

The U.S. consumes 176 billion gallons per year of transport fuels producing 1.6 million metric tons of CO2. At $40/MT (the price of CO2 in markets where it is traded when written), it would generate $64 billion per year in new revenue. While any new tax of $64 billion would be an economic suppressant, the affects could be mitigated by:


Using $21 billion for infrastructure improvement

2 Using $21 billion for a dividend to taxpayers

3 by Joe Petrowski

The U.S. has reduced CO2 emissions three years in a row, for the first time in history, and the U.S. produces less CO2 than Canada, China and the rest of Asia. However, the green movement rolls on with the new left looking to use planetary doom to expand government oversight, redistribute income and punish the prosperous despite the inconvenient truth that transport fuels account for less than 25% of CO2 emissions. This is less than agriculture and geological (wild fires, volcanoes, ocean vents, etc.) emissions combined. There is a significant challenge in stopping what is a quasi-religious movement. The desire to raise more revenue while seizing the moral high ground is simply too irresistible. With the alternatives being far worse, a carbon tax would be the least disruptive to markets, the easiest to administer and the least distortive.

Using $22 billion to reduce deficits

At $40/MT it would cost 37cents/gallon, raising the price of fuel for certain, but that could be mitigated by a reduction and a simplification of state and federal fuel taxes. Ancillary benefits would be a boost to EVs, natural gas and hydrogen vehicles as well as more fuel-efficient autos and programs that remove CO2 from the atmosphere. n


Joe Petrowski Joe Petrowski has had a long career in international commodity trading, energy and retail management and public policy development. He currently serves as Director of Fuels for Yesway, where he oversees all operations of the fuels team, including pricing, procurement and management of the firm’s fleet services program. 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 Managing Director of Mercantor Partners, a private equity firm investing in convenience and energy distribution and a member of the Gulf Board.



The Green New Deal “”

The plan is utopian in nature, massive in scope (beyond the realm of feasibility) and seems to have as much, if not more, to do with social justice issues not specifically related to carbon remediation.

by Keith Reid

The announcement of Congresswoman

Alexandria Ocasio-Cortez’s (D-NY) “Green New Deal” (GND) has caused quite a stir. It proscribes a move to 100% clean energy by 2030, just 10 years, to offset human influenced or Anthropogenic Global Warming (AGW). While this is a “simple resolution” that lacks the force of law, it clearly defines the policy objectives of the environmental left and its political faction in the Democratic Party. Co-sponsor Sen. Ed Markey (D-MA) has indicated he will begin drafting a bill to support the resolution.

Among a range of initiatives, one of particular interest to fuel marketers and retailers (not to mention society in general) as cited in the FAQ: “Totally overhaul transportation by massively expanding electric vehicle manufacturing, build charging stations everywhere, build out high-speed rail at a scale where air travel stops become necessary, create affordable public transit available to all, with the goal to replace every combustion-engine vehicle.” So far, the bill has faced more ridicule than opposition from Republicans. The plan is utopian in nature, massive in scope (beyond the realm of feasibility) and seems to have as much, if not more, to do with social justice issues not specifically related to carbon remediation. It would transfer control of large swaths of daily life from the private sector to government and transform America into a country unrecognizable compared to the Constitutional republic that exists today. FMNMagazine




Here are the bullet points from the FAQ: • Move America to 100% clean and renewable energy (eliminating all fossil fuels) • Create millions of family supporting-wage, union jobs • Ensure a just transition for all communities and workers to ensure economic security for people and communities that have historically relied on fossil fuel industries • Ensure justice and equity for frontline communities by prioritizing investment, training, climate and community resiliency, economic and environmental benefits in these communities

“A climate economics approach finds that today—contrary to the alarmists’ massive insistence on negatives-only stories— global warming causes about as much damage as benefits.” Bjørn Lomborg, former director of the Danish Environmental Assessment Institute

• Build on FDR’s second bill of rights by guaranteeing: • A job with a family-sustaining wage, family and medical leave, vacations and retirement security • High-quality education, including higher education and trade schools

The driver for the need for such a massive disruption of society and the economy is the most alarmist view of climate change. The GND states: “IPCC Report said global emissions must be cut by 40 – 60% by 2030 [Editor: Again, in just 10 years]. U.S. is 20% of total emissions. We must get to 0 by 2030 and lead the world in a global Green New Deal.

• Clean air and water and access to nature • Healthy food • High-quality health care • Safe, affordable, adequate housing • Economic environment free of monopolies • Economic security for all who are unable or unwilling to work The last part relative to “… or unwilling to work” appeared in this initial FAQ launch and was quickly denied by a Cortez staffer. He later walked that denial back by claiming a “preliminary version” was accidentally released, which itself appears to have now been reversed. More specific, necessary actions cited in the FAQ and the resolution (with some overlap) include: • Banning beef due to methane emissions (cow gas) • The need to upgrade or replace every building in the U.S. for state-of-the-art energy efficiency • Phasing out nuclear power (the only practical clean energy ready for prime time today) • Providing job training and education to all • Protecting rights of all workers to unionize and organize • Ensuring an economic environment free of monopolies and unfair competition • Essentially replacing air travel with high speed rail (which is even losing favor in California now) • Strengthening and enforcing labor, workplace health and safety, anti-discrimination and wage and hour standards • Ensuring that all GND jobs are union jobs that pay prevailing wages and hire locally FMNMagazine


It goes on to list such environmental impacts as wildfires that, by 2050, will annually burn at least twice as much forest area in the western United States than was typically burned by wildfires in the years preceding 2019 and the loss of more than 99 percent of all coral reefs on Earth that will occur if this is not met. While presented as fact, these are speculative. In fact, there is currently a notable debate going on among scientists that support AGW as to the severity of potential outcomes, including potentially beneficial results. From Bjørn Lomborg, former director of the Danish government’s Environmental Assessment Institute (EAI) in Copenhagen writing in 2016 in the UK’s Telegraph: “If our climate conversation managed to include the good along with the bad, we would have a much better understanding of our options. Climate economics does just that, taking all the negatives (like rising sea levels and more heat deaths) and all the positives (a greener planet, fewer cold deaths). A climate economics approach finds that today—contrary to the alarmists’ massive insistence on negatives-only stories—global warming causes about as much damage as benefits. Over time, climate becomes a net problem: by the 2070s, the UN Climate Panel finds that global warming will likely cause damage equivalent to 0.2 per cent to 2.0 per cent of global GDP. This is certainly not a trivial cost, but nor is it the end of the world. It is perhaps half the social cost of alcohol today.” However, such an outlook removes the primary motivator for “solutions” that go far beyond climate science but need an existential emergency to push through on society.


Policy Brief: The Green New Deal

Politics or Science?

Not Your Grandparent’s Socialism

The GND’s focus on social justice in the climate realm is not surprising. This has long been a core component of the AGW remediation debate and one that has significantly politicized and clouded the discussions.

Socialism can mean traditional safety nets like Medicare/Medicaid, Social Security and a hand up for those down on their luck, through measured welfare programs. Democratic socialists believe in foundational socialism with strongly Marxist overtones. As the Democratic Socialists of America (which is Cortez’s affiliation) state in their “about” materials: “Democratic socialists do not want to create an all-powerful government bureaucracy. But we do not want big corporate bureaucracies to control our society either. Rather, we believe that social and economic decisions should be made by those whom they most affect.

This conceptually ties back to the Malthusianism of the late 18th and early 19th century, carried through to Paul R. Ehrlich’s “The Population Bomb” of the late 1960s. Basically, overpopulation trends will kill the planet and endanger survival. Marxists quickly developed a resource redistributive concept from that more attuned to their political goals. This is an important aspect of the debate. If you wish to claim that the science is settled (“settled science” is contradictory); or that there is a scientific consensus (there is not), then you have to equally acknowledge that there are significant political and economic forces at work on the left (including inside the scientific community) in addition to similar claims made against the right. The GND is very transparent on this, though it has been observable over the years.


“Today, corporate executives who answer only to themselves and a few wealthy stockholders make basic economic decisions affecting millions of people. Resources are used to make money for capitalists rather than to meet human needs. [Editor: Do 401K holders count?] We believe that the workers and consumers who are affected by economic institutions should own and control them.

It has been argued by opponents that the GND will overhaul the economy in the same way an iceberg overhauled the Titanic’s seaworthiness.

The Copenhagen summit of 2009 was broadly considered to be a failure, even with the strong but not absolute support of President Obama. Inadequate wealth distribution to the developing world was a component of the failure. As the leftist Guardian reported at the time: “Many reactions were strongly critical of Obama. Hugo Chávez, the president of Venezuela, described Obama’s speech as ‘ridiculous’ and the U.S.’s initial offer of a $10 billion fund for poor countries in the draft text as ‘a joke.’ ”

“Social ownership could take many forms, such as worker-owned cooperatives or publicly owned enterprises managed by workers and consumer representatives. Democratic socialists favor as much decentralization as possible. While the large concentrations of capital in industries such as energy and steel may necessitate some form of state ownership, many consumer-goods industries might be best run as cooperatives.”

As NPR coverage of the GND noted: “The Green New Deal framework combines big climate-change-related ideas with a wish list of progressive economic proposals that, taken together, would touch nearly every American and overhaul the economy.”

Politically, through the process of Intersectionality, climate justice is being linked to identity politics to pursue a more broadly socialist policy in a range of areas. ran a newsletter piece in 2014 from the Syracuse Peace Council on the Global Climate Convergence’s Earth Day to May Day campaign. It included the following: “… the campaign seeks to ‘build a unified movement that can link climate justice to...economic inequality, the racism of mass incarceration and mass deportations, the sexism of the ongoing attacks on women’s reproductive rights, systemic oppression of LGBTQ people, [and] attacks on working people’s living. ‘Campaigns like these are especially important considering that the mainstream environmental movement has largely failed to take into account how issues such as racism, sexism and class inequality are integral to the fight to save the planet. Despite these failings, communities of color have long connected their fights against environmental degradation to other forms of oppression through the framework of environmental justice.’ ” FMNMagazine

It has been argued by opponents that the GND will overhaul the economy in the same way an iceberg overhauled the Titanic’s seaworthiness. Cortez acknowledges the economic challenge. A challenge simply too big for a capitalist market economy. As their FAQ states: “The level of investment required is massive. Even if every billionaire and company came together and were willing to pour all the resources at their disposal into this investment, the aggregate value of the investments they could make would not be sufficient. “Once again, we’re not saying that there isn’t a role for private sector investments; we’re just saying that the level of investment required will need every actor to pitch in and that the government is best placed to be the prime driver.” 10

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Policy Brief: The Green New Deal

The GND basically specifies far, far more deficit spending on top of an already disturbing 22 trillion-dollar debt load. There are a range of unsupported claims for a positive economic outcome both financially and in terms of jobs. In a comparison to World War II the FAQ states: “We invested 40 – 50% of GDP into our economy during World War II and created the greatest middle class the U.S. has seen.

The Democratic Party has relied increasingly on a coalition of highly progressive identity groups in recent years and is Politically, millennials are a beholden to provide the maximum amount of support politically core component of the Democrat base and support many progressive possible to each of those groups or face serious consequences in intersectional issues. Polling voter turnout and campaign conducted by the left-of-center support.


newsmagazine The Nation suggests Politically, millennials are a core that climate change is a major component of the Democrat base concern for millennials and and support many progressive That is basically correct, but it omits a few shows strong support intersectional issues. Polling conducted key details. for the GND. by the left-of-center newsmagazine The

• The Axis powers were not able to damage the U.S. economy through military action. The GND would correct that and likely inflict severe damage on the economy as it exists now with a questionable ability to create a superior replacement.

Nation suggests that climate change is a major concern for millennials and shows strong support for the GND. Interestingly, that same poll shows that support drops (but does not reverse) when millennials are informed of the actual financial costs and sacrifices that would have to be made to support such policies.

• At the end of World War II, the U.S. was the strongest economic power in the world, with virtually no competition for the next 20 years. The post-war golden era began to grind to a halt when foreign cars, steel and other products started entering the global market in the 1970s. The U.S. currently faces strong economic competition throughout the world that will not be undertaking a GND of their own.

Ironically, the FAQ states this goal: “Make the U.S. the leader in addressing climate change and share our technology, expertise and products with the rest of the world to bring about a global Green New Deal.” We already are. As Howard Feldman, API senior director of regulatory and scientific affairs notes: “The United States leads the world both in natural gas and oil production and in cutting GHG emissions. Clean natural gas produced through advanced technologies like hydraulic fracturing is playing a significant role in driving carbon dioxide emissions to 25-year lows. Americans have the cleanest air in decades due in part to the increased use of natural gas to generate electricity, demonstrating that environmental protection and economic growth are not mutually exclusive.”

• Because the U.S. had tremendous surplus manufacturing capacity at the end of the war, it enjoyed considerable business rebuilding much of the war-ravaged, non-communist world. • The U.S. had cheap access to abundant fossil fuels and built an efficient petroleum refining and distribution system that helped both win the war and drive the post-war boom. After a period of decline, that is once again the case. The GND aims to kill our current energy revolution.

Domestic Politics

While there is little likelihood for such policies being passed through 2020, any significant change in the political landscape after the elections could shift that, perhaps in some significant ways. Many progressive environmentalists have even gone on record since the release stating that getting off carbon in 10 years is not feasible, but aggressive actions along those lines to support the base—well beyond cap and trade or a carbon tax—would not be unexpected.

It would be easy to dismiss this as the fantasy of an inexperienced and ill-informed Junior Congresswoman with an extreme agenda if not for the disturbing amount of support it has received from the rest of the Democratic Party, including many senior members. Speaker Nancy Pelosi (D-CA) has been dismissive and declined to name Cortez to the new Climate Change Committee. However, this illustrates the well-documented divide between the aggressively progressive base of the party and what remains of the more moderate “Blue Dog” contingent.

Reducing the U.S. carbon output to pre-industrial levels will not change the fact that China, India, Europe and the rest of the world will not be massively disrupting their economies though a GND of their own. And, if you fully accept AGW science, this unilateral action will not solve the alarmist concerns. However, reducing the U.S. to a developing-world quality of life is an achievable goal. n

Currently, the GND resolution has been co-sponsored by 65 Democratic house representatives. It was initially co-sponsored by Senate veteran Ed Markey (D-MA). Announced and likely presidential candidates including Sen. Elizabeth Warren (D-MA), Sen. Kamala Harris (D-CA), Sen. Cory Booker (D-NJ), Sen. Kirsten Gillibrand (D-NY), Amy Klobuchar (DMN) and former Maryland Representative John Delaney have either fully or conceptually supported the GND. FMNMagazine


$200 Per Barrel Oil? Bunker Fuel Regulations Coming Soon with Ripple Effects

by Keith Reid


he International Maritime Organization’s (IMO’s) lowsulfur rule, scheduled to become effective in January 2020, will set the sulfur content for bunker fuels (residual oil/highsulfur fuel oil) at 0.5 percent (5,000 ppm) or less compared to 3.5 percent today. While there is currently a 0.1 sulfur requirement (1,000 ppm) for specific emission control areas, that is generally limited to the coastal regions of the United States, Canada and Western Europe. There are exceptions to the fuel requirement for ships fitted with sulfur scrubbers. Additionally, some vessels might be converted to alternatives like liquefied natural gas. Those solutions come with some significant capital costs and have low penetration today but are seen as meeting up to one-third of the demand moving forward. There will be significant penalties for vessel operators refusing to comply, including having the vessels declared unseaworthy. This switchover is to reduce health issues related to particulates and environmental issues like acid rain, which were the justifications for sulfur reductions in diesel. That transition, despite considerable concerns, went well from


The maritime market consumes approximately 3.5 million barrels per day of high-sulfur fuel or 4 percent of total demand.

both supply and price perspectives. Many of those same concerns have been raised for this shift.

This rule is seen as being highly disruptive to the shipping industry and likely downstream with higher prices working into to the retail sector. It is also seen as being disruptive to the refining industry.

While there has been a significant push toward low-sulfur fuels in the refining sector, many refiners serving higher-sulfur markets like power generation and maritime have not made the expensive upgrades required to produce a lower-sulfur fuel. The maritime market consumes approximately 3.5 million barrels per day of high-sulfur fuel or 4 percent of total demand. The concern is a



FUELS & SUPPLY shortage of light, sweet crude to facilitate more lowsulfur products and shifts in production strategies. This is er prices during a transition period for bunker fuel but also diesel, jet fuel and heating oil. There is also the potential to marginally impact gasoline. There have been some extreme predictions and some that were far more moderate. Analyst Philip Verleger predicted in 2018 that prices could peak at $200 per barrel. At about the same time, Morgan Stanley predicted a potential of $90 per barrel oil. Other analysts predict a 25 – 30 percent increase. This will tend to be a short-term disruption of a few years with the market stabilizing over time. Goldman Sachs sees an increase in scrubber use as leading to less of a crisis. FMN asked analyst Alan Levine, Chairman of Powerhouse, for his thoughts on the issue. Levine is an internationally recognized expert in pricing and business practices in the energy industry. A petroleum specialist for over 40 years, he is a highly regarded authority on the relationship of energy futures to cash petroleum markets. Levine was a consultant to NYMEX at the inception of the heating oil contract in 1978 and is a hedge adviser to many energy interests. Powerhouse provides hedging plans, price monitoring and buy and sell order execution.

would imagine if the most bullish FMN: Imarket predictions come true—oil hitting $200 per barrel—there wouldbe some intense pressure to back offon the regulation for some period of adjustment time.

You bring up an important thing when you talk about LEVINE: exceptions. We’ve had any number of things that have come out that would imply oil prices will go to the moon, like imposing sanctions on Iran. So, when it comes to it, they impose the sanctions but then give everybody a waiver. I think you might also have the same thing here. However, there have been strong reservations expressed about granting waivers or adjusting deadlines. of the concern is that sour crude is difficult to FMN: Much process into low-sulfur fuels, thus creating shortages and putting a premium on light, sweet crude. As the U.S. fracking production tends to be lighter crude this could potentially provide some offset.

thing that’s happened that really exceeded LEVINE: One anybody’s expectations is the speed at which


There is a short time left but a lot of options. What is your take on this potential oil and fuels crisis?

domestic production has risen. We’ve been showing nearly 12 million barrels a day on the weekly reports. And as they bring more and more pipeline capacity online in Texas, that will get into the market and work against higher prices.

going to happen…with my LEVINE: What’s reading on this, it would appear to

me that many of [the shipping companies] are coming down on the side of going with some kind of scrubber, at least long-term. Because, there’s this concern that they pull into a port and that port doesn’t have the low-sulfur fuel they need. What do they do then? This creates a problem. That’s not to say that there won’t be some demand on ultra-low-sulfur diesel. I absolutely think there will be.

reminds me of the concerns going into the 2010 FMN: This switchover to ultra-low-sulfur diesel (ULSD), which is 15 ppm. I admit to being more than a bit “glass half-empty” in my reporting at the time, because for three straight years up until the deadline I could get no answers from the refining, analyst or distribution community about any real progress toward meeting the goals. But, in the end, it just happened with little drama.

Oh, my God. The world was coming to an end. LEVINE: We can never produce this much ULSD. The world is

I wouldn’t discount [extreme prices] entirely. Some years ago, I published a piece when the oil price was around $45 per barrel and I used some technical material that suggested it could go to $150, though I just couldn’t imagine it happening. But within a year, we were at $147, so you can’t say that it can’t happen. But, if oil prices go up that high, it would induce a slowdown in economic activity of very high proportion. FMNMagazine

dissolving around us. And, at first there were price differences. For a while they ran two different, futures prices. But when the time came it was a big thud. And it’s because, in part, there are some very creative individuals and they do what is necessary to make things happen. Again, this is not nothing, but at the same time I think one must be aware of how effectively industries respond to these issues. n 15

Reversal of Misfortune: Oil in the U.S. Part 2

by Nancy Yamaguchi, PhD




In our Winter issue, we presented Part 1 of “Reversal of (Mis)Fortune: Oil in the U.S.” This continuation develops further our theme. Reversing the downward slide in U.S. oil production was a mighty feat, displacing a massive chunk of imports and converting the U.S. into a major oil exporter as well. This is not wholly good fortune when considered from abroad. This article focuses on the change in oil flows and the impact on neighboring oil producers, chiefly Venezuela, Mexico and Canada.

Impacts on Regional Crude Exporters: Canada, Mexico and Venezuela The massive reduction in U.S. crude import requirements is having profound impacts on neighboring crude exporters. Figure 1 shows the huge shift in U.S. crude imports from Canada, Mexico and Venezuela from 1973 through 2018. From the 1970s through the late 1990s, all three countries were important and growing sources of crude for the U.S. Their exports to the U.S. were roughly comparable in volume, at approximately 1 mmbpd each in the year 1993, growing to around 1.2 to 1.3 mmbpd in 1997. Thereafter, their paths began to diverge—dramatically, after the year 2000.

Figure 1: Shift in U.S. Crude Oil Imports from Canada, Mexico and Venezuela, 1973-2018 (kbpd)

Source: Energy Information Administration (EIA)



“ ”

The massive reduction in U.S. crude import requirements is having profound impacts on neighboring crude exporters.


Reversal of Misfortune: Oil in the U.S.

“ ” Venezuelan crude exports to the U.S. began to slump after 1998, after Hugo Chavez took over as the country’s president. Venezuelan crude production was nearly 3.5 mmbpd in 1998, and it has never regained this level since then. According to OPEC, Venezuela’s crude production had dwindled to 1.148 mmbpd in December 2018. Production averaged 1.339 mmbpd in 2018, a sharp drop of 0.572 mmbpd from 2017’s production level of 1.911 mmbpd. In 1998, Venezuela exported 1.377 mmbpd of crude to the U.S. This plummeted to 0.506 mmbpd in 2018, an average rate of decline of 4.9% per year over the last twenty years. Mexican crude exports to the U.S. began to fall after the year 2004. Mexican production has fallen steadily as key offshore fields, including Cantarell, have begun to play out. In 2004, Mexican output was 3.825 mmbpd, according to Petróleos Mexicanos (Pemex), the national oil company. The Mexican government took steps in 2014 to revive the industry by enacting constitutional reforms that ended the 75-year monopoly held by Pemex. Production has continued to fall, however. Licensing rounds have been disappointing, and the current global supply-demand balance has not encouraged additional exploration and investment. Pemex reported that crude production was 2.788 mmbpd in 2014 and that this fell to an estimated 2.071 mmbpd in 2018, a drop of 0.717 mmbpd. Production is forecast to decline again in 2019. In 1998, Mexico exported 1.321 mmbpd of crude to the U.S. This fell to 0.665 mmbpd in 2018, a rate of decline averaging 3.4% per year over the last twenty years. In contrast, Canadian exports to the U.S. began to grow even more rapidly, in part filling the gap left by the declines in supply from Mexico and Venezuela. Canadian production of bitumenbased products from oilsands (diluted bitumens, or “dilbits,” and synthetic crudes) has grown enormously. Continued growth is expected, with an interruption in 2019 expected because of storage and pipeline constraints. The government of Alberta Province mandated a cut in output, effective January 2019. Most of Canada’s output is landlocked, with limited access to seaports to the east or west. Consequently, most Canadian crudes and oilsands products travel via pipeline or rail to the U.S., and they are priced at a discount to U.S. crudes. FMNMagazine

Mexico and Venezuela are exporting less crude to the U.S., while Canada is exporting more. Mathematically, this could simply mean that Mexico and Venezuela are exporting their crude to other markets. But instead, it is because their production has fallen. Canadian production has risen.

In 1998, Canada exported 1.266 mmbpd of crude to the U.S. This nearly tripled to 3.694 mmbpd during the January – October period of 2018. The average rate of increase has been 5.5% for the past twenty years.

Crude Production Differences: Canada, Mexico, Venezuela As Figure 1 illustrated, Mexico and Venezuela are exporting less crude to the U.S., while Canada is exporting more. Mathematically, this could simply mean that Mexico and Venezuela are exporting their crude to other markets. But instead, it is because their production has fallen. Canadian production has risen. As Figure 2 illustrates, Canadian crude and condensate production have grown dramatically since the year 2000. In 2000, Canadian output was 2162 kbpd. This grew to 4578 kbpd in 2018, according to the Canadian National Energy Board (NEB). Production has grown at a rate averaging 4.3% per year for the past eighteen years.

Figure 2: Canadian Crude+Condensate Production (kbpd)

Source: Canada National Energy Board




“ ”


Reversal of Misfortune: Oil in the U.S.

[The Mexican government] enacted constitutional reforms in 2014 that ended the monopoly of the national oil company, Petroleós Mexicanos (Pemex), and began to open the oil sector to private investment, but this has not arrested the downturn in production.

Figure 4: Mexico’s Oil Production Declines, (‘000 bpd)

In 2018, over one-half (50.5%) of Canada’s output was heavy crude, followed by 23.1% upgraded bitumen (also known as synthetic crude), 17.6% conventional light crude and 8.8% condensate. Alberta Province is the key producing region, accounting for close to three-quarters of domestic output. Alberta contains vast resources of oilsands, and it is the center of the synthetic crude industry. During the 2000 – 2018 period, production of conventional light and heavy crudes declined. Alberta’s production of upgraded bitumen has expanded at a rate averaging 7% per year, and production of non-upgraded bitumen has grown at 10.7% per year. Bitumen products are considered difficult feedstocks from a refining perspective, but essentially all U.S. refineries with pipeline access to these inexpensive feedstocks have made the investments necessary to process them. Source: Petroleós Mexicanos (Pemex)

Figure 3: Canadian Oil Production by Type, 2018 (kbpd)

Venezuelan production also has been falling. Figure 5 illustrates the steep drop in output, which fell from 2375 kbpd in 2015 to 1336 kbpd in 2018, and to 1106 kbpd in January 2019. Between 2012 and January 2019, output has declined at a rate averaging 10.3% per year. Production is expected to fall even further in coming months, caused by the current social unrest and sanctions imposed by the U.S. Some estimates place Venezuelan production below 900 kbpd this year. The U.S. State Department expects it to fall as low as 500 kbpd by the end of the year under the weight of U.S. sanctions. President Nicolas Maduro defiantly claimed that he would “call upon investors from Arabic and Islamic countries to invest their money into developing the oil and gas industry,” and that he would increase crude production by 1 million bpd. Venezuela’s situation is at a critical juncture, discussed in more detail in the section following.

Figure 5: Venezuela Crude Production, (‘000 bpd)

Source: Canada National Energy Board

Canada’s situation contrasts sharply with Mexico’s. Figure 4 shows the prolonged downward trend in Mexican oil production. Production dropped from 3.8 mmbpd in 2003 to 2.05 mmbpd in 2018. Heavy crudes account for 52% of Mexico’s production, light crudes account for 27%, extra-light crudes 9%, natural gas liquids (NGLs) 12%. Production has declined at 4% per year during the 2003 – 2018 period. The government set a goal of reviving the oil industry. It enacted constitutional reforms in 2014 that ended the monopoly of the national oil company, Petroleós Mexicanos (Pemex), and began to open the oil sector to private investment, but this has not arrested the downturn in production. From 2014 to 2018, production fell at a rate of 7.4% per year. FMNMagazine

Source: Organization of the Petroleum Exporting Countries (OPEC)



Reversal of Misfortune: Oil in the U.S.

Venezuela in Crisis At the time of this writing, the situation in Venezuela has reached crisis proportions. The country has been in a tumultuous state for years, but it appears that larger forces now are in motion that will move the country forward—but the direction is unknown. The country has two Presidents: the incumbent President Nicolas Maduro, who retains control over most of the military, and Interim President Juan Guaidó, the leader of the National Assembly who gained the support of the U.S. and many other countries when it appeared that Maduro’s re-election was heavily rigged.

“ ”

Venezuela has the largest oil reserve in the world, estimated at 303 billion barrels. Venezuela was one of the founding members of OPEC, and it has played a major role in the group’s history. The national oil company, Petróleos de Venezuela, S.A. (PDVSA), grew to be a major force in the global oil market. As a national oil company,



Venezuela has the largest oil reserve in the world, estimated at 303 billion barrels. Venezuela was one of the founding members of OPEC, and it has played a major role in the group’s history.


Reversal of Misfortune: Oil in the U.S.

however, it was subject to competing political aims. President Hugo Chavez, who led Venezuela from 1998 until his death in 2013, promised that his Bolivarian Revolution would give power back to the people. Oil revenues provided the money for a wide array of social programs. PDVSA’s payroll expanded, but its operations became less efficient as the money generated was channeled to other political projects rather than being reinvested in the oil and gas sector. In 2002, many PDVSA employees went on strike to protest the policies of President Chavez. He fired approximately 19,000 workers. This included the great majority of the research and development arm, Intevep (Instituto de Tecnología Venezolana para el Petróleo). PDVSA lost much of its ability to compete in the global marketplace. Some employees moved to foreign countries including Colombia and Canada, taking their expertise to the oil industries there, and this brain drain further crippled PDVSA.

In the years leading up to the Saudi-led oil price war, global oil prices were very high. Brent crude oil spot prices were over $100/b during the last three years of the Chavez regime, which gave the Venezuelan president a great deal of financial leeway. After 2013, however, prices began to fall and the incoming President, Nicolas Maduro, was unable to continue with the socialist system of subsidies and price controls. Venezuela’s economy was reported to be teetering on the brink of collapse—always teetering, but never actually collapsing. The general citizenry has proven extraordinarily resilient, but conditions have grown so dreadful that the collapse may finally be arriving. In December 2018, consumer prices in Venezuela skyrocketed 1,700,000 percent, up from a climb of 1,300,000 percent in November, according to the country’s opposition-led congress. This is the highest inflation rate ever recorded. Protests have been widespread and constant, as many Venezuelans have been unable to afford the basics of food, water and medicines.

Adding to Venezuela’s economic woes, a World Bank arbitration panel recently ordered Venezuela to pay U.S.-based ConocoPhillips over $8 billion, finding that Venezuela violated international law by expropriating ConocoPhillips investments.

In January 2019, the opposition party National Assembly Leader, Juan Guaidó, declared himself interim president of Venezuela, stating that the re-election of Nicolas Maduro was illegitimate. U.S. President Donald Trump was the first president to recognize Guaidó as the legitimate head of state. The U.S. president was joined by other Western Hemisphere countries including Canada, Brazil, Colombia, Ecuador, Peru, Argentina, Chile, Costa Rica, Guatemala and Paraguay. Australia also announced support for Guaidó. The European Union adopted the cautious stance of requesting that Maduro schedule new elections. When Maduro refused, most of them decided to back Guaidó as interim leader, believing that he will honor his promise to hold legitimate elections. The EU countries supporting Guaidó include Austria, Britain, Denmark, France, Germany, the Netherlands, Poland, Portugal and Spain.

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Other countries remain behind Maduro, including Bolivia, Cuba and Russia. Maduro has sought aid from Russia and from OPEC during the current crisis. Maduro tweeted thanks for support from Russia, China and Turkey. Maduro also asked Pope Francis for “a dialogue.” Italy is divided on the issue.

FUELS & SUPPLY Initially, oil markets took this news in stride, and there was little oil price movement. However, the U.S. then declared that it would issue sanctions on PDVSA on January 28th, stating that PDVSA personnel were plundering the company to engage in criminal activity. The sanctions are intended to isolate President Maduro and cut off the flow of revenue. PDVSA’s U.S. subsidiary, Citgo Petroleum Corporation, can process Venezuelan crude at its Houston, Texas, refinery, but the revenues are contained in blocked accounts. PDVSA still can export oil to other customers, but some of these exports are for debt repayment, and they do not provide hard currency to the Maduro administration. The U.S. has directed that non-U.S. entities must wind down their purchases of Venezuelan oil by April 28th. The sanctions immediately affected tanker transport in the Gulf of Mexico, with an estimated seven million barrels of Venezuelan crude afloat without destinations. PDVSA scrambled to send cargoes on long-haul voyages to China, Russia and India. PDVSA subsequently declared a maritime emergency because of its inability to pay some of its tanker fleet operators. Some Venezuelan tankers have been seized for non-payment. Adding to Venezuela’s economic woes, a World Bank arbitration panel recently ordered Venezuela to pay U.S.-based ConocoPhillips over $8 billion, finding that Venezuela violated international law by expropriating ConocoPhillips investments. Venezuela suffered nationwide power outages in March 2019, which President Maduro blamed on cyberattacks by the U.S. During the blackouts, both presidents held rallies for their supporters. The situation is in flux, but global sentiment tipped more toward Guaidó during wellpublicized attempts to deliver international humanitarian aid to Venezuela from neighboring Colombia. The U.S. Agency for International Development (USAID) estimates that 3.4 million Venezuelans have fled the country, with nearly 1.2 million going to Colombia. Venezuelan security forces blocked the delivery of humanitarian aid, and violent clashes at the border caused at least five fatalities.

Reversal of Misfortune: Oil in the U.S.

“ ”

Conclusion: A Reversal of (Mis)fortune The U.S. oil market has gone through a major transformation. Instead of becoming an ever-growing market for other international oil producers, its import dependence has dropped, and it has become an important energy exporter. The U.S. may become a major net exporter of energy when all forms are included, but the U.S. is not a net exporter of crude oil. In 2018, the U.S. produced 10.95 mmbpd of crude, exported 2.00 mmbpd of crude and imported 7.76 mmbpd of crude. Nonetheless, this is a huge shift from where the country might have been. The U.S Energy Information Administration (EIA) forecast in its Annual Energy Outlook 2005 (AEO2005) that crude imports would exceed 16 mmbpd in the year 2025. This projection was slashed to 6 mmbpd in the AEO2018 report. Think of the U.S. as a customer who was expected to buy 10 mmbpd of crude and that this customer has left the market. The volume the U.S. will not buy is approximately as much as the largest producers (the U.S., Russia and Saudi Arabia) can produce. The volume the U.S. will not buy is twice as much as Canada, Mexico and Venezuela combined are exporting currently. Mexican and Venezuelan output has dwindled. Many of Mexico’s oilfields were mature and in decline already. Mexico is trying to reverse its decline by opening its market to competition, and FMNMagazine


The volume the U.S. will not buy is twice as much as Canada, Mexico and Venezuela combined are exporting currently.

its national oil company, Pemex, is no longer a monopoly. Venezuela crippled its own industry over a period of decades, and it remains to be seen if true regime change and reform are underway. Even if Venezuela begins to repair its society and economy, the process could take years. The presence of the U.S. as a massive market surely helped stimulate the development of oil export industries in neighboring Canada, Mexico and Venezuela. It cannot be said that the U.S. caused the declines in Mexico and Venezuela. But it is logical to assume that, if U.S. import requirements had continued to grow as forecast, other regional producers would have had a far easier time. Thus, we may continue with our theme that the resurgence of U.S. oil is a massive reversal of (mis)fortune. Interpreting it as good fortune or bad depends on who and where you are, and where you want to be. n FMN WEEKLYeNEWSLETTER

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 TransEnergy 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

U.S. crude oil output was long thought to have peaked back in 1970 at just under 9.7 million b/d. Now, EIA estimates that we have touched 12 million b/d for the week ending February 15. This surge has continued to obliterate “Peak Oil� theory, the stories of which topped out in July 2008 when oil prices hit a whopping $145 per barrel. Source: Jude Clemente in Forbes, March 1, 2019

Bottom Line:

That the U.S. would be an oil giant again was hard to imagine after 1973. Hard to imagine in 2008 for that matter. Then the technology matured, and the oil markets will never be the same. At least until they change again.



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Should I Stay or Should I Go? What to Do with a Family Business When No One Wants to Run It




“ by Roy Strasburger

The parents’ identity is tightly interwoven with the business—in fact, the identity of the business and the family is often the same. The children feel bad because they do not want to follow in their parents’ footsteps, and they don’t want to lose the income that the store has generated.

About once a week we receive a phone call that goes something like this: “I am the son/daughter of a family that owns a convenience store. My mother and father started the business and have decided to retire. They have left it to me to run the business. The problem is that I don’t enjoy being a convenience store operator—it’s hard work. The store is profitable, and we don’t want to sell it. Can you help us?” As you may know, our company, StrasGlobal, provides contract operations for owners of retail sites that do not want to do the daily operations themselves. Therefore, we are the go-to group for families in this type of situation. This is a very emotional subject. Usually, the parents have spent countless hours and long days building and running a successful business. The store has provided a living and, usually, an education for their children. The parents’ identity is tightly interwoven with the business—in fact, the identity of the business and the family is often the same. The children feel bad because they do not want to follow in their parents’ footsteps, and they don’t want to lose the income that the store has generated. So, what are they to do? There are three obvious options. The first is that the children continue running the store. This option often doesn’t work out because the son or daughter becomes resentful—feeling that they were forced into a career that they are not interested in. The store starts to suffer, and the parents become agitated that the sales and profitability are declining. It is often a downward spiral.

The second option is to sell the business. The challenge here is that most owner/operators of stores can’t get what they feel is a “fair” price for the business that they helped to create and build. This isn’t to say that they have inflated the price; they just have a high expectation as to the return that they will get from the sale of an asset that they’ve put so much effort into. The third option is to have someone else run the site for them. This can happen two ways: the first is that a non-family member is hired to manage the store instead of the children. What the owners often find is that this does not remove them from the day to day problems of store operations (people not showing up for their shifts, inventory and cash loss, etc.) and that they (either the parents or the children) are still spending a lot of time in the store.











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Should I Stay or Should I Go?

“ The second opportunity is to outsource the business to a professional operating company such as ourselves. It will cost a bit more, but we provide a professional operations environment, provide all of the accounting and financial reporting for the store, take responsibility for all employees and employee issues, and we are responsible for excessive inventory and cash loss at the site. After the operating costs and our fees are paid, the owner keeps all of the profits generated at the site. So, in a nutshell, the owner of the business avoids all of the negative aspects of running a convenience store but gets to keep all of the financial upside (after costs and fees). The store continues to create a revenue stream for the family and the store remains a family asset that can be passed on to the next generation that wants to operate it. In the meantime, the store is operated according to the owner’s wishes. We carry the product that they want and don’t carry product that they don’t want to sell. We use our buying power to get better prices for the items that are sold in the store and the owner determines the pricing strategy and how the store is presented to the public.

To be completely open, this format does not always work. We have had instances where the owner decides that retirement is not really an option. Basically, the owner becomes bored and wants to have the daily stimulus of meeting people. At this point, it is our job to transition the business back to the owner as seamlessly as possible. We have had a couple of instances where the owner, or one of the owner’s children, wants to become one of our employees. They want to be in the store every day, but they don’t want to have to make the decisions or deal with the headaches of managing people and vendors. We do our best to accommodate any type of scenario that the owner wants to pursue.


Often times, the owner wants to spend a lot of time in the store to make sure that the business is being handled the way “we’ve always done it.” This is completely natural and to be expected. Our job is to provide excellent customer service, maximize sales and protect the business. In doing that, we often 29

introduce new technologies, products and strategies to the owner. It is up to us to prove to the owner the value of these new ideas, but it is up to the owner to decide whether he wants to implement them. Ultimately, the owner becomes comfortable with the way the business is being run and the time between visits becomes longer as we gain the owner’s trust.

Ultimately, our objective is to help the business owner meet their strategic goals with as little hassle as possible. n

The transition from the original owner/operator to this format is often a delicate matter. We spend time talking with the owner and laying out a game plan that everyone is comfortable with. We talk about limits of authority and scope of decision making. We define the channels of communication and what the decision-making process will be. Once everyone is on board, then we proceed with an orderly transition from one operator to the next.


Often times, the owner wants to spend a lot of time in the store to make sure that the business is being handled the way “we’ve always done it.” This is completely natural and to be expected

Roy is the President of StrasGlobal. For 35 years StrasGlobal has been the choice of global oil brands, distressed assets managers, real estate lenders and private investors seeking a complete, turn-key retail management solution from the most experienced team in the industry. For more information, contact StrasGlobal at 512-298-0778 or

New and Interesting Product

Gas Pos Offers a New Approach

by Keith Reid

Gas Pos is a new point-of-sale vendor for both convenience fuel retail and truck stop operators. Gas Pos, which has a cloud-based software-as-a-service (SaaS) format, promises to eliminate paying out-of-pocket for a fuel point-of-sale (POS) system, installation, maintenance, repair and replacement. Gas Pos is free upfront, including POS software and store and forecourt hardware, comes with a solid warranty, 24/7 help desk and free Gas Pos installation. On the truck stop side, fleet card acceptance includes Comdata®, EFS, T-Chek and TCH. Gas Pos claims a boost of up to $300,000 in additional profits with its solution. The company, though new to the space, has a tech history going back four generations and includes retail station owners among friends and family. Gas Pos has received a $1 million investment by the venture capital firm Merus Capital to execute on a national roll-out. It also has a partnership with cloud communications platform Twilio.

FMN interviewed Gas POS CEO Josh Smith for some details on the new offering.

FMN: Tell us a bit about the history behind Gas POS.


My family has been in technology for four generations, specifically financial technology. This goes back to when computers were run on wheels and punch cards and they were doing factoring and inventory and accounts receivable (AR) management for pharmacies. This was in the early sixties. My father then got into selling computers after serving in Vietnam. He went on from there to have a range of successful business ventures for the military and various industries—steel, coal, gaming—and in 2012 decided to look at the petroleum market. We had heard from friends and family about the changes happening with payment card industry (PCI) compliance and data security and then EMV. Gas Pos, Inc. was formed in 2016.




FMN: What caused you to believe a better solution was required?

Smith: A third of all interchange revenue across the country is from gas stations and truck stops. So, when we saw that people were having to upgrade equipment for end-of-life, we knew that this was a moment of change that made it possible to launch a new venture.

My grandparents on both sides owned grocery stores and gas stations, so this is very much a family affair. Our focus is on independent small business owners because they’re the most at risk and they’re the most disadvantaged in this process, particularly those operating unbranded gas stations. They don’t have a rebate from an oil company to help them offset this cost. They are the most likely not to upgrade, because every three to five years as an industry we come out with something new. And the new thing typically costs $10,000 to $25,000 each time. We want to give them a more affordable option.

FMN: Describe the system. Smith: For the forecourt, we

spent eight months designing and testing an EMV upgrade module called Switchly that will plug into existing gas pumps and connect with encrypted wireless back to an in-store communication station. On the fleet side, we’re using our own systems to reach out to the networks and take authorizations on behalf of the retailers. The average truck stop is on a three- to seven-day float for their funds. We have a product coming out that will be able to give them funds the same day. We estimate an extra $50,000 a day in cashflow and with the increase in interest rates, that’s going to be ridiculously beneficial to the stops. And for a traditional bank card, we’re running those transactions directly in from the sites to the host—First Data or Worldpay or whoever.

“” The average truck stop

is on a three- to sevenday float for their funds. We have a product coming out that will be able to give them funds the same day.

FMN: What’s the store

Smith: We are a payment switch

in that regard, where we’re sending the cards in for authorization and we’re providing that level-three data—a driver number, odometer, trailer number—things like that. On the over-the-road side, if it is a class 1 – 6 vehicle, the most common data is they want to know a driver ID and odometer number. We just provide the data that is requested by the networks.

FMN: What are the core

hardware like?

value propositions?

touch dynamic terminals. We have a partnership with the Equinox Payments and we’re going to bring their Lux series out to the market. You’ll start seeing them in many places like Macy’s and it’s a slick device. They take contactless EMV payment and near-field communication for Apple Pay and other mobile wallets. We also have a 12" tablet option if someone needs a smaller footprint.

economics. Our system is delivered as a service. It doesn’t cost a dime to buy the equipment, and you install it as a completely frictionless process. We provide lifetime warranties on our equipment so that they don’t have to worry if it breaks. We charge $200 per month and that includes hardware, software support, lifetime warranty— the whole nine yards. We also help our customers improve their operations.

Smith: Today we use 15", all-in-one, Smith: First and foremost, the

FMN: What about the site


Smith: Allied NeXgen. Allied is

amazing, and if it wasn’t for those guys, we wouldn’t be able to do this. What I like the best about NeXgen is that it gives us a “one to many” interface and the ability to mix and match dispensers. Maybe they want to keep an older unit from one brand on the diesel island but have another company’s product on the consumer island. NeXgen is just a great product.

FMN: What about back office


Smith: We’re working on our back

office integration and we have a few providers that are interested in working with us. A lot of our stores are independent, single-store operators that are just transitioning into scanning and into inventory management.

FMN: How well does the

system handle the on-site reporting requirements with fleet cards? FMNMagazine


FMN: How so? Smith: First, they can manage

their fuel prices online. For some of our customers, it was taking days to update fuel prices across all their locations. But by using our cloud, they can go in and change the prices at every location real time, and it’s going to notify the store. With Twilio being one of our main partners, it’s very easy to send text messages, calls and alerts. So, if a store doesn’t change their price, for whatever reason, within a very short period it’s going to start texting and calling the home office and saying, “Store 27 hasn’t updated their prices.” We’re also constantly monitoring the stores and looking for ways to help them improve their businesses. If it’s a margin question, and we notice that they’re out of alignment with some of the other stores, we let them know they are missing money here. Let’s help you come up with a way to make extra revenue. n

As expected, Mr. Nixon said that to cope with the widening shortage of crude oil and refinery products caused by the Arab oil embargo, he would prohibit sales of gasoline on Sunday and would lower highway speed limits throughout the nation to 50 miles an hour for cars and 55 for trucks and buses. Heating oil deliveries will be cut by 15 percent to homes, the White House said, 25 percent to stores and other commercial customers and 10 percent to industrial users. Source: Edward Cowan writing in the New York Times, November 26, 1973

Bottom Line:

My, how times have changed! And the lessons learned from Nixon’s meddling in the fuel markets is that the cure can be worse than the disease.



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Propane Bulk Plant MAINTENANCE by Foster Fuels


As an owner or operator of a propane bulk plant, you know how critical proper maintenance is. The safety of your employees, customers and neighbors depends on it. An accident, leak or explosion at a bulk propane plant is instantly a major concern and can lead to very serious consequences. At the very least, it can mean unplanned downtime to your business, which can quickly eat into your profits and destroy the relationships you have with your customers who are used to reliable, on-time propane delivery.

At Foster Fuels, we take safe propane tank compliance seriously. Like you, we deal with fuel every day and understand the importance of: n Proper propane bulk plant design, following all laws and requirements n Continuous inspection and maintenance of all propane-related safety devices

When you ensure proper propane bulk-tank maintenance and compliance, your business benefits as you can offer safe, reliable propane distribution and earn a reputation as a responsible, trusted propane supplier.

Here are the first two questions you should ask about your bulk plant:

n An emergency contingency plan in case the unexpected occurs

1 Does your propane bulk plant have the required Emergency Shut-Off System?

n Conscientious employees who have the training necessary to work safely In the end, to earn and keep your license as a bulk propane storage and supply site, you must guarantee you are NFPA 58 and API 2510 compliant at all times. These aren’t casual guidelines; these are strict requirements that can mean the difference between running a legal business and having your bulk propane installation shut down. We’ve put together a list of some of the important things to consider with respect to LPG bulk plant maintenance. Running a safe bulk propane plant doesn’t happen by accident. There’s no room for chance and error, so make sure you’re doing what is required to create and maintain an NFPA 58 and API 2510 compliant installation. FMNMagazine

When you ensure proper propane bulk-tank maintenance and compliance, your business benefits as you can offer safe, reliable propane distribution and earn a reputation as a responsible, trusted propane supplier.


2 Does the system work?

Even if the answer to both of those questions is “yes,” there are still a number of important best practices for your bulk plant.

n Design: From the original conception stage of your liquefied petroleum gas (LPG) tank layout and installation, you need to have in mind all the necessary functional and safety requirements. Significant planning is required for 18,000- and 30,000-gallon propane storage tanks with respect to space from other installations, type and quality of piping, and adequate valves and security devices. You can also plan for future expansion and save big time and money further on down the road.


Propane Bulk Plant Maintenance

n Maintenance: Making maintenance difficult to perform because of lack of space, complicated access and nonstandard components is an invitation to ignore it. Regular preventive maintenance is critical in maintaining a safe, functioning bulk propane plant and means less downtime throughout the year. You’ll also become more familiar with your LPG tanks and hardware and be able to predict many potential issues before they become major problems.

n Inspection: Regular inspection is the only way to understand which upgrades and repairs are necessary to your LPG storage facility. Don’t wait until something fails; plan your maintenance and upgrades on a regular basis. Pay close attention to all valves, shutoffs and connections. Check expiration dates on flexible hoses and gaskets. Verify your propane tank data plates to ensure they n Training: Training of personnel is often are properly attached, and all overlooked. It is easy to assume that once information is legible. Understand someone has been trained on the basics of your propane tank requirements your installation, training is completed. You and create a checklist to go and your employees need regular training through on a regular frequency. on standard safety practices related to the This will create good habits for use and maintenance of your bulk propane you and your employees. tanks and equipment. Organize yearly You always want to avoid any emergency drills and assess the readiness stoppages at your bulk propane of your employees. Do regular spot checks plant, either because of an accident to verify that all maintenance has been or unexpected problem. If you need performed according to plan and keep to shut down for regular meticulous documentation as proof for maintenance, you can plan to have auditor visits during your NFPA 58 or API all of the necessary equipment, 2510 compliance audit.

personnel and contracts ready to get you back up and running quickly. When an unexpected problem arises, however, you’re stuck scrambling to find a solution. You may also be exposing your employees and property to potential damages. Avoid surprises by scheduling and performing regular bulk plant tank repair and maintenance. The peace of mind that comes with knowing your bulk propane plant is compliant and operating safely is priceless. n

Established in 1921, Foster Fuels Inc. is a thirdgeneration Foster family-owned-and-operated business headquartered in Campbell County, Virginia, and serving customers in all regions of the United States. Foster continues to grow in the bulk petroleum distribution business marketing kerosene, home heating oil, diesel and gasoline to residential properties, farms, small distributors and retail customers. Foster Fuels services close to 10,000 propane customers from its three area locations. Fosters Fuels can help with your bulk plant compliance and safety issues with a personalized propane bulk-plant maintenance plan. We know that each installation is unique and will tailor your maintenance plan to your needs, requirements and expectations




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Are Your Fuel Logistics Processes Stuck in the ‘90s? by Richard Browne

Many areas of our business have

been transformed over the past 10 years by technology. When you pause and think that the iPhone has been with us a little longer than 10 years, tablets have exponentially more computing power than many of our five-year-old laptops, and that our customers can go weeks without using cash, we need to consider if our core business processes have kept pace.

“ ”

If you are using a white board, job tickets or Excel to keep track of your drivers’ locations and scheduling, you’re missing both information and efficiency.

If you haven’t conducted an audit and best practices review of your fuel buying and invoicing processes, now might be the time. In visiting wholesalers and truckers, I often see a “file room” with boxes of paperwork related to the fuel buying, dispatching and inventory management processes. Looking at the buying and dispatch process often reveals the use of Excel sheets where information is cut and pasted from one source to another. Tracing the cash, there are often lags in the drop to cash cycle waiting for paperwork to be dropped off, entered into a reconciliation system and then moved to an invoicing system to create a customer invoice. On top of that, management reports are created manually, either weekly or monthly, from a variety of systems and sources that occasionally don’t agree.


Image courtesy Veeder-Root, ®2019






Here’s a checklist of factors to review in conducting a fuel logistics audit:


Is your driver dispatch board electronic?

Are you minimizing misdirected loads?

If you are using a white board, job tickets or Excel to keep track of your drivers’ locations and scheduling, you’re missing both information and efficiency. Modern dispatch tools are cloud-based and device independent, allowing you and your team to all be on the same page. Features such as drag and drop scheduling combined with real time load tracking both improves efficiency and eliminates “where are they” telephone calls and emails.


Several things cause loads to have issues, including a load arriving earlier than requested or inaccurate fit data at time of dispatch. The best scheduling systems learn route timings and site volume by day part, allowing more accurate prediction of tank capacity at time of delivery. By tracking actual vs. planned delivery times, you can capture and review which carriers are able to follow your delivery instructions and which ones consistently deliver ahead of the delivery window. Automatically capturing gauge readings prior to terminal loading helps to minimize potential fit issues.

Your price feeds capture part of the information needed to buy optimally. If your system is not able to fully capture your other costs, including freight and day buys or other special pricing, you may be leaving money on the table.

Can you safely communicate with your drivers in real time?:

How quickly can you fully invoice following delivery?

Safe communication with your drivers is critical. Advancements in this area, including text to speech and positive message receipt confirmation, ensure your drivers are not distracted and that they do get relevant messages according to your safety policies. Device agnostic delivery programs can run on the Apple or Android device that your drivers are using, reducing the number of devices and distractions that are in the cab.


Are you using best buy methodologies?


Many fleets rely on getting the bill of lading (BOL) and delivery ticket back to the home office to invoice, a process that can have a significant impact on your working capital needs. In addition to faster cash, electronic BOL capture and closure enables automatic capturing of demurrage leveraging geofencing technology.


Are your drivers as productive as possible? 40

Modern logistics systems can eliminate the need for a driver to go instore to capture a gauge reading or a delivery signature. Utilizing remote polling that can be geofence-triggered upon arrival at the site, pre and post-delivery tank readings are captured paperlessly. This automation can improve efficiency by about 15 minutes a load, which can result in an additional couple of loads over a week.


Does your logistics process enable visual management? One of the benefits of the significant improvements in data storage and processing speeds is a marked improvement in visual management capabilities. If your team has to scan through stacks of numbers to identify low-site inventory and locate a delivery, they are not set up for success. Making your information visual will enable your team to focus on what matters and quickly identify their top priorities. n

“With the challenges we face in attracting and retaining drivers, any gain in driver productivity or satisfaction pays off in a big way.” Phil Dorroll, President, Go Energies An additional benefit of electronic dispatch and load closure is the ability to capture key performance indicators (KPIs) for your drivers, identifying your most efficient drivers who consistently deliver quickly and are efficient in terminal pickups. Modern systems also assist in identifying which drivers are due for recertification, license renewal or other actions. FMNMagazine


Richard Browne Richard Browne, Growth and Business Development Leader at InSite360, a Veeder-Root company. Browne is a fuel and c-store veteran focused on downstream petroleum logistics and operational excellence. As a leading global supplier of fuel management solutions, Insite360 is the analytics business unit of Gilbarco Veeder-Root. Insite360 products and services handle 22 billion gallons of gasoline and diesel fuel annually. Contact Richard at

The Cost of Non-Compliance by Steve Smith and Matt Zeise Responsible organizations understand that compliance with regulatory requirements plays a vital role in daily operations. Meeting regulatory obligations is expected by customers and shareholders and failing to meet that expectation can wreak havoc on an organization’s reputation and finances. Today’s business professional relies on technology to provide the data that guides meeting regulatory needs. Technology is needed to ensure that a firm’s motor fuel tax filing obligation is completed in a timely and accurate fashion. With so much riding on technology, how can today’s motor fuel tax professional navigate and evaluate the options available and understand what will make the most impact on their business?



“Technology is needed to ensure that a firm’s motor fuel tax filing obligation is completed in a timely and accurate fashion.”


What to Look for In a Tax Automation Tool There are many excise tax automation tools on the market. However, not all are created equal. Here are a few points to consider when evaluating a tax automation solution.

Ease of Implementation:

Examine what is needed to bring the system into your organization. Will you need IT resources? Will you need to install or “bolt on” software to your current back office system? Does the vendor supply a descriptive timeline about your specific implementation?

Product Support:

A great way to evaluate a company’s support team is to look for product reviews and social media mentions about the tool. Also, investigate if the company addresses their support process on their website. Do they have a guaranteed response time? Do they provide help tools like videos and documentation within the application?

Depth of Coverage:

Because of the vast number of excise filings available, ensure that the solution addresses the jurisdictions in which you need to file.

Why Now? The Impact of a Data-Driven Culture


With data analytics now at the center of 21st century business, the reporting requirements and business opportunities are changing for today’s motor fuel business.

As a company changes, whether it is through growth or acquisition, can the solution change with it? Look for solutions that can handle multiple data sets from various back office systems.

Transparent View of Compliance: Tax authorities are aware of the amount of data being tracked by organizations and are now requesting data reports to be part of the fuel tax reporting obligation. Organizations that do not automate their tax obligation needs are at a disadvantage as more filing entities move to a digital-only reporting structure.

Stronger Audit Defense:

Organizations are moving to a data-driven model to prepare for internal and external audits. By having a data trail, it is easier to show how reports are generated and numbers are calculated for compliance reporting.

Discovery of New Business Trends and Issues:

A consolidated tax compliance data source can alert decision makers to trends and anomalies within a product line (for example, a decline in diesel tax payments in a specific market). Data provides a way to see these trends and better prepare an organization to address them.



Challenges and Misconceptions about Moving to an Automated Tax Compliance Model Though there are many advantages to moving to a digital compliance model, many organizations struggle to get such an initiative in flight.


Creating a Sense of Urgency with Leadership. Tax departments are often seen as a cost center rather than a department that can realize cost savings. The pain in the manual process is felt at the department level, so it can be a challenge to emphasize how a new approach can benefit the organization beyond time savings.


The Cost of Non-Compliance

“The right tax compliance system can be implemented regardless of other IT needs and can help with the testing of the new implementation.”

Link the Request to a Strategic Goal:

Being able to link an initiative to a business goal helps elevate its potential to be approved.

Identify the Decision Makers: Who will impact if the initiative will be approved or halted?

Identify an Executive Sponsor: Who at an executive level can help push the initiative? Generally, this individual will take final ownership of the project’s success or failure.

Expose the Proposal to Outside Criticism and Review It: People are more engaged with a project if they can provide opinion and input.


Understanding ROI. Tax compliance solutions are designed to improve compliance. You may see a temporary increase in time and effort as compliance teams learn a new software tool. Organizations that make the investment in an automated solution often realize increases in ROI and other efficiencies as a result of the transition. The right tool allows tax teams to focus on other tasks by reducing the amount of time searching for inaccuracies. After implementation, companies often see fewer fines and penalties due to delays and inaccuracies.


Tax compliance solutions can only handle data from one source. Nope, a reliant tax compliance system can take data from multiple back office systems and translate it into one concise compliance report. If the core data within the system is correct, a good compliance solution will be able to automate and translate the compliance result.


I shouldn’t pursue an automated fuel tax solution if I have other IT needs. The right tax compliance system can be implemented regardless of other IT needs and can help with the testing of the new implementation.

Think About Timing:

When you present a proposal for an automated tax solution can influence if it will be approved. Look for opportunities to tie the project with other initiatives within the organization. Will the company go through a new enterprise resource planning (ERP) implementation soon? Tying tax automation to another software infrastructure project can help boost its success.

The volume of information required continues to trend upward, and that’s not likely to change any time soon. If your business is also growing across jurisdictions, the compliance tasks can seem like they are increasing exponentially but you can’t afford to drop the ball—the costs are simply too high. Manual processes aren’t enough to ensure the integrity of your data and reporting processes, especially as electronic filing requirements become more and more popular in the industry. Choosing the right automation tool and getting it in place before your organization reaches critical mass can save so much more than just time and effort. n

How to Approach Your CFO About an Automated Tax Solution One of the most challenging aspects of moving to a digital tax compliance solution is getting buy-in from leadership. Here are a few tips about how to design your pitch for a positive outcome.

Know the Problem:

Be able to answer these questions—What problems will an automated tax compliance solution address? How big is the issue and why should people care about it? FMNMagazine


Steve Smith Matt Zeise Steve Smith is the Chief Architect, and Matt Zeise, Product Owner at IGEN. IGEN provides data automation and translation solutions with a focus on motor fuel tax compliance and reconciliation of large data sources. Through its suite of solutions, users can automate difficult business tasks and create repeatable workflow processes thereby increasing accuracy while lowering associated time constraints and work hours. To learn more about IGEN, visit


The driver market continues to be tight, but not quite as much as the middle of 2018. The overall trend late last year was that turnover is slowing. There can be various reasons for this—either freight volumes are decelerating and as such, fleets pulled back on recruiting efforts, or fleets’ efforts to increase pay are paying dividends in the form of reduced turnover. The truth probably lies somewhere in between, but it is a trend that bears watching. Source: ATA Chief Economist Bob Costello on fourth quarter 2018 data

Bottom Line:

It’s not rocket science, folks.



Exchanging Aging by Brian Holland

Truck Fleets

Truck attainment has been a main challenge for private fleets, for-hire carriers and associations that rely on trucking across many industries, including energy, manufacturing, construction and retail. This challenge has been highlighted by the backlog of orders for Class-8 heavy-duty trucks, largely from an American economy that has been wholesome and resilient ever since the Great Recession ended in 2010 and a decrepit industry philosophy toward truck attainment, which is now fluctuating. Class-8 truck orders and sales continued at a healthy pace through much of 2018, as many companies saw the need to upgrade into newer equipment or add to their equipment to handle the boosted demand in shipping goods due to the nation’s economic activity. According to America’s Commercial Transportation (ACT) Research, Class-8 net orders equaled 506,300 units at the end of November, the second-strongest 12-month order period in history, trailing only the 12-month period ending October. FMNMagazine

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Specifically, for gas, oil and energy brands, these organizations will continue to feel the effects of an order backlog into 2019 as long as they continue their asset attainment strategy based on functional obsolescence versus economic obsolescence.

COMMERCIAL FUELS Monthly orders (28,082) still outperform the number of units being manufactured (27,973) as of November, and while this breach is narrowing, it continues to show astronomical demand for new trucks. Specifically, for gas, oil and energy brands, these organizations will continue to feel the effects of an order backlog into 2019 as long as they continue their asset attainment strategy based on functional obsolescence versus economic obsolescence. Corporations that shorten their asset management lifecycles based on a flexible lease model will be able to plan their substitutions better and thus avoid the discomfort associated with the current backlog. The frenzied economy means that more companies are shipping materials to job sites or goods across the country; more businesses are in need of re-stocking shelves and inventory; more consumers are in need of goods ordered online and thus the transport of those shipments; and as a result, trucks are working strenuously.

Trucks and transportation have been the lifeblood of this economic machine

Replacement and truck obtainment strategies that help the economy stay active need to be carefully deliberated as we continue into 2019 when companies take a closer look at their bottom line.

The long-standing business objective was for organizations to make hefty purchase orders of trucks, driving them for anywhere between five to upwards of ten years of service to squeeze every cent out of the truck’s usage. However, data and analytics are proving this model to be costly and unproductive. Instead, private fleets and for-hire carriers are grasping they can achieve more savings on the truck’s overall impact to the bottom line as well as maintenance and repair (M&R)—the highest inconsistent and volatile cost of a fleet operation—by moving to a shorter lifecycle. When energy companies drive their trucks as long as possible, they run on functional obsolescence—making verdicts based on

When energy companies drive their trucks as long as possible, they run on functional obsolescence—making verdicts based on the truck’s ability to stay on the road.

the truck’s ability to stay on the road. In most cases, when firms let the truck decree the timetable for replacement, firms are left struggling to order a new truck based off limited planning cycles. Today’s backlog of truck orders is a result of this, as the multiplier effect of many transportation firms and this ideology have caught up to them.

Instead, today’s leading firms are taking a distinctive approach

Establishments are now paying closer attention to a truck’s individual TIPPINGPOINT® [Editor: as branded by Fleet Advantage], the point at which it costs more to operate a truck than it does to replace it with a newer model. Aspects such as the cost of fuel, utilization, finance costs and M&R are all factored into arriving at each truck’s unique TIPPINGPOINT®, giving fleet operations laborers and finance departments a closer look based on data and analytics into determining and calculating the finest time to replace an aging truck. For example, a recent analysis of long-term ownership compared to shorter lifecycle management clarifies a significant cost savings over time. A fleet that opted for a four-year lease model on a truck would save almost $27,893 per truck in comparison to a seven-year ownership model because of the aforementioned factors such as fuel, utilization, financing and M&R. The shorter lease model is also cost-effective when compared to just a four-year ownership model, showing average savings of $12,710. This approach offers flexibility to adjust to changing markets, ultimately driving down operating costs while reinforcing a positive corporate image, driver recruitment and retention efforts by continuously upgrading to newer trucks. Companies are leveraging FMNMagazine


data analytics and comprehensive fleet studies that produce a fleet modernization and utilization plan, projecting when aging equipment will need to be replaced. This is especially effective with today’s fluctuating demand and the current booming economy as companies trying to acquire equipment solely based on demand are faced with equipment shortages and long lead times. Just as significant, recent alterations to the corporate tax rate, as well as new accounting standards, have made it more attractive to lease equipment. With these changes, at least in the case of truck acquisition, purchase of equipment remains more expensive than shorter-term leasing the equipment. What’s more, leasing remains the preferred method for companies regardless if they have a stronger or weaker balance sheet. In addition, leasing also allows companies to evade the risk of residual value and the expense of remarketing. By adopting this new approach of shorter truck lifecycles, industry organizations and transportation corporations will become better equipped at exchanging their aging truck fleets in a more cost-efficient manner as we continue into 2019. n


Brian Holland Brian is President and Chief Financial Officer at Fleet Advantage, a leading innovator in truck fleet business analytics, equipment financing and lifecycle cost management. For more information visit


Truck Classes:

Fuel marketers and retailers use a variety of trucks to keep their businesses operating. These trucks are categorized by a class rating, based upon the maximum loaded weight of the truck.

Wholesalers typically use Class 8 tanker trucks (33,001 pounds and over) with tank trailers with a capacity up to 12,000 U.S. gallons. The tanks typically have between two and six compartments that can store multiple products for delivery to retail outlets.

Commercial mobile fuelers and home heating fuel retailers usually rely on Class 7 trucks (26,001 – 33,000 pounds). These typically have the tank integrated into the truck chassis and have been traditionally called “straight trucks,” “bobtails” or “tank wagons.” Fuel capacity is typically around 3,000 gallons. Smaller medium and light duty trucks (down to Class 1, which is the typical consumer pickup truck) are used for a range of maintenance and service tasks within the industry. Some of these even mount low-capacity tanks to provide low-volume niche services delivering tens of gallons if required.



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Moves All Fleet Managers Should Be Making in 2019 Top Initiatives for a Safe and Successful Operation by Bernie Kavanaugh


Effective ELD systems can offer features including GPS fleet tracking, two-way messaging, vehicle inspection reports, driver safety alerts and fleet analytics integration. If the ELD currently in use isn’t offering these administrative benefits, resolve to choose a more sophisticated system that can save money and make for a more manageable fleet.




Push for Paperless Since December 2017, the Federal Motor Carrier Safety Administration (FMCSA) has required the use of electronic logging devices, or ELDs, in commercial vehicles. But are fleet managers making the most of these logs and the increased safety, decreased time and cost-saving benefits this software has to offer? Effective ELD systems can offer features including GPS fleet tracking, two-way messaging, vehicle inspection reports, driver safety alerts and fleet analytics integration. If the ELD currently in use isn’t offering these administrative benefits, resolve to choose a more sophisticated system that can save money and make for a more manageable fleet.

Look at Level III Data Level III data is transaction detail that supplements the “when” and “where” behind a purchase with the “who,” “what” and “how”—for example, information such as driver ID, product category and cost per mile. This level of data is a powerful tool when it comes to effective fleet management and when used correctly, it can help to empower the right purchasing decisions.

Take time to Tailor Telematics For fleet managers, safety is a constant concern. Not only do drivers put themselves at risk every time they get behind the wheel, but vehicular accidents also represent a significant source of loss, accounting for as much as 14 percent of a fleet’s total expenses. Telematics can help managers measurably improve fleet safety by collecting real-time data on unsafe driving behaviors and monitoring vehicle locations, engine diagnostics, fuel usage and more. With telematics, decision-makers can adopt a proactive, rather than reactive, approach to fleet safety, better customize driver training and coaching programs, minimize accident rates and even reduce fleet insurance premiums. Take a look at the telematics you’re currently collecting and see how this information can be put to even greater use. Or, if you’re just getting to grips with this data, see how it can be tailored to make managing a fleet simpler for this year and beyond.

Make the Most of Machine Learning Whether it’s Netflix recommending shows it thinks we’ll enjoy or Facebook automatically tagging friends in photos, machine learning algorithms are an ever-increasing element of daily life. And just as they make social media or streaming simpler, they can likewise improve fleet management. Using algorithms that iteratively learn from data, machine learning allows computers to find hidden insights without being explicitly programmed where to look—for example in fleets, tracking the cost of fuel purchases along routes and using this information to suggest gas stations that will make overall fuel costs lower.

Benefit from Big Data On a daily basis, fleets are inundated with terabytes upon terabytes of information—and keeping track of this massive influx can feel daunting. It’s so daunting, in fact, that it can be tempting to simply ignore it in order to make alternative use of the limited and valuable time fleet managers and their teams have. But when tackled effectively by analytics platforms, Big Data can in fact simplify number crunching, tease out trends and unlock actionable, value-added strategies for a fleet. Make 2019 the year you get to grips with next-gen technologies, and see how Big Data can be used to generate a wide range of cost-saving benefits, including everything from route optimization to fuel fraud prevention, and from reducing administrative waste to simplifying accountability. n


Bernie Kavanaugh Bernie is Senior Vice President and General Manager of Large Fleet at WEX, Inc. Powered by the belief that complex payment systems can be made simple, WEX Inc. (NYSE: WEX) is a leading provider of payment processing and business solutions across a wide spectrum of sectors, including fleet, travel and healthcare. For more information, visit

Resolve to investigate how machine learning could be incorporated into your business and if and how its findings could be used to your advantage. FMNMagazine

Delve deeper into Level III data throughout 2019 to see how its associated purchasing controls can prevent fuel card fraud and misuse, identify taxes for exemption and streamline operations.


Weigh Stations and Bypass Evolve with Technology by Brian Mofford If you look at today’s big rig and compare it to a 2008 model, the technological advancements would boggle the mind. The safety options alone make today’s truck able to literally drive itself. What about the rest of the industry—weigh stations and bypass in particular? Major advancements there as well. The weigh station your father may have seen is a far cry from today’s weigh station. Gone are the days when inspection officers trusted just their luck in choosing which vehicles need to go through a Level 3 inspection. Today, technology makes sure inspection officers are spending their time looking at the trucks that need to be inspected. That’s because “smart” roadside weigh stations dot the United States and Canada, with more being added each month. These technology-filled stations feature a bevy of advancements, including vehicle waveform identification and advanced thermal imaging systems. Much of this technology was developed and patented by Drivewyze’s sister company, Intelligent Imaging Systems. (IIS).




“ ”

At the heart of many systems is IIS’ thermal inspection technology, which can heat-sense thermal signatures associated with unsafe and defective equipment such as inoperative brakes, failed bearings and underinflated or damaged tires. Advanced image processing, coupled with decision-making algorithms within screening software, searches and flags possible defects for a more thorough inspection. It’s a huge time saver for law enforcement and lets inspectors focus more of their time on the trucks that truly need checking.

At the heart of many systems is IIS’ thermal inspection technology, which can heat-sense thermal signatures associated with unsafe and defective equipment such as inoperative brakes, failed bearings and under-inflated or damaged tires.

In addition, more states (often through their weigh station bypass partners) are adding weigh-in-motion sensors in the roadway. That data is transmitted too, allowing the system to compare current readings to historical weight data gathered at various other statewide locations. To ensure data from those weight readings are assigned to the right truck and trailer, an electronic screening platform can gather data via vehicle waveform identification (VWI). This uses magnetometers mounted on overhead signs to identify vehicles by measuring the truck and trailer’s magnetic “signature.” Each truck and trailer, even those spec’d identically, generate a unique magnetic footprint. While the signature changes over time, VWI can still recognize the readings and assign them to the corresponding trucks and trailers with a high degree of accuracy. For general truck information, overhead (strobe) cameras can read license plates and DOT numbers day or night to help inspectors and officers identify the corresponding carrier information, such as vehicle registration and fuel tax records.

While technology assists law enforcement at weigh stations, technology is also helping safe fleets become more productive by becoming eligible to bypass these weigh stations altogether. Did you know that each time a truck pulls into a weigh station the average cost is about $9.30? It’s true. We ran data from more than 12 million customer site visits throughout the United States with Drivewyze’s PreClear Analytics tool and found the average pull-in to a weigh station lasts 3 minutes and 40 seconds and costs more than $9 in fuel, maintenance and operational costs. Now, multiply that by the number of trucks you run, and the number of weigh stations stops you make, and you can see how much time and money is lost. We’ve made this tool available (and free for all) to allow fleets thinking of subscribing to a bypass service to generate their own custom reports to see if a bypass service makes sense for them. What exactly is bypassing? It started decades ago through short-range communication transponder technology. The truck had a transponder “badge” on the windshield, with the embedded information read by a transponder poll (reader) near the weigh station. But, over the past five years, weigh station bypass has evolved from the equivalent of a landline to



a smartphone. Drivewyze, for example, uses a cloud-based software-as-a-service system that leverages cellular networks and the Internet to add transponder-like functionality to electronic logging devices (ELDs) and mobile devices such as tablets and mobile phones. It’s simple—no hardware—and it’s loaded and ready to use on many ELDs for fast activation.

The safer the fleet, the more likely bypasses occur. Everyone is also subject to a random factor requiring an occasional pull-in.

For those not familiar with how bypass works, here’s how. Under our system, it detects when you’re approaching a fixed weigh station or temporary inspection site that is Drivewyze enabled. Two miles out, thanks to geo-fencing, the service alerts the driver of the upcoming site, while at the same time transmitting the carrier’s information to the weigh station. In many states, with weigh-in-motion technology, that information is also transmitted once the truck runs over the sensors. At the weigh station, safety scores, registration and IFTA tax compliance is automatically examined and calculated against the bypass criteria established by each state. If the carrier and vehicle pass the criteria, at one mile out, the driver receives permission to bypass the site. The driver is signaled to pull-in if there’s an issue or if the random algorithm indicates it is time for a pull-in.

Cellular technology also benefits states. Weigh stations themselves don’t require the installation of expensive transponder poles and readers. This allows states, which want to offer bypass opportunities to fleets, to get up and running quickly, with no infrastructure cost.

There is no doubt that commercial vehicle pull-ins and inspections play a critical role in maintaining highway and road safety. It is a key enforcement process and safeguard to keep unsafe vehicles or drivers off the road. But, with nearly 5.7 million interstate-licensed commercial trucks on the road today and limited resources, inspection stations are often congested. Pre-clearing—bypassing—vehicles based on the state’s pre-determined safety criteria frees up inspection stations to focus on drivers, vehicles or fleets that may need their attention. With weigh station bypass, everyone wins. n


Brian Mofford

Brian is Vice President of Technology at Drivewyze and has more than 20 years of experience in Information Technology and Software Engineering. Brian led the development and launch of the Drivewyze™ PreClear weigh station bypass service, which was released commercially in August 2012.

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Tanker trucks are those big machines that haul liquid such as water or gasoline. You’ll need to get your CDL endorsed to do this particular job, which can be both difficult and dangerous since liquid cargo can be unstable. However, it is one of the highest paying trucking jobs—fuel tanker drivers earn as much as $70,000 per year. Consider the extra training and certification as an investment in your career. Source: 10 high-paying trucking jobs hiring right now, by Peter Jones for The Jobnetwork

Bottom Line:

Many young men and women entering the workforce today not only lack the earning potential of a fuel haul truck driver but start their professional life deep in a financial aid hole.



Failure Is Not an * Option by Brian Reynolds

Everything I Need to Know I Learned at the Movies For the past 30 years I’ve been under the impression that EPA compliance rules and regulations have actually been successfully working for the purposes for which they were originally intended. Not that the new rules won’t work, but if it ain’t broke, don’t fix it! It’s almost as if somebody in Washington is getting instructions from outer space!

The new 30-day rules unfortunately are not all that new. The recent EPA mandate first was published and actually became the rule in 2015. States’ enforcement of the 30-day rule only became aggressive throughout the U.S. during the past year. For the informed, we all should have seen this aggressive enforcement coming.

“We are the Borg. Strength is irrelevant. Negotiation is irrelevant. Resistance is futile.” –“Borg Queen” in the 1987 movie Star Trek: The Next Generation

At least when it comes to EPA compliance and enforcement, justice is blind! Talk within the industry is that enforcement and the accompanying expensive fines are piling up and to all-time highs. Regulators are not discriminating. Big operators and little operators are all being randomly picked for spot audits of compliance reports. Just in case you missed the memo: The current state of environmental compliance for the Petroleum Marketing industry as it applies to Statistical Inventory Reconciliation (SIR) and most other forms of leak detection for Petroleum Storage Tank (PST) tightness is a passing result every 30 days. To read about it on the EPA website:

Every Star Trek fan knows when you hear these words, it’s pretty much over! Same thing for EPA-mandated petroleum storage tank (PST) regulations and enforcement. Today, when it comes to compliance rules and regulations, all active PST owners and operators’ compliance efforts are being aggressively scrutinized by state regulators.

Previously, most monthly SIR users collected data throughout the month and sent it to their SIR provider after the month was complete. The SIR provider then returned the reports and results to the client in a few days. At that time, the client began resolving any issues in the data or results. This is no longer allowed due to the 30-day rule.

* “Failure is not an option.”

— NASA Flight Director Gene Kranz in the 1995 movie Apollo 13 FMNMagazine


BUSINESS OPERATIONS prove that you are taking compliance seriously is to produce, with little to no warning, the past 12 months of passing records.

Talking your way out of a fine for non-PST compliance from a state regulator is not the same as talking your way out of a speeding ticket or coming home late from playing golf.

And 30-day compliance isn’t as easy as it sounds. The time required to produce the required results before the end of a two-day deadline is very difficult.

“What choice do I have? It is as if you have seized me by the base of my snarglies!” – “Beldar Conehead” in the 1993 movie Coneheads

Henry Wadsworth Longfellow once said, “It takes less time to do things right than to explain why you did it wrong.” The state absolutely will not care how you did compliance from years past and using all of the classic concepts for getting out of trouble will not work, either. You are not going to be able to smooth-talk your way out of non-compliance.

“No, ma’am. We at the FBI do not have a sense of humor we’re aware of.” –“Agent K” in the 1997 movie Men in Black Talking your way out of a fine for non-PST compliance from a state regulator is not the same as talking your way out of a speeding ticket or coming home late from playing golf. You’re not going to be able to change subjects by using flattery or telling a joke to lighten the mood. You’re not going to be able to say you’re sorry and

Changing a proven workable process is not only confusing, but also problematic when it comes to the implementation of a newer, lesser understood process. One option is for tank owners and operators to perform a SIR analysis every 15 days using the last 30 days of data. Or, in other words, to have a running 30 days of data every 15 days. This option results in a more frequent analysis of the PST system’s leak status and is the preferred EPA process. It allows owners and operators to meet the release detection requirement in a timelier fashion for complying with the 30-day mandate.

“You must unlearn what you have learned.” –“Yoda” in the 1980 movie Star Wars: Episode V– The Empire Strikes Back The EPA is taking compliance seriously and again the definition of compliance is 30 days of passing results. The only way to FMNMagazine


promise to do better. Quickly producing compliance methods that worked two years ago will not work today. The only way to avoid a fine is by instantly producing certified passing results from the automatic tank gauge or SIR and do so in a consistent, easily readable format. Regulators will not patiently allow you to sift through piles of reports that take hours if not days to produce. Their expectations are to see passing reports that can be verified quickly and easily at a glance. This is the only way to satisfy an onsite inspection from a regulator. n

Brian Reynolds Brian began his career working as a teenager in his family-owned jobbership in Cisco, Texas and was at the forefront of many significant industry milestones. Reynolds was an early adopter of cardlock systems in the 1980s, a pioneer of high-volume supermarket fueling centers in the 1990s and one of the key architects of inventing reward-based fueling loyalty in the 2000s. He currently works for Dover Fueling Solutions in ClearView, wet stock management sales.Contact Brian at or cell 325-733-6490.

A Look at OPW’s Acquisitions and Market Strategy

by Keith Reid

Hamilton, Ohio-based OPW, a Dover company and a global leader in fluid-handling solutions, has been in business since 1892. It currently oers a broad range of solutions for commercial and retail fueling including loading systems, cargo tank truck and rail tank car equipment, dispensing and electronic point of sale (POS) and back office systems, electronic gauges, automated fuel terminals and controls and vehicle wash systems. FMNMagazine



FMN interviewed OPW President Kevin Long on OPW’s acquisition strategy and how the solutions are being brought to market.

The company has made numerous acquisitions to facilitate that growth. More recently:

2013 OPW acquired Fibrelite, which launched the first composite access covers for the retail petroleum industry in the 1980s. It also acquired KPS, which pioneered the use of high-density polyethylene (HDPE) fusion piping systems for fueling stations in the 1990s.

2014 OPW acquired Australia-based Liquip International, a leading designer and manufacturer of bulk liquid handling and storage solutions in the petroleum, aviation and chemical markets.

2016 Parent company Dover acquires Paris, France-based Tokheim, a leading manufacturer of fuel dispensers, retail automation systems and payment solutions and integrates the company into OPW. This allowed OPW to offer an end-to-end fuel site solution.

2016 OPW acquired Tokheim ProGauge, which provides automatic tank gauge solutions, including a variety of tank probes, consoles and related software and calibration services for service stations.

2016 OPW acquired UK’s Fairbanks Environmental Ltd., a global leader in providing fuel management services to the retail and commercial fueling industry.

2016 Dover Corporation completed the acquisition of Wayne Fueling Systems Ltd. and announces that it will join Tokheim, ProGauge, Fairbanks and OPW Fuel Management Systems in a new business unit named Dover Fueling Solutions. The new entity provides advanced fuel-dispensing equipment, payment systems, automatic tank gauging and wetstock-management solutions.

2019 OPW acquired Belanger, a leading manufacturer of vehicle wash equipment and systems. It joins PDQ (initially acquired by Dover in 1998) as OPW’s car wash component.




What drives your acquisition strategy?

Long: OPW’s acquisition strategy is geared toward realizing our “Defining What’s Next” corporate philosophy. OPW strives to acquire companies that reflect our commitment to offering innovative solutions that protect people and the environment while improving the business performance of our customers in the markets in which they operate. From a financial standpoint, we seek to acquire market-leading profitable and growing businesses supplying equipment and components that ensure safe and efficient transfer and handling of critical fluids as part of complex processes and supply chains. To that end, our recent acquisition of Belanger, Inc., is a great fit.


What are some of the unique capabilities the various acquisitions brought to the table?

Long: The main goals of any acquisition are twofold: 1) acquire companies that are capable of integrating into the OPW corporate culture, which focuses on delivering best-in-class products and services to our customers and creating a fulfilling environment for our people and, 2) improve our value proposition and add value to the product offering, keeping in mind that our customers’ success is a key focus for all of us at OPW.


A Look at OPW’s Acquisitions and Market Strategy



From a branding standpoint (and operationally as well), explain how Dover Corporation’s OPW and Dover Fueling Solutions product families are structured and how the brands are positioned.

Long: OPW and Dover Fueling Solutions are two separate operating companies within the Dover Fluids segment. Dover Fueling Solutions delivers advanced fuel dispensing equipment, payment, automatic tank gauging and wetstock management solutions for the retail fueling industry. OPW delivers piping and containment, vehicle wash systems, tank valves and fittings, vapor recovery systems and nozzles and accessories for a variety of applications across the retail fueling industry. The combined product portfolio between Dover Fueling Solutions and OPW represents the industry’s only endto-end fueling solution for both pressure fueling systems and suction fueling systems.

FMN: The Belanger acquisition in addition to PDQ shows a focus on the car wash segment. While this was hit hard by the recession of 2008, it is certainly rebounding. How do you see that market segment moving forward?

Long: There is a long-term shift from “driveway” and manual washing to professional and automated washing. With technological innovation that delivers a safer and higher-quality service and a more enjoyable customer experience, as well as innovative loyalty programs adopted by operators, we see solid growth in demand for professional vehicle washes, which in turn stimulates long-term growth in demand for vehicle wash equipment. While capital investments will always fluctuate with the general economic environment, we anticipate a robust, long-term expansion in the vehicle wash space. FMNMagazine

Similarly, how will PDQ and Belanger be operated after the acquisition? Will both brands remain? How about their specific product lines? R&D, etc.?

Long: PDQ and Belanger brands will continue to serve the vehicle wash market with their products as part of OPW’s Vehicle Wash Solutions business. Both PDQ and Belanger have spent many years building their reputations as leaders and true innovators in automatic in-bay and conveyorized tunnel vehicle wash solutions. The business will work across both brands to identify and share technologies and best practices that will advance the best that both brands have to offer the industry. Most importantly, the teaming of PDQ and Belanger will allow OPW to provide customers with the most comprehensive end-toend portfolio of vehicle wash solutions.


Acquisitions provide opportunities for enhanced operational efficiencies, but historically some acquisition models have been more short-term focused while others more long-term. How do you strike the right balance between efficiency and areas like customer service to an installed base that might have concerns?

Long: Dover and OPW have a long history of successful acquisitions—we understand the value of “do no harm” when it comes to integrating acquired businesses. When considering acquisitions, OPW evaluates how it would integrate the new company with minimal disruptions to customers while positioning it for future growth. Great time and energy are focused on integration planning and careful execution management, and we leverage the expertise Dover Corporation has built over many years of acquisitions. We have a track record of investing in our businesses, and any acquisition is pursued with the strategy of improving our customers’ and employees’ futures.


How do you see the U.S. vs. international markets today?

Long: Broadly speaking, OPW operates in a number of fluid handling markets, including retail fueling, car wash solutions and fluid transport. Many of our customers operate globally, and we continue to invest in ways to best serve them with the solutions required in the locations they operate. Currently, we see opportunities in the U.S., Europe and Asia Pacific markets to provide innovative products that meet new country-specific industry regulations. As a global company, our leaders work with local customers to determine future needs and together, we “define what’s next.” n 58

CLAIMS DENIED Workers’ compensation denial rates are up 20 percent during the past five years by Kelly Flannery, Risk Analyst; Hallie Cooley, Senior Data Analyst; Christopher Geldes, Data Analyst; and Kelly Billings, Vice President

Lockton Analytics study shows that claim denial rates

increased from 5.8 percent to 6.9 percent between 2013 and 2017.* Lockton’s claim denial benchmarking study digs into this increase in denials and addresses how it is impacting employers. Employers have access to more data than ever before and are increasingly using it to drive decisions. This study suggests that there is opportunity for improvement.

This study focuses on two questions


Fatigue is frequently cited in many accident investigation reports as a contributing factor in vehicle crashes, often due to lack of rest stops or inadequate sleep. The use of cruise control may be adding to the effects of driver fatigue resulting in reduced vehicle control.






4.6% 3.7%

3.0% 2.0% 1.0% 0.0%

Reservation of rights.


Pre-existing condition.


Idiopathic condition.


Intoxication or drug-related violation.


Stress non-work related. Failure to report accident timely.





9 10

*For data valued at 12 months.


No medical evidence of injury.



Denials that sck at 12 mos. Denials that convert at 12 mos.

Is a high denial rate in the employer’s best interest?





Top 10 most common reasons given for claim denial


What is driving this increase?




Claim denial management is a part of most employers’ risk management practices. Claim adjusters strive to strike the right balance between accepting legitimate claims and denying those without merit. Adjusters often give multiple reasons for denial. Frequent reasons for denying a claim relate to whether it occurred during the course and scope of employment, and include the following:

Top 10 Reasons for Denying a Claim with the Highest Conversion Rates (Rates Shown Valued at 12 Months)

v No medical evidence of injury v Not related to work

v Not a statutory employee

While some of these denials are sustained and do not pay out, Lockton Analytics found that on average, 67 percent of initial denials convert to paid claims by 12 months. Think about that for a minute: on average, more than two out of three denied claims will pay out! In an ideal world, employers would have deniable sustainability of 100 percent, with no claims that convert to a paid status.

Special Consideration: While this article discusses the financial impact of claim denials for employers, there is an added emotional and financial toll on individual claimants as well. Affected employees may be waiting on claims to pay out for lost-time wages or medical bill costs, so even minor delays in the claim process can have farreaching impacts. A view of distrust toward the employee drives lowered productivity and soft costs to the employer that are difficult to quantify, but real nonetheless.

When considering the reasons for denial, it might be worth knowing that some have much higher conversion rates than others.




Claims Denied

Aggressively denying claims saves money, right?


Not so fast! Let’s take a closer look.


Lockton found that the average net incurred value of a claim that is accepted and pays out is $10,153. However, the average for a claim that is denied, and then pays out, is $15,694. That is a 55 percent increase for denied claims!





60 month average



It is worth noting that while non-denied claims have some minor development after 36 months, denied claims still see significant development for at least an additional two years. Lockton’s study stopped at 60 months because more than 97 percent of claims were closed by that point, regardless of denial status. Expense on denied claims is nearly triple the amount of non-denied claim expense, making it the primary driver of the wedge between denied and nondenied costs.


48 month average


36 month average


24 month average


12 month average



Non-denied claim

Denied claim



Indemnity is also less favorable on average for denied claims by about $2,585.


The only bucket that is favorably impacted by denying claims is medical costs, where employers average a $548 decrease.




The extra effort involved in denial management, which often includes litigation, can trip up efforts to manage overall costs.

48 month average 36 month average 24 month average

Industry Matters

Often, employers feel that benchmarks may not apply to them because operating and financial metrics can vary by industry. Lockton’s study confirms that significant differences exist in average claim costs across industries. We selected the three industries in the study with the highest claim volume for a deeper dive.

In every industry, converted denials cost more than non-denied claims. But some industries have significant variations from the overall averages. Healthcare (NAICS Industry 62) experiences lower average net incurred costs than overall norms. However, Administrative and Support and Waste Management and Remediation Services (NAICS Industry 56) and Manufacturing (NAICS Industries 31, 32 and 33) incur higher claim costs than the national average.

60 month average


12 month average





AVERAGE NET INCURRED BY INDUSTRY $18,417 $17,378 $15,694


60 month average

$11,647 $10,153

48 month average


36 month average


24 month average 12 month average
















Claims Denied

Geography Matters

Denial outcomes vary by state due to state-specific regulations and differing legal issues. Employers with a high employee concentration in one state will want to consider that state’s characteristics when comparing to benchmarks. Lockton looked into the three states with the highest claim counts in the study: California, Florida and Texas. California has a very high conversion rate compared to the national average, while a lower percentage of denials convert in Florida and Texas. Texas has seen that conversion rate climb rapidly during the past five years from about 47 percent in 2013 to 61 percent in 2017.

When we look at average claim costs by state, California has much higher net incurred values than the national averages for both non-denied and denied claims. This state is prone to much higher litigation rates than others and has the highest ratio of loss adjustment expense (LAE) to losses. Florida experiences incurred costs that are slightly favorable to national averages. Texas is at the opposite end of this spectrum from California, with lower than average net incurred costs. Texas even tends to see a benefit on denied claims.


6 $16,833


60 month average



Attorney involvement is a significant cost driver in denied claims. It is in an employer’s best interest to be cognizant of workers’ rights and what constitutes adequate compensation from the start.

While many outcomes are possible, the decision between accepting and denying a claim can lead to a large variance in the average outcome.

36 month average


24 month average 12 month average Non-denied












Important! In many states, when a claim is denied, the employer loses the right to guide the employee’s medical care with an employerpreferred provider. In these states, employees may then seek care from any provider and for however long that provider believes is best.


60 month average 48 month average 36 month average

Litigation is Impactful

It should be no surprise that 70.6 percent of denied lost-time claims will be litigated, which is more than twice the litigation rate for nondenied lost time claims of 27.5 percent. While some employees may be able to appeal denials without legal counsel, many do not have the legal background required to successfully move forward.

48 month average



24 month average 12 month average

How should I use this information?

Consider the practices by your company in relation to the above benchmarks. Are you tracking your denial rates and measuring the effectiveness of your denial practices? If denial rates and costs are substantially higher or lower than those outlined in this report, consider the “Why?”

Keep in mind that the initial denial rate is only the first piece of the story. Take a closer look at your company’s converted denial rate, and whether savings from indemnity and medical costs are enough to offset increased expense on denied claims that end up paying out. Many times, that expense could have been saved if the claim had been paid from the outset.

These benchmarks can help identify potential opportunity for improvement, especially when paired with variables such as industry, geography and employee age. Additional considerations not addressed in this paper can include nature and cause of injury, employee tenure, and drilling further into litigation status. FMNMagazine



Claims Denied

Ask your claims department to look at your claim management practices and costs, and consider the position of your company against the above benchmarks. If your company results differ, Lockton can help you determine what is driving your outcomes, and perhaps drive improvement to your company’s bottom line. n

“Ground rules” for how Lockton looked at the data:

A converted claim is defined as any claim that has incurred indemnity or medical costs. This excludes both zero-dollar claims, as well as those that only have expense dollars.

While both averages and medians were reviewed, averages were selected given that the term is more widely used by employers and within claim departments.

To minimize the impact of catastrophic claims on averages, any claim with an incurred value of $250,000 or greater was removed from the data set. Having those higher-dollar claims in the averages did not change conclusions but did increase the average dollar amounts.

More than 6,000 professionals at Lockton provide 50,000 clients around the world with risk management, insurance and employee benefits consulting services that improve their businesses. For more information, contact Greg Cushard, Sr. Vice President Lockton Insurance Brokers at cell: 916-730-4849 or office: 415-568-4115, email:


Business Software for Fuel Marketers of All Sizes “Trinium has enabled us to upgrade our technology to a more modern and functional system, while providing us the necessary flexibility to customize the system to fit our specific needs." Dave Olson, Partner Ernie’s Fueling Network Call (310) 214-3118 to schedule your one-on-one demo today or email



The United States will surpass Saudi Arabia later this year in exports of oil, natural gas liquids and petroleum products, like gasoline, according to energy research firm Rystad Energy. That milestone, driven by the transformative shale boom, would make the United States the world’s leading exporter of oil and liquids. That has never happened since Saudi Arabia began selling oil overseas in the 1950s, Rystad said in a report Thursday. Source: Matt Egan, CNN Business published online March 21, 2019

Bottom Line:

Pipelines are being rerouted towards the coasts and the tankers are leaving the U.S. full instead of empty. This shift has resulted in some logistical issues— but what a nice problem to have.




Advanced Fuel Solutions, Inc.

Afton Chemical Corporation

Biobor Fuel Additives

Advanced Fuel Solutions, Inc. (AFS) develops, brands and markets nextgeneration premium fuel treatments for wholesalers, dealers, jobbers and fleets all over the country. While we will confidently put our suite of advanced multifunctional additive packages (which collectively treat all middle distillate fuels) against any on the market today, our customers tell us it is our commitment to service, reliability and quality assurance that distances our brand from the field. Established in 1996, we have built our business strategically and thoughtfully, one customer at a time. We are mindful that the rate of our growth never eclipses the quality of our service, and that the solutions we provide never cost more than the value they return. We’re proud to say that our very first customer is still with us today. At AFS, we treat our customers as carefully as we treat their fuel. Our field-proven products include OPT-AF™, ODT-21™, AWDA 1500™ and Slipstream® Premium Marine Fuel.

Afton Chemical, with over 90 years of experience in the fuel and lubricant additives marketplace, is one of the largest additive suppliers in the world. Afton Chemical Corporation uses its formulation, engineering and marketing expertise to help their customers develop and market fuels and lubricants that reduce emissions, improve fuel economy, extend equipment life, improve operator satisfaction and lower the total cost of vehicle and equipment operation. Afton Chemical Corporation develops and sells an extensive line of unique additives for gasoline and distillate fuels, driveline fluids, engine oils and industrial lubricants. Afton Chemical Corporation supports global operations through regional headquarters located in Asia Pacific, EMEAI, Latin America and North America. Afton Chemical Corporation is headquartered in Richmond, Virginia.

Biobor Fuel Additives has been a worldwide leader in the treatment of diesel, jet fuel and gasoline since 1965. The company’s flagship product, Biobor JF, is a widely used and recommended biocide for diesel and jet fuel, carrying an extensive list of OEM approvals from some of the world’s largest engine manufacturers. Additionally, Biobor produces a full line of diesel conditioners, cold flow improvers, detergents, cetane improvers and lubricity additives, solving a wide range of today’s fuel related issues. Fuel retailers across the country use Biobor JF as part of a regular maintenance program to keep storage tanks free from microbial contamination, while also offering consumer packaged products to diesel and gasoline customers. Bulk treatment programs are available with summer and winter premium diesel additives to offer your customers a premium fuel with added value.

READ MORE at FMNMagazine



FPPF Chemical Company, Inc. FPPF Chemical Company, Inc. is a major U.S. manufacturer of fuel additives, conditioners and treatments founded in 1975. FPPF is a leader in quality and innovation for diesel fuel additives and treatments in the marketplace. FPPF’s original diesel fuel additive, Fuel Power®, remains a leading year-round diesel fuel treatment in the U.S. and Canada. As fuels have changed, FPPF’s highly skilled technical personnel have researched and developed many new products to enhance the company’s product line. These include Lubricity Plus Fuel Power, 8+ Cetane, Killem (Biocide), Marine Formula, Total Power (complete multifunctional additive), Polar Power (cold weather diesel fuel treatment), FPPF 4000 Cooling System Treatment, FPPF Ethanol Gas Treatment and a complete line of aerosol products and cleaners. Recently, technologically advanced

biodiesel fuel additives now augment FPPF’s complete line of high-quality products. FPPF Chemical has distributors in all 50 states, Canada, Latin America, Europe and Australia. Virtually every truck stop in North America handles FPPF products.

Fuel Quality Services, Inc. Established in 1984, Fuel Quality Services, Inc. (FQS) is internationally recognized for providing superior and cost-effective fuel system biocides, stability additives, microbial test kits and on-site services to solve client issues in the crude oil and finished fuel markets.



Navigate through 300 exhibit booths, learn from subject-matter experts, and connect with thousands of industry influencers who, just like you, are advancing the convenience retailing, grocery, and fuel marketing industries in Texas.

om c . o p -ex w s . www FMNMagazine


Howes Lubricator Howes Lubricator is a fifth-generation, family-owned company that produces some of the highest quality fuel and oil additives on the market. In 1920, Founder Wendell V.C. Howes formulated a line of preventative maintenance products that would fuel the company to worldwide recognition. Today, the Howes family is more dedicated than ever to giving their customers state-of-the-art, top-of-the-line products that meet the demands of changing fuels and engine designs. Using only the highest quality petroleum-based ingredients, Howes products differ from others because they never use alcohol or harmful solvents. All of their products are safe to use and guaranteed to work, giving your engine the best power, performance and protection available. Howes products include Howes Diesel Treat, a top selling anti-gel in the United States and Canada,

ADDITIVES ROUNDUP as well as Howes Meaner Power Kleaner, Howes Oil Enhancer and Howes MultiPurpose Lubricating and Penetrating Oil, among others.

The Lubrizol Corporation

Infineum is a world leader in the formulation, manufacturing and marketing of petroleum additives for lubricants and fuels. Established in January 1999, Infineum is a joint venture of two of the most respected names in lubricants and fuels, ExxonMobil and Shell. Infineum delivers a wide range of fuel additives that enhance existing fuel properties (such as cold flow and lubricity) and bring unique performance features to enable fuel marketers to differentiate their products. Through research and development, we are continually improving our additives to meet new environmental and business challenges. Our products have demonstrated reliable and harms-free performance over the range of fossil distillate fuels and their blends with biodiesel, and in a variety of heavy fuel oils, crude oils and waxy raffinates. Our robust operations and global network mean we deliver with maximum reliability and minimum risk.

The Lubrizol Corporation, a Berkshire Hathaway company, is a market-driven global company that combines complex, specialty chemicals to optimize the quality, performance and value of customers’ products while reducing their environmental impact. It is a leader at combining market insights with chemistry and application capabilities to deliver valuable solutions to customers in the global transportation, industrial and consumer markets. Technologies include lubricant additives for engine oils, driveline and other transportation-related fluids, industrial lubricants, as well as additives for gasoline and diesel fuel. In addition, Lubrizol makes ingredients and additives for home care, personal care and skin care products and specialty materials encompassing polymer and coatings technologies, along with polymer-based pharmaceutical and medical device solutions. With headquarters in Wickliffe, Ohio, Lubrizol owns and operates manufacturing facilities in 17 countries, as well as sales and technical offices around the world. Founded in 1928, Lubrizol has approximately 8,700 employees worldwide.


Schaeffer’s Fuel Additives Schaeffer’s Fuel Additives have a reputation for extending engine and component life, increasing fuel economy and improving overall engine efficiency and performance. In particular, Schaeffer’s CarbonTreat™ premium fuel additive line is specifically designed for high-pressure common rail (HPCR) systems, and compares to other products that offer similar technology but without a complete premium package. Schaeffer’s CarbonTreat™ premium fuel additives are multifunctional, ULSDcompliant diesel fuel additives that are highly effective at combating sludge and plugging issues that can impair engine performance. Schaeffer’s CarbonTreat™ premium fuel additive line is available in summer, winter and all-season formulations, and can be used in any diesel-powered vehicle and in all types of diesel fuel, including low-sulfur diesel fuel and biodiesel blends.

ValvTect Petroleum Products

Innospec Fuel Specialties Innospec is a global specialty chemicals company focused on bringing innovative new technologies to market, combined with a fast and responsive service. Untreated fuels can lead to an excess of corrosion, injector fouling and harmful emissions. Innospec’s Performance Specialties fuel additives offer a wide range of solutions to upgrade the performance of fuels. Innospec is solely dedicated to fuel and fuel additive technology. Our team is focused on the high performance premium diesel and gasoline markets. Whether a customer is looking to open up new markets, develop new products or optimize performance of a particular type of fuel, our team has the market knowledge, technical expertise and capability to deliver customer- and application-specific fuel treatments.

MidContinental Chemical Company, Inc. MidContinental Chemical Company (MCC) manufactures and distributes petroleum additives that enhance the performance of fuels and lubricating oils. MCC provides comprehensive additive solutions to the petroleum industry, including refineries, pipeline operators, petroleum terminals, fuel distributors/ jobbers, retail fuel marketers, c-store chains, aftermarket product packagers and lube oil and grease manufacturers.


ValvTect Petroleum Products is a leading supplier of high performance diesel, high performance winterized diesel, heating oil and gasoline additives to fuel distributors, truck stops, fleets, marinas, railroads, terminals and refiners nationwide. ValvTect also supplies a complete line of propane gas additives and BlueMoon filters and filtration systems to propane and gas distributors and dealers. Our registered trademarks— Diesel Guard, XP+, Energy Additives (EA), BioGuard and ValvTect Marine Fuels— represent not only quality fuels sold to millions of consumers, but are also supported by marketing programs, infield technical expertise and advanced formulas to meet the demands for the ever-changing fuels that are available. We specialize in providing solutions for you and your customers’ fuel problems at an economical cost. FMNMagazine


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What Does That Mean? PAGE

ADD Systems..................................... 47 Biobor Fuel Additives.........................13 Cummins & White............................. 21 Ecogreen Tank Monitor...................... 55

Test Your FMN Acumen

The list below represents acronyms used in this issue of Fuels Market News.


Per Barrel



America’s Commercial Transportation Research



Automated Clearing House


Fuels Market News............................ 69


U.S. EIA Annual Energy Outlook


Anthropogenic Global Warming

Infineum UK...................................... 25


American Petroleum Institute


Accounts Receivable


American Trucking Associations


Barrels Per Day


Bill of Lading


Commercial Driver License


Chief Financial Officer


Carbon Dioxide


U.S. Department of Transportation



Environmental Assessment Institute (Danish)


IGEN.................................................. 19 Innospec.................... Inside Back Cover

Lock America, Inc............................... 36 MidContinental Chemical Company, Inc..................................... 52 North American Bancard.................... 59 OPW Retail Fueling............................ 11

RDM Industrial Electronics, Inc...................... Back Cover Shields, Harper & Co.......................... 22 SkyBitz Petroleum Logistics.................... Inside Front Cover Source NA.......................................... 28 Southwest Fuel & Convenience Expo............................. 67 Thunder Creek Equipment................. 37 TMC................................................... 33 TriniumTech....................................... 64 ValvTect Petroleum Products........................ 4 – 5


U.S. Energy Information Administration


Electronic Logging Device


EuroPay MasterCard Visa


U.S. Environmental Protection Agency


Enterprise Resource Planning


European Union


Electric Vehicle


Federal Motor Carrier Safety Administration


Gross Domestic Product


Greenhouse Gas


Green New Deal


Global Positioning System


High-Density Polyethylene



kbpd KPI



International Fuel Tax Agreement

International Maritime Organization

Intergovernmental Panel on Climate Change

Thousand Barrels Per Day

Key Performance Indicator Liquefied Petroleum Gas Maintenance and Repair

MMBPD Million Barrels Per Day MT








Metric Ton

National Association of Convenience Stores

Canadian National Energy Board

National Fire Protection Association Natural Gas Liquid

National Public Radio

Organization of Petroleum Exporting Countries Payment Card Industry

Petróleos de Venezuela, S.A. Petroleós Mexicanos Point of Sale

Petroleum Storage Tank

Research & Development Return on Investment Software as a Service

Statistical Inventory Reconciliation State of the Industry


Ultra-Low-Sulfur Diesel


Vehicle Waveform Identification


U.S. Agency for International Development

1.800.282.5183 | |

RDM Intercoms

Performance Series

D15 Classic Series

D20 Classic Series

Remanufactured Petroleum Electronics 3M, RDM, Executive Bennett Daktronics FE Petro Gasboy Gilbarco Incon OPW

Petro Vend Schlumberger TMS Tokheim Veeder-Root Verifone Wayne

Customer Service Available: 7:30am - 6:00pm EST Monday - Friday

**Part numbers and manufacturer’s names are listed for reference purposes only. RDM remanufactures, rebuilds, and resells electronic equipment by various equipment manufacturers but is not af liated with or certi ed by these companies.**

Profile for Fuels Market News

Fuels Market News Magazine Spring 2019  

Fuels Market News Magazine Spring 2019