Fuels Market News Summer 2022

SUMMER 2022

Training Up Truckers

In the Lead:

Powerhouse’s Alan Levine

E-Fuels

A future carbon-neutral alternative to fossil fuels

SUMMER 2022

FuelsMarketNews.com

COVER STORY

28

Training Up Truckers

34

In The Lead: Hedging Powerhouse

40

Can E-Fuels Help Solve Climate Change?

Apprenticeship programs are fast becoming a favored model for getting more people into the industry.

Alan Levine has been advising the industry on fuel hedging since he helped make it an option.

With innovation and support, electric fuels could one day be a carbon-neutral alternative to fossil fuels.

FMN Magazine SUMMER 2022 | 1

04 06 08 10

From the Editor NACS News Fuels Institute Fueled for Thought

RETAILER OPERATIONS 12 Out of Sight but Not Out of Mind

Be proactive when monitoring fuel-storage equipment function.

12

14 Are You a Frog?

tart planning now to adapt your business amid S the eventual rise of EVs.

16 Don’t Be a Profit Center for Fuel Thieves

ere are some practical ways station operators H can prevent theft at the pump.

COMMERCIAL FUELS 18 CPI Index and Your Fleet

How does rising inflation impact your truck financing?

20

18

Is the U.S. Electric Grid Ready for Summer?

Microgrids backstopped by diesel generators can take over when the main power supply falters.

FUEL MARKETERS 22 R epair or Replace, That Is the Question

The ease of repairing sliding vane pumps should bring an end to the repair-or-replace argument.

26

22 2 | FMN Magazine SUMMER 2022

Secrets of Strategic Planning The process doesn’t have to be complicated—just the opposite.

46 Industry News 48 Remember This?

FuelsMarketNews.com

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FROM THE EDITOR

Our Global Society … or Not We are at an inflection point in the world. Since the end of the Cold War, there has been an ever-present move toward a globalized international society.

In Europe, the EU has increasingly stripped sovereignty from its member states. Allowing China, a neo-communist dictatorship, WTO membership in 2001 was a pivotal event. After 9/11, we saw the direct response to the attack morph into nation-building exercises in Iraq and Afghanistan. While U.S. led, this was supported by the globally focused European leadership. The Obama Administration followed up with similar “Arab Spring” efforts in Libya and Syria, with similar support.

On the climate change front, the most aggressive zero-carbon initiatives are similarly supported as part of the globalist platform expressed through such influential (and unapologetically globalist) organizations as the World Economic Forum.

The tailwinds pushing globalization have been stout. But is that now changing? Al Levine, our In the Lead interview, has decades of experience in the industry and in commodities and international finance. He also analyzes global politics (among many other data points) to provide sound hedging advice. He sees the possibility of a globalization retreat, centered on the shock of the Ukraine war, with other drivers. It’s something that has been on my mind for a while as well.

Offshoring manufacturing to centralized locations (largely in Asia) has exasperated some of the significant supply chain issues triggered by the pandemic shutdowns we currently face. The failures in nation building in the Middle East have become obvious. The idea that we had entered a “post-conflict” ideal world among major power players has been upset by Vladimir Putin. China’s Xi Jinping is aggressively pursuing territorial ambitions in the Pacific. Military procurement debates in the United States are focused more on when versus if a conflict over Taiwan and regional resources will occur.

4 | FMN Magazine SUMMER 2022

And, on the carbon front early adopters of zero-carbon like Germany find themselves unable to support natural gas sanctions against Russia, with almost no nuclear capacity left and having to reactivate coal plants to meet domestic needs. Polling shows a range of results on support for green energy when it comes to paying more for that conversion, especially among U.S. citizens (and largely dependent on who is funding the poll).

However, a Yale survey from 2019 found that paying an extra $10 per month to support green energy was unappealing to 72% of U.S. respondents. Similarly, the need for green energy is largely a partisan issue in the U.S., and one where aggressive action is likely linked to which party holds the most power in any given year.

Currently, rightly or wrongly, the price at the pump is linked to green energy initiatives among a sizable portion of the population.

I have no crystal ball. I do have a feeling that we will likely soon see a significant shift, one way or the other, that will similarly decide such matters largely in a holistic sense because right now they are all presented as part of the same package.

Should significant policy reversals occur, there will most certainly be fewer gallons dispensed in the future through natural EV penetration and increased combustion engine efficiencies.

Fortunately, while the industry needs to be actively analyzing its operational footprint and looking at issues like adding EV charging stations to retail sites or exploring alternative transportation fuels, there is still time to determine what actions to take to meet long-term goals.

EDITORIAL Keith Reid Editor-in-Chief (847) 630-4760 kreid@fmnweb.com Kim Stewart Editorial Director (703) 518-4279 kstewart@convenience.org Lisa King Managing Editor (703) 518-4281 lking@convenience.org CONTRIBUTORS Stephen Bennett, Blerim Gashi, Chris Hordyk, Ed Kammerer, Muqsit Khan, John Kimmel, Vikram Mittal, Joe O’Brien, Brian Reynolds, John Rickette, Allen Schaeffer, Dr. Raj Shah, Roy Strasburger DESIGN Imagination www.imaginepub.com Cover image by Artem_Egorov/Getty Images

ADVERTISING Ted Asprooth (847) 222-3006 tasprooth@convenience.org

PUBLISHING Erin Pressley Publisher (703) 518-4208 epressley@convenience.org Rose Johnson Audience Development and Production Manager (703) 518-4218 rjohnson@convenience.org

EDITORIAL COUNCIL RETAILER/MARKETER MEMBERS Josh Asche, senior vice president, COO, Hy-Vee Fast & Fresh; Mark Fitz, president, Star Oilco; Derek Gaskins, chief marketing officer, Yesway; Kevin Smartt, CEO and president, Texas Born (TXB) VENDOR/SUPPLIER MEMBERS Regina Balistreri, director of marketing, ADD Systems; Gary Lackore, director of sales – Americas, MidContinental Chemical Company Inc.; Kaylie Scoles, marketing director, RDM Industrial Electronics Inc.; Jen Threlkeld, product marketing manager, Dover Fueling Solutions Fuels Market News Magazine is published quarterly by the National Association of Convenience Stores (NACS), Alexandria, Virginia, USA. Subscription Requests: circulation@fmnweb.com

Keith Reid is the editor-in-chief of Fuels Market News.

He can be reached at kreid@fmnweb.com.

POSTMASTER: Send address changes to Fuels Market News Magazine, 1600 Duke Street, Alexandria, VA, 22314-2792 USA. Contents © 2022 by the National Association of Convenience Stores. Periodicals postage paid at Alexandria, VA, and additional mailing offices.

1600 Duke Street, Alexandria, VA, 22314-2792 PUBLISHED BY

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Fuels Institute Explores Decarbonizing Commercial Vehicles The Fuels Institute recently released a study that examines the overall challenges that the medium- and heavy-duty vehicle market faces on the road to decarbonization.

To inform the broad community on the nuances of MHDV decarbonization, the Fuels Institute collaborated with Guidehouse Insights to highlight the complexity of the market. To do so, Guidehouse Insights identified the top five and bottom five applications for MHDV decarbonization as a function of technology readiness and quantified each market’s impact on the overall U.S. MHDV market and contribution to U.S. MHDV greenhouse gas emissions.

There are roughly 12 million MHDV vehicles in the United States, representing about 5% of all vehicles on the road and 30% of transportation-related greenhouse gas emissions. There are distinguishable differences between MHDV 6 | FMN Magazine SUMMER 2022

and light-duty vehicles, and the same carbon abatement strategies may not apply to both.

Vehicle types and sizes are diverse, customization is frequent, and operating conditions present myriad and nuanced challenges for various decarbonization solutions. “The MHDV market policies, targets and expectations cannot be the same as those for light-duty vehicles because the MHDV market is vastly more complex,” states John Eichberger, Fuels Institute executive director. “Legislators, regulators and corporations need to understand this complexity as they set targets for policy and design incentive mechanisms for market suppliers.”

Download a copy of “The Easiest and Hardest Commercial Vehicles to Decarbonize” at www.fuelsinstitute.org.

FuelsMarketNews.com

NACS Earns 2022 ENERGY STAR® Award NACS is honored to announce that it has received the 2022 Energy Star Award for Excellence in Energy Star Marketing from the U.S. Environmental Protection Agency and the U.S. Department of Energy.

NACS first partnered with the EPA’s ENERGY STAR program in 2019 to create convenience store-specific resources designed to help the industry reduce energy use and costs.

As part of this effort, NACS and ENERGY STAR launched the NACS Energy Use Survey to capture convenience store data necessary for measuring store energy use and to create the convenience retail industry’s first and only ENERGY STAR Score. These benchmarking tools are slated to be released later in 2022.

“The 2022 ENERGY STAR award-winning partners are demonstrating what it takes to build a more sustainable future,” said EPA Administrator Michael S. Regan. “These organizations are showing once again that taking action in support of a clean energy economy can be good not only for the environment, but also for business and customers.”

“NACS is proud to play a leadership role in developing

National Association of Convenience Stores

tools for convenience retailers to make a difference in the communities they serve, whether related to improving energy efficiency, offering healthy options, fighting human trafficking, enhancing food safety systems or reimagining the next generation of age-verification for age-restricted products. We look forward to continuing to work with ENERGY STAR to provide retailers with tools that can enhance their operations,” said NACS Vice President of Strategic Industry Initiatives Jeff Lenard.

NACS resources related to ENERGY STAR and other initiatives are available at www.convenience.org/topics.

Each year, the ENERGY STAR program honors a group of businesses and organizations that have made outstanding contributions to protecting the environment through superior energy achievements. EPA notes that ENERGY STAR award winners lead their industries in the production, sale and adoption of energy-efficient products, homes, buildings, services and strategies.

Winners are selected from a network of thousands of ENERGY STAR partners.

Calendar of Events JULY NACS Financial Leadership Program at Wharton July 17-22 | The Wharton School, University of Pennsylvania | Philadelphia, PA NACS Marketing Leadership Program at Kellogg July 24-29 | Kellogg School of Management, Northwestern University | Evanston, IL

FuelsMarketNews.com

NACS Executive Leadership Program at Cornell July 31-August 04 | Dyson School, Cornell University | Ithaca, NY NACS Convenience Summit Asia July 19-21 | Singapore

OCTOBER NACS Show October 01-04 | Las Vegas Convention Center | Las Vegas, NV

NOVEMBER NACS Innovation Leadership Program at MIT November 06-11 | MIT Sloan School of Management | Cambridge, MA NACS Women’s Leadership Program at Yale November 13-18 | Yale School of Management | New Haven, CT

For a full listing of events and information visit www.convenience.org/events.

FMN Magazine SUMMER 2020 | 7

E15 Summer Waiver: Key Questions About the Market

BY JOHN EICHBERGER

T

he Biden Administration announced its intention to use emergency waiver authority to allow for the summertime sale of the fuel E15, a mixture of gasoline and up to 15% ethanol. The sale of E15 during the summer months is currently prohibited due to environmental regulations. The goal of this action is to provide a lower price fuel option for consumers and encourage more retail facilities to offer the fuel. Following this announcement, the Fuels Institute looked at the E15 market to better understand what impact this decision might have on fuel supply and prices and to provide some additional insights on the transportation energy market.

WHY CAN WE NOT SELL E15 IN THE SUMMER? Ethanol’s chemical properties increase the evaporative potential of gasoline when blended at lower concentrations. (The evaporative potential is measured in terms of Reid vapor pressure, or RVP.) The EPA requires gasoline during the summer months to be manufactured with a lower RVP to reduce emissions and benefit air quality. The Clean Air Act of 1990 recognizes ethanol blended at 10%. In 2011, the ethanol industry was successful in getting a partial authorization to blend gasoline with up to 15% ethanol. However, the Clean Air Act does not recognize E15 for purposes of the RVP, effectively prohibiting it from being sold during the summer unless the gasoline into which it is blended is produced with a lower RVP to accommodate the RVP increase.

SHOULD WE BE ABLE TO SELL E15 IN THE SUMMER? The regulations are clear, but they are also outdated and inconsistent with science. E15 in fact increases the RVP of gasoline less than E10—as the volume of ethanol increases, its impact on evaporation goes down. On May 31, 2019, the Trump EPA signed a rule authorizing the sale of E15 year-round, seeking to eliminate this outdated restriction. However, the U.S. Court of Appeals reversed this action stating that Congress explicitly restricted the waiver to fuels containing 9%-10% ethanol and that EPA did not have the authority to change this provision. Congress must take action to revise the Clean Air Act. Doing this is a significant challenge since it opens the door to other efforts to change the act from those who think it is not aggressive enough as well as those who think it is overly burdensome.

8 | FMN Magazine SUMMER 2022

CAN E15 LOWER PUMP PRICES? Yes. When the Chicago Board of Trade closed on April 13, 2022, ethanol was trading at $2.137 per gallon. At the same time, gasoline (reported as RBOB) was trading at $3.29. At these prices, the wholesale price of E15 would be 5.7 cents per gallon lower than E10.

Because ethanol satisfies the obligations of the federal Renewable Fuel Standard (RFS), each gallon is assigned a renewable identification number (RIN) and when blended with gasoline generates a credit. These credits can be sold to refiners to satisfy their obligation. The blender, quite often the retail company, can then use the value of these RINs to either reduce prices at the pump or supplement its profitability or a combination of each. However, RIN values can be quite volatile.

WILL THE WAIVER RESULT IN MORE E15 SOLD THIS SUMMER? The lack of the RVP allowance for E15 is a significant barrier to the market expansion of E15. However, from anecdotal information provided by several retailers, it has not really affected volumetric sales from stations that offer the product. EPA has used its discretion to not actively enforce the RVP FuelsMarketNews.com

Product

Gasoline

Ethanol

Wholesale Price

E10

$2.961

$0.214

$3.175

E15

$2.797

$0.321

$3.118

Product

Wholesale Price

RIN Value

Adjusted Price

E10

$3.175

$0.110

$3.065

E15

$3.118

$0.165

$2.953 Prices as of April 13, 2022

restriction on E15, and many retailers have continued to sell it during the summer months. While some have applied stickers to their dispensers saying that E15 in those months is only for flex fuel vehicles, others have chosen to not make that distinction.

That said, the issuance of an official waiver provides greater security to fuel retailers that they will not be subject to any enforcement action. It also protects them from a private lawsuit.

WILL THE WAIVER RESULT IN MORE STORES OFFERING E15?

Most likely not. Retailers who have not entered the E15 market have chosen their path for a variety of reasons and, while the summer restriction may be among them, a temporary emergency waiver is unlikely to change their minds. For retailers to offer E15, they may have to invest in new equipment to ensure they satisfy compatibility requirements. A temporary emergency waiver may not provide enough regulatory certainty to justify such an investment.

HOW CAN ETHANOL MORE EFFECTIVELY BENEFIT THE MARKET? The waiver is being issued largely in response to increased prices at the pump, and ethanol can have a positive influence. But ethanol also represents an opportunity to lower FuelsMarketNews.com

the carbon emissions associated with transportation.

According to the California Air Resources Board, the carbon intensity of ethanol is about 30% lower than gasoline, and recent improvements in production processes have improved that advantage. Unfortunately, regulations limit ethanol blend ratios primarily to 10% and, thereby, limit the carbon benefits that might be available. Increasing the sale of E15 from more retail facilities and opening the door to additional ethanol blend levels can increase the carbon mitigation contribution from ethanol.

However, doing so will require a variety of regulatory changes as well as investments in fuel distribution infrastructure to accommodate higher blends. In addition, not all vehicles were designed to operate on these higher blends.

The bottom line is that ICEVs represent 99% of the vehicles in the United States and will continue to be a significant part of the transportation sector for decades. With 73% of ICEV greenhouse gas emissions generated during the combustion of fuel, the best way to reduce carbon emissions is by reducing the carbon intensity of the fuel.

Note: This article is condensed from the original. Read the full version at www.fuelsinstitute.org.

The Clean Air Act does not recognize E15 for purposes of the RVP, effectively prohibiting it from being sold during the summer.

John Eichberger is executive director of The Fuels Institute. For more information, visit www.fuelsinstitute.org.

FMN Magazine SUMMER 2022 | 9

FUELED FOR THOUGHT

Tank Replacement Here are some pros and cons for UST owners to consider.

BY JOE O’BRIEN

W

ith more than 150,000 underground storage tanks (USTs) expected to hit the 30-year mark in the next decade or so, the fueling industry is embarking on a period of significant activity to address the aging vessels. UST owners face two basic choices—keep their tanks or replace them. There are pros and cons to both scenarios, each influenced by current dynamics in the market. With that in mind, here are some of the considerations particular to each scenario that UST owners need to weigh.

KEEP THE EXISTING TANKS In addition to complying with the U.S. Environmental Protection Agency’s requirements for preventing and detecting UST releases, all active USTs must meet the EPA’s financial responsibility regulations. The rules require UST owners and operators to prove they “have the financial resources to clean up a site if a release occurs, correct environmental damage and compensate third parties for injury to their property or themselves.”

One common method for meeting financial responsibility requirements is state funding. Unfortunately, this source of funding isn’t as robust as it used to be. Fourteen states and territories either do not have an EPA-approved state fund or they have phased out funding to cover the costs of a new release.

Insurance is the other mechanism most used to demonstrate financial responsibility. However, obtaining coverage for tanks that are approaching or have surpassed their warrantied service life is becoming increasingly difficult. Outside of installing new USTs, there are some actions that may help owners of older tanks obtain or keep insurance. In the EPA’s “UST Technical Compendium: Financial Responsibility,” the agency reports these tips from insurance providers: 10 | FMN Magazine SUMMER 2022

• Demonstrate compliance by maintaining thorough inspection, release detection and testing records • Fully complete the insurance application • Prepare for higher premiums and larger deductibles • Install new piping, sumps and spill buckets, known as a tank-top upgrade • Retrofit tanks with a double-walled interior To help UST operators find willing insurance providers, the EPA compiled a list of carriers who may consider coverage. The list is based on information the insurance carriers provided to the EPA. INSTALL NEW OR REFURBISHED TANKS Many manufacturing companies have had to struggle with a shortfall of critical parts and materials due to recent supply chain issues, and UST manufacturing is no exception. According to one environmental consulting company, recent events that contributed to product delays include: • A nationwide shortage of resin, which is used in fiberglass fittings, piping, tanks and glues • A winter storm that crippled chemical processing, plastics manufacturing and steel production in Texas and Louisiana FuelsMarketNews.com

IMAGE SUPPLIED BY DEANHOUSTON

Additionally, there is a limited pool of licensed professionals to meet the increased demand for UST installations, further complicating project timelines. According to independent environmental claims management firm Pinnacle, the timeline for a tank replacement has ballooned from about 30 days to six to nine months or even longer.

Even when the market is steady, costs to install new USTs are considerable. But when demand is high and supplies are low, costs escalate. It is estimated that the costs of steel or fiberglass tanks have increased 50% or more since the end of 2020. Bearing in mind that it typically takes 15 to 20 years before UST owners see return on their investment, tank owners may be reluctant to purchase new tanks for cost reasons alone. When you factor in the uncertainty surrounding what fuels and energy sources will be in demand in the future, the investment may be construed as risky.

Not surprisingly, a market for used tanks seems to be emerging. Tank owners need to be aware, however, that most states have explicit requirements for re-using a tank. Oftentimes, refurbished USTs need to be certified by an independent testing organization before they are installed.

Preparing for an influx of used UST installations, California stated in an advisory document that Unified FuelsMarketNews.com

Program Agencies should consider modifying their installation permits and plan check policies and inspection processes to address the installation of used USTs. Finally, how insurance providers will respond to requests for coverage for refurbished tanks is unclear.

What operators can expect with UST replacements in the next year or two is extremely difficult to predict.

Speculation persists as to when supply chains will stabilize. Some suggest that as demand normalizes, supply chains will follow—possibly by the end of 2022. However, presuming the demand for USTs is steadily increasing, one has to question if stabilization is even possible for tanks.

There are signs, however, that support for motor fuels remains. Although EV infrastructure received its first meaningful financial support with the Bipartisan Infrastructure Law, support for biofuels hasn’t dissolved.

According to the U.S. Department of Agriculture, $100 million in grants is being made available to fund biofuels infrastructure. If station operators can tap into these funds to upgrade and install new tanks that are approved for storing ethanol blends E-15 and greater or biodiesel blend B-20 and greater, a more cost-effective pathway toward meeting financial responsibility and sustainable business operations may in fact be viable.

Speculation persists as to when supply chains will stabilize.

Some suggest that as demand normalizes, supply chains will follow—possibly by the end of 2022.

Joe O’Brien is vice president of marketing at Source™ North America Corporation. He has more than 25 years of experience in the petroleum equipment fuel industry. Contact him at jobrien@sourcena.com or visit sourcena. com to learn more.

FMN Magazine SUMMER 2022 | 11

RETAIL OPERATIONS

Out of Sight but Not Out of Mind Be proactive when monitoring fuel-storage equipment function.

BY ED KAMMERER

W

hile the exact origin of the saying, “Out of sight, out of mind” is up for debate, the meaning is clear.

People tend to not think about something or someone if they do not see that thing or person for a long period of time.

This brings us to the owners and operators of retail fueling locations.

When it comes to the components in the underground fuel storage and dispensing system at the fueling site, they can hardly be blamed if an “out of sight, out of mind” attitude develops.

After all, the most significant word regarding the location of the components in an “underground fuel-storage system” is the first one—underground.

Since these components are installed below grade and then rarely seen 12 | FMN Magazine SUMMER 2022

afterward—in many instances, for five, 10, 20 or more years—the instinct of the site operator, unless obvious leaks or damage occur, is to assume they are working properly. But while the equipment is the same, the world around it is not, in three very significant ways for fuel site operators: 1. Underground storage system equipment has continued to evolve, becoming more advanced, reliable, safe and cost effective. Think of it like this: When you buy a new smartphone, you don’t buy Version 1.0, you buy the latest technology. The same mindset should be applied when purchasing storage system components.

2. The list of ever-changing federal, state and municipal regulations aimed at improving the safety of fuel storage systems may mean that

the components at the retail fueling site are now out of code, making the operator susceptible to fines or, in the worst-case scenario, shutdown.

3. The motor fuel menu has expanded to much more than regular and unleaded gasoline and diesel fuel since the turn of the century.

Because of this, there’s a chance that today’s reformulated gasoline and diesel, along with the expanding array of alternative fuels, may not be compatible with storage system components that are 20 years old.

BE PROACTIVE, NOT REACTIVE Considering the expansion in equipment options, safety regulations and fuel menu, we recommend that retail fuel site operators take a proactive approach when it comes to their underground fuel system equipment.

Specifically, upgrading systems by replacing old equipment before it experiences a breakdown and installing the current platform of equipment that is available today is the ideal path to follow. This means avoiding dated equipment specs that may be cheaper to purchase, but may also, in the long run, contribute to unnecessary delays or disruptions to your business, which can have a negative effect on your FuelsMarketNews.com

IMAGE SUPPLIED BY DEANHOUSTON

RETAIL OPERATIONS

reputation and relationship with your client base.

The capabilities of storage system equipment are so much more advanced than they were in the 1990s. Today’s components are more feature-rich than past iterations, while also having a lower total cost of ownership. For example, the evolution of storage-system piping has reached a point that if you’re installing piping that needs a secondary jacket to be trimmed, glued or welded with joints directly buried in the ground, or it’s not conduit-less (usually because that alternative is cheaper), you might end up wasting time and money in the long run.

There is an almost common-sense feel to being proactive in maintaining an underground fuel storage system. Since retail fueling companies invest so much money in their overall networks, it should be obvious that they should invest in the best technology. In other words, if a site costs $2 million to construct, spending another $500 on a better tank sump or a conduit-less tank sump shouldn’t be a deal breaker.

In the long run, the true beneficiaries of fueling sites with operators who are proactive in the outfitting, operation and maintenance of their fuel-storage systems are their customers. More than anything, consistently delivering a positive customer experience is the foundation of a successful retail fueling business. Drivers don’t just fill up their tanks for the sake of filling up their tanks (especially as fuel prices continue to rise); they do so to keep their vehicles operating as they go about their busy days. If the site is down because of a leak or equipment breakdown, or the fuel flow is slow because of a malfunctioning pump, FuelsMarketNews.com

that’s a bad impression that may cause the driver to look for another gasoline station to visit.

Customers are looking for convenience when filling up their vehicles and strive to realize some level of “immediate gratification” during the transaction. If the fueling site is open, the pumps are clean and the fuel flows freely, it enables them to get in and out quickly and increases the likelihood that they’ll be back.

Manufacturers of fuel storage systems are always looking for new and innovative ways to advance system performance, either through upgrades of existing products or the development of new ones. That’s why the market is now able to offer such advances as watertight tank sumps (featuring both conventional and no-drill technology), double-wall spill containers, conduit-less dispenser sumps and turbine enclosures, and rigid entry fittings or hybrid entry fittings for use in installations where conduit-less construction is not an option. There also have been notable innovations in underground components that can be reached, repaired and replaced without breaking forecourt concrete. These advances include flexible piping systems, testable overfill-prevention valves and emergency shut-off valves.

It’s undeniably hard for fuel site operators to avoid an “out of sight, out of mind” posture when considering the performance of underground fuel storage components and systems, but there can be great value in being proactive in the care and upgrade of these critical pieces of equipment. Being proactive enables operators to stay ahead of any problems and is a much more efficient, safe and cost-effective way to run a business.

The capabilities of storage system equipment are so much more advanced than they were in the 1990s. Today’s components are more feature-rich than past iterations, while also having a lower total cost of ownership.

Ed Kammerer is the director of global product management for OPW. He can be reached at ed.kammerer@ opwglobal.com. OPW delivers product excellence and a comprehensive line of fueling equipment and services to retail and commercial fueling operations around the globe. For more information on OPW, go to opwglobal. com.

FMN Magazine SUMMER 2022 | 13

RETAIL OPERATIONS

Are You a Frog?

Start planning now to adapt your business amid the eventual rise of EVs.

BY ROY STRASBURGER

M

y great-grandfather was not a frog. A German immigrant, he arrived in the United States in the late 1800s. After working for many years on the railroad system, he decided to settle down in Central Texas. Gathering all his hardearned savings and borrowing as much as he could from the bank, he opened a dry goods store to meet the needs of the local housewives. (This is where I get my retailing background).

After several successful years of operating his business, my great-grandfather decided to expand and sunk all of his profits into a cigar emporium and saloon to meet the needs of the 14 | FMN Magazine SUMMER 2022

gentleman of Central Texas (hey, this was the early 1900s).

Texas is a thirsty place, and the saloon grew to become a bigger business than the dry goods store.

Conveniently, the two businesses were located next to each other—husbands waited at one, while wives visited the other.

A few years later, the 18th Amendment passed, and alcohol prohibition became the law of the land. Overnight, a once thriving business became illegal, and the great majority of my great-grandfather’s revenue disappeared.

When he heard the news about the upcoming change, my great-grandfather

started working on a plan to stay in business. He decided to add a meat market and butcher shop to the dry goods store, in effect, becoming a forerunner of today’s supermarket. He built this business from scratch and so successfully combined the two offers that, several years later, my family had six supermarkets in the Central Texas area.

This is the type of adaptation that fuel retailers will need to undertake to meet the electric vehicle (EV) challenge. The rise of EVs will happen slowly—and then all at once.

The internal combustion engine will be around for at least another 30 years, and someone will still need to sell fuel for them. However, when the fuel supply situation (fuel transport and delivery issues) that we have been experiencing over the past few months is combined with the oil production instability caused by the Russian invasion of Ukraine, the EV adoption timeline could speed up tremendously.

As fuel prices go up, more people will order EVs (when they will receive FuelsMarketNews.com

CONSTANTINIS/GETTY IMAGES

RETAIL OPERATIONS

them is a different question due to supply chain issues). The EV market share that was going to develop over the next 15 years is going to happen in five. More EVs on the road means fewer miles driven by internal combustion engines, which means fewer gasoline gallons will be sold. A smaller gasoline retail market will, inevitably, lead to there being fewer retailers who can survive by selling gasoline. As gallons drop, reduced fuel profit dollars will not justify the costs associated with maintaining a gasoline site (repairs, maintenance, equipment upgrades and environmental insurance). Gasoline fuel retailers need to start thinking now about how their businesses will be impacted and what they are going to do to adapt.

Frankly, the idea that the only thing that a fuel retailer needs to do is replace gasoline pumps with electric charging stations is a red herring. The growth in the use of EVs means there will be a completely different “refueling” business in the future.

Refueling will no longer be confined to the corner gas station or convenience store. Refueling retailers will have to compete with non-traditional refueling locations for a driver’s business (assuming that there are still drivers—but that is another column for another day). Charging stations are already found at homes, apartment buildings, coffee shops, shopping malls, parks and public parking garages, to name but a few locations.

Today’s gasoline retailer is no longer competing directly with other fuel retailers. The new competition is any FuelsMarketNews.com

place you can put a charging station— and the cost and space requirements for charging stations will continue to shrink to the point that anyone can install one.

So, what is a fuel marketer to do?

The urban convenience and fuel station will not be viable if it depends only on fuel to make a profit. The traditional convenience and fuel retailing model is only going to be successful at interstate highway locations or in remote areas where people will need to recharge their EVs during long trips.

The majority of EVs will not need a traditional convenience store location to refuel because they will be able to recharge at home, at work or during leisure activities.

To stay viable, today’s fuel retailers will need to adapt and modify their store offer to attract customers without the draw of fuel. The site needs to either become a destination offering products, services or outstanding customer service that will attract customers, or it will provide the infrastructure for remote services such as delivery of groceries, meals or other goods.

This is a classic example of the frog in the saucepan (drop a frog in a pan of hot water and it will jump out. Put a frog in a pan of cold water, gradually raise the heat, and you will have frog soup). The gasoline engine is not going to disappear suddenly, but the total demand for hydrocarbon fuel is declining, leaving retailers with a dwindling revenue base and, eventually, a fuel business that is not viable. Do not be the frog—start planning now.

The idea that the only thing that a fuel retailer needs to do is replace gasoline pumps with electric charging stations is a red herring.

Roy Strasburger is the CEO 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, turnkey retail management solution.

FMN Magazine SUMMER 2022 | 15

RETAIL OPERATIONS

Don’t Be a Profit Center for Fuel Thieves Here are some practical ways station operators can prevent theft at the pump.

BY BRIAN REYNOLDS

F

uel theft has always been a part of life for a fuel marketer.

If you’ve been in this business long enough you hear of oneoff events to remind everyone that it happens. Today it is prevalent, well organized, technically sophisticated and frequently happening in the middle of the day.

With any entrepreneurial activity, albeit in this case it’s illegal, you imagine somebody doing an analysis 16 | FMN Magazine SUMMER 2022

for return on investment (ROI). With regular-grade gasoline approaching $5 per gallon and diesel closing in on $6 a gallon (as of early June), the ROI is very compelling, and thieves are focusing on stealing as much as possible with each breach. It is very common to see a single fuel theft event often be between 400 and 1,000 gallons.

Mostly older dispensers are getting hacked from the payment terminal or by covertly placing the dispenser

in stand-alone mode and bypassing detection at the POS. If the timing is right, automatic tank gauges (ATGs) get confused and don’t set off a sudden fuel loss alarm because the station is already busy with legitimate sales.

Other methods include paying for a small amount of fuel, then quickly installing homemade devices that confuse the pulsars, allowing for a $5 purchase to net $500 worth of fuel.

This seems to happen more frequently at standalone diesel islands.

Crooks also use the old tried and true method of parking a van directly over a UST manhole and pumping directly into a small tank inside the vehicle.

According to reports, diesel seems to be the product most vulnerable to theft since many convenience stores have a separate high-flow diesel island for trucks. Diesel may also be the easiest thing to sell for cash, particularly in areas where home heating oil is used, FuelsMarketNews.com

ALEX MILLAUER/SHTUTTERSTOCK

RETAIL OPERATIONS

and thieves can pass off diesel as heating oil and selling it at substantially less than market value. And there are plenty of examples with recent police busts of “backyard” cash only filling stations.

The most extreme example of fuel theft I have heard of recently (and caught on video surveillance) is where an operator reported a theft with a thief disguised as a pump technician in a service truck and safety equipment— complete with red cones. There was no rush, with the thief going to every fueling position and pretending to calibrate meters. His helpers would go to the opposite side and pump as much product as they could in tanks hidden in the many accomplices’ vehicles. The thieves reportedly made off with over 12,000 gallons. All in a dishonest day’s work.

In preparing for a fuel theft presentation, my internet research was surprising. No longer is the internet solely the domain for “Do it Yourselfers.” You can get expert video advice on how to steal vast volumes of gasoline and diesel from a convenience store without getting caught.

So, what can be done to at least minimize or discourage fuel theft? Here are some things that every prudent operator should do: • Change locks on the dispenser and consider audible alarms for the lower dispenser doors.

• Make sure the pin-out jumpers are removed and security codes are changed after every use.

FuelsMarketNews.com

• Install new locks and caps on the UST fill caps, and if possible, barricade the tank pad. Some operators are even putting fencing with locking gates around the tank pads.

• Add surveillance cameras that can time stamp to the second and be correlated with a wet stock management system.

• Educate store associates to be on the lookout for and report unusual behaviors on the forecourt.

• Add wet stock management, whereby all recorded sales are time stamped and any unrecorded removal is graphically portrayed. Additional analysis can be compared to the exact second of time and correlated to surveillance footage. This is a quick way to share evidence with law enforcement.

Plus, real-time wet stock management can further alert moments after a theft occurs, so a thief could be caught in the act and apprehended. It takes more than a couple of minutes to steal 500 gallons of fuel. Pumping directly from a dispenser would most likely take well over an hour. So real-time alerting provides for a gigantic fuel inventory burglar alarm. Wet stock management can also be done with older dispensers and virtually any ATG. With $100 plus per barrel oil and fuel prices surging for the foreseeable future, loss prevention practices and the appropriate technology can minimize fuel shrinkage even if it can’t be eliminated entirely.

Diesel seems to be the product most vulnerable to theft since many convenience stores have a separate highflow diesel island for trucks.

Brian Reynolds began his career working as a teenager in his familyowned jobbership in Cisco, Texas, and was at the forefront of many 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 works for Dover Fueling Solutions in ClearView, wet stock management sales. He can be reached at Brian.Reynolds@ DoverFS.com or (325) 733-6490.

FMN Magazine SUMMER 2022 | 17

COMMERCIAL FUELS

CPI Index and Your Fleet How does rising inflation impact your truck financing?

BY JOHN RICKETTE

R

ecent increases to the Consumer Price Index (CPI) are having a noticeable effect on costs of certain truck financing structures—but not all. Understanding these specific nuances can mean the difference of millions of dollars lost or preserved toward the bottom line of a fleet with hundreds of trucks.

The CPI measures the price of many goods and services, including groceries, clothes, restaurant meals, recreation and vehicles—light vehicles as well as commercial. According to a recent CPI report, price pressures remained elevated year over year.

Inflation, which hit 8.3% in April, has risen for a few key reasons. U.S. 18 | FMN Magazine SUMMER 2022

gross domestic product grew 5.5% on a year-on-year basis in the fourth quarter of 2021, largely because of consumer demand for many goods.

The changing dynamic of CPI can have a monetary impact on a fleet organization’s bottom line because CPI can have a direct correlation to finance costs. These finance costs can be significant depending on the type of investment structure (lease versus purchase), and even as more companies shorten their equipment life cycles through leasing, many firms are realizing that not all lease agreements are equal.

The decision for many fleets comes down to whether or not to structure

their agreements through a full-service lease (FSL) or that of an unbundled lease (UBL) agreement.

FULL-SERVICE LEASING—A MYTH OF CONVENIENCE In a full-service lease, the lessor provides financing and other transportation services packaged in a single monthly payment. Full-service transactions are often that, just transactions, and the contracts are tenured and strategically designed to avoid high-impact deal breakers.

In an FSL agreement, fleets essentially hand over all decisions affecting the fuel and maintenance costs to their lease provider and instead focus on a “bundled” monthly payment.

While on the surface, this may sound like a marriage of convenience, full-service leasing eliminates flexibility since it locks the organization into a rigid contract and terms for a set long-term period, wherein the cost for maintenance and finance are FuelsMarketNews.com

COMMERCIAL FUELS

combined along with general overhead costs. Unfortunately, limiting the operational flexibility can be disastrous when business conditions change or industries experience severe shifts overnight.

HABESEN/GETTY IMAGES

UNBUNDLED LEASING: FLEXIBILITY AND COMPETITIVE COSTS UBL agreements are designed for fleets to work with a provider that can help break out costs individually and identify the lowest-possible financial costs involved with operating a fleet, including fuel economy efficiency, and eliminating unnecessary maintenance and repair costs.

A UBL offers flexible financing options based on actual costs; not what costs were projected at the onset of the decision process. UBL offers vehicle life-cycle management for better cost and performance optimization. In a UBL agreement, companies have greater flexibility on these individual costs and the freedom to upgrade and scale the size of their fleet, guaranteeing the lowest-possible financial costs involved with truck acquisition.

HOW CPI IMPACTS TRUCK FINANCING Finance costs are a significant calculation in any equipment acquisition. The decision to purchase or lease requires a cap cost number and a finance number.

Fleet organizations in an unbundled lease structure work with their lease finance partners to gain access to multiple original equipment manufacturers and lenders, which is key to obtaining the lowest equipment and FuelsMarketNews.com

finance cost. The unbundled agreement allows the freedom and flexibility to shop for the most competitive options available.

A traditional full-service lease includes a fixed cost, a maintenance and repair cent per mile, which increases over time based on the CPI. An unbundled lease fixed cost on the other hand does not increase based on CPI, and M&R is based on actual costs fleets incur, not a fixed amount per month regardless of maintenance events. As the CPI increases, fleets locked into an FSL see their costs rise, and these additional increases can be severely detrimental to the bottom line. What’s more, an eroding bottom line can decrease competitive potential in a market where every penny counts and additional cash is needed to expand the business.

What’s more pressing for fleets locked in a full-service lease is the notion that few economists see the CPI rate declining significantly in the near future. Continued supply chain issues are expected to keep pressure on the cost of goods—heavy-duty trucks included—and this means these fleets won’t see any relief to their profits anytime soon, a business strategy that won’t please investors and other financial stakeholders. While they are locked in their current lease agreements, they would be wise to re-evaluate their longer-term truck acquisition strategies and begin planning for the right time to convert to a more flexible, bottom-line-friendly unbundled lease structure.

Full-service leasing eliminates flexibility since it locks the organization into a rigid contract and terms for a set longterm period.

John Rickette is vice president of portfolio and manager of the transaction management team at Fleet Advantage. For more information visit www.fleetadvantage.com.

FMN Magazine SUMMER 2022 | 19

COMMERCIAL FUELS

Is the U.S. Electric Grid Ready for Summer?

Microgrids backstopped by diesel generators can take over when the main power supply falters.

BY ALLEN SCHAEFFER

B

uckle up and be prepared to set your thermostats back. The headlines in recent months about the weaknesses in the U.S. electrical supply are ominous.

“One Billion People Are At Risk of 20 | FMN Magazine SUMMER 2022

Rolling Blackouts This Summer,” states OilPrice.com, and “America’s Power Grid Is Increasingly Unreliable,” reports The Wall Street Journal. From clean energy regulations to aging infrastructure to weather extremes,

the U.S. power grid is under pressure, and much of the Northern hemisphere may be looking at a perfect storm of blackouts during the hottest months of the year.

North America’s power grid faces a challenging summer, warns North American Electric Reliability Corporation (NERC), the nonprofit, international regulatory authority. “A large swath of the North American bulk power system faces either a high or elevated potential this summer for insufficient operating reserves under normal operating conditions. The 2022 summer assessment said that the Midcontinent ISO faces a capacity shortfall in its North and Central areas, resulting in what NERC called FuelsMarketNews.com

DOUGLAS SACHA/GETTYIMAGES

COMMERCIAL FUELS

a ‘high risk of energy emergencies during peak summer conditions.’”

From coast to coast, grid operators are talking openly and loudly about their concerns regarding adequate power supply to meet demand over the next 4-6 months and beyond.

California says it needs more power to keep the lights on. State energy officials have a sober forecast for the state’s electrical grid, saying it lacks sufficient capacity to keep the lights on this summer and beyond if heatwaves, wildfires or other extreme events take their toll. The update from leaders from three state agencies and the office of Gov. Gavin Newsom comes in response to a string of challenges with the ambitious transition away from fossil fuels, including rolling blackouts during the 2020 summer heat wave.

On the 15-state grid operated by the Midcontinent Independent System Operator (MISO), consumers in 11 states are at risk of outages.

MISO, which serves about 42 million people, projected it has “insufficient” power generation to meet the highest demand periods this summer, especially in its Midwest states. The grid has never given a warning of this kind ahead of the start of summer demand.

With the chorus of voices sounding the alarm on summer power supply, the importance of emergency backup systems rises to the top of consideration by business and government leaders. Power and generator dealers, FuelsMarketNews.com

as well as distributors, are working with customers to deploy the right systems and maintain 100% readiness should these systems be needed to sustain business operations and maintain critical life systems in the event of a grid outage.

Diesel is the technology of choice for ensuring reliable emergency backup power, thanks to its load-carrying capacity, rapid response time (10 seconds) and reliability. Beyond commercial and residential installations, diesel-powered and natural-gas-fueled generators are increasingly being incorporated into self-sustaining microgrids powering entire neighborhoods, removing their dependency on central power-plant generation.

In microgrid systems, prime power comes from renewable solar and wind energy; batteries store the energy and release it during times of high demand. The generators backstop the whole system to ensure reliable power when renewables are intermittent, and storage has been depleted.

Diesel generators, used alone or as part of microgrid applications, are increasingly being fueled with renewable biobased diesel fuels that reduce carbon emissions by 50-86% and other emissions as well, thereby contributing toward sustainability and lowering greenhouse gas emissions, while also ensuring a reliable and continuous supply of electrical power when it is needed. That’s a hot bargain anytime.

Diesel is the technology of choice for ensuring reliable emergency backup power, thanks to its load carrying capacity, rapid response time (10 seconds) and reliability.

Allen Schaeffer is the executive director for the Diesel Technology Forum, a nonprofit organization dedicated to raising awareness about the importance of diesel engines, fuel and technology. Diesel Technology Forum members are global leaders in clean diesel technology and represent the three key elements of the modern clean-diesel system: advanced engines, vehicles and equipment; cleaner diesel fuel; and emissions-control systems.

FMN Magazine SUMMER 2022 | 21

FUEL MARKETERS

Repair or Replace, That Is the Question The ease of repairing sliding vane pumps should bring an end to the repair-or-replace argument.

BY CHRIS HORDYK

T

here are philosophical choices that have sparked some of the great debates of our time: Star Wars or Star Trek? Thin crust or deep dish? Yanni or Laurel?

In the world of truck transport of liquid commodities such as motor fuels, heating oil and chemicals, the question that typically divides people into two distinct camps is “repair or replace?”

Or more to the point, what is the best pumping technology with which to outfit your transport vehicles, one that can be repaired in the field, or one that 22 | FMN Magazine SUMMER 2022

should just be scrapped and replaced with a new model once it fails?

SURVEYING THE FIELD The operators of transport-truck fleets have a basic choice of three customary truck-mounted pump technologies: the sliding vane, external gear and centrifugal. Let’s take a closer look at all three technologies: • External Gear: This pump technology uses the meshing of gears to facilitate the flow of liquid through

the pump at consistent volumes, which makes them a positive displacement (PD) pumping technology. They will deliver a constant amount of liquid with each revolution of the gears, while their tight clearances and speed of rotation restrict any fluid from moving backward, or “slipping,” during their operation. Since the gears are rigid, the pumps create a smooth, pulse-free flow, but also one that can handle very high pumping pressures, especially those that are needed to transfer high-viscosity liquids. However, the contact inherent in the meshing of the gears will cause them to wear over time.

This gear wear will compromise volumetric consistency and increase the risk that product slip will occur as the pump ages, which will result in decreased productivity over time.

External gear pumps are also generally inexpensive, though they do FuelsMarketNews.com

FUEL MARKETERS

IMAGE SUPPLIED BY DEANHOUSTON

have a relatively high number of wear parts. This will prompt many users to run them to failure and then replace, rather than repair. The cost to replace the wear items is a substantial percentage of the entire cost of the pump and directs users to scrap the entire pump for common wear.

• Centrifugal: This technology uses the rotational energy created by an internal impeller to “throw” the liquid to the discharge port. Although less efficient than PD pumps (meaning they require more energy to perform the same amount of work), this method of operation produces a smooth, pulse-free flow. Conversely, to achieve this effect and the resulting operational benefits, by design centrifugal pumps are more complex, which means higher downtime and maintenance costs when they fail.

Centrifugal pumps also tend to have a steeper purchase price, which can put the operator between a rock and a hard place when considering the repair-or-replace question. From an operational standpoint, while some manufacturers claim they are self-priming, most centrifugal pump models cannot prime unless they are first pre-primed. Also, they do not have the capability to fully deplete tanks during unloading, cannot strip lines for product recovery and spill reduction, and cannot run in reverse for recovery between loads. Lastly, centrifugal pumps must operate at a speed that requires either a hydraulic-drive system or a gearbox to convert typical PTO speeds to the required pump speed.

FuelsMarketNews.com

• Sliding Vane: This PD-pump technology features a rotor with retractable vanes that protrude and retract as the rotor turns. This setup draws liquid into chambers that are created by the spaces between the vanes, from where it is pushed to the discharge port. The self-adjusting vanes sustain the pump’s volumetric performance, making it energy efficient while simultaneously preventing product slip. Another feature of sliding vane pumps is a lack of metal-to-metal contact, which reduces the possibility that pump friction and galling will occur. An additional sliding vane attribute is its self-priming ability and suction-lift capabilities, which allow the creation of an internal vacuum strong enough to strip lines and tanks. Since there is no metal-on-metal contact inside the pump, sliding vane pumps have a liquid-handling range from ultrathin liquids (0.2 cP) all the way up to liquids with a thickness of 22,500 cP.

Knockoff models have entered the market that may look the same as a high-end pump (while costing less), but their performance leaves a lot to be desired.

Not all pump technologies are created equal. Knockoff models have entered the market that may look the same as a high-end pump (while costing less), but their performance leaves a lot to be desired. Mainly, they fail quicker during normal operation.

Because of their reduced purchase cost, these sliding vane pump models will likely not be run to failure and then replaced, rather than repaired.

CHOOSING A PUMP There are a few variables that must be considered in picking the best pump type. The first is purchase price. A pump FMN Magazine SUMMER 2022 | 23

Chris Hordyk is a product manager for Blackmer. He can be reached at chris. hordyk@psgdover.com. Blackmer is a leading global provider of sliding vane, gear, regenerative turbine and centrifugal pump, and reciprocating compressor technologies for the transfer of liquids and gases. Learn more at blackmer.com and psgdover.com.

that is designed to be repaired will have a higher purchase price than throwaway technologies. Developers and manufacturers of pumps designed to be repaired take great pains to make the purchase price as palatable as possible, knowing that any excess upfront costs can be recouped on the back end via longer service life and more manageable and bottom-line-friendly repair costs.

However, complicated or reoccurring component repair or replacement also brings the potential for a large amount of ancillary costs for the fleet owner.

The more complicated the pump and its drive system, the less likely that fleet operators—which are often lean 3-4 truck operations with small staffs— will have the expertise to perform repairs or preventive maintenance. In this case, an outside service provider will need to be scheduled, or the pump shipped out for repairs, which can

mean excessive idle time for the truck, along with significant labor costs.

All of this sounds like an argument to simply replace the failed pump with a new one, but that returns us to the first consideration of purchase cost, acknowledging again that initial cost may be lower, but over the 20-year life cycle of a high-quality sliding vane pump, an external gear or centrifugal pump needs to be replaced three or four times.

In general, many people take a sense of pride in keeping a piece of mechanical equipment operating over an extended period. Sure, that snow blower may be 30 years old, but by taking care of the impeller, it hasn’t failed yet. Or there are instances of fuel-oil suppliers who will re-chassis their transport trucks but install their 10-year-old sliding vane pump on the new chassis.

WHOLESALE FUEL & LUBRICANTS CARDLOCK MANAGEMENT INTEGRATED ACCOUNTING

Business Software for Fuel Marketers of All Sizes “Our implementation team along with Trinium, implemented the system across our cardlock businesses in a very short period of time, four months. We now have a more functional cardlock software to manage our business, which is already generating benefits for our customers and staff."

Chris Bridgford Director of Cardlock Services Pilot Thomas Logistics Call (310) 214-3118 to schedule your one-on-one demo today or email sales@triniumtech.com www.TriniumTech.com/Fuel

24 | FMN Magazine SUMMER 2022

FuelsMarketNews.com

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Right now. With E15 & E85.

What’s it going to cost you? Quite possibly nothing at all. As in zero. Zilch. Nada.

That’s because your station’s equipment might already be flex-fuel compatible. Find out today with Flex Check and start cashing in. We can help.

FLEXFUELFORWARD.COM

FUEL MARKETERS

Secrets of Strategic Planning The process doesn’t have to be complicated— just the opposite.

BY JOHN KIMMEL

W

e hear a lot of high-level conversations about setting and reaching our organization’s goals, but too often those goals remain unmet.

The bad news is that there are several reasons why we don’t achieve our goals.

The good news is that most of those reasons will be eliminated if you follow the steps outlined below. These steps unlock the secrets to strategic planning that bring success.

START WITH AN ANNUAL STRATEGIC PLAN Many companies try to start with a three-year plan or longer, only to find

26 | FMN Magazine SUMMER 2022

large gaps between the reality of what the team believes they can achieve and the tasks necessary to get there.

So, especially if this is your first real attempt at strategic planning, keep your plan to a single year. Your team will be better able to connect to a period of time that is easily understood and still embrace the tasks that will stretch them toward those big goals.

CREATE A STRATEGIC PLANNING TEAM If you are a small organization, you should include your entire team in this process. For larger teams this is simply not realistic. For these organizations, make sure all the company leaders are

part of the team as well as at least one representative from each division and position.

Image Caption Goes Here

SCHEDULE A STRATEGIC PLANNING EVENT Another mistake is trying to create a strategic plan while you are also trying to work at your normal job. Strategic planning takes focus. Schedule an event offsite if possible and direct the organization to interrupt you only in the case of an emergency. Also, this is likely a two-day event unless you have a small team of five or fewer people, in which case you might be able to accomplish the plan in a single day.

DO A SWOT Strategic planning starts with clearly identifying what your organization is, and what it is not. We accomplish this by performing a brainstorming session called a SWOT, which is an acronym for strengths, weaknesses, opportunities and threats. Once you have those details in mind, the teams can determine what one, two or three goals they should accomplish in the next FuelsMarketNews.com

FUEL MARKETERS

12 months. Having more than three annual goals reduces the likelihood of success dramatically, so stick to three goals or less.

ALISTAIR BERG/GETTY IMAGES

ASSIGN AN OWNER TO EVERY GOAL Every big goal, supporting goal and even individual steps need to be “owned” by one person who is responsible for its completion. This does not mean that the person is responsible to do all the work necessary to reach the goal, but rather that tracking progress and accountability measures are the responsibility of this individual. Warning: Goals that are owned by more than one person or the team simply will not get done, so don’t fall into that trap.

MAKE YOUR GOALS SMART Zig Ziglar used to say, “Don’t become a wandering generality. Be a meaningful specific.” What he meant was that unless you have clearly articulated what you want to accomplish, you will never get where you want to go. Imagine a reporter interviewing Warren Buffet. The reporter asks, “What is the secret to your success?”

Can you imagine Buffet saying, “Well, I got this job and I kept showing up. And they kept promoting me, and so I just kept coming to work, and here I am….”

Of course not. That would be ridiculous. And yet, we get so caught up in our day-to-day activities that we often fail to plan the course that will get us to our desired destination. To keep this from happening, use SMART goals as your guide. SMART goals are specific, measurable, achievable, relevant and time bound.

FuelsMarketNews.com

BREAK DOWN BIG GOALS INTO SMALL STEPS Big goals can seem so daunting to your team that they may feel that the goals are unachievable. On the other hand, when you break goals down into quarterly, monthly and weekly steps the goals often change to seem impossible to miss. For example, if I want to lose 35 pounds over the next year, that may seem overwhelming. But that weight loss goal is less than three pounds per month, and only 0.67 pounds per week.

It is easy for me to embrace the idea of losing 0.67 pounds per week.

Having more than three annual goals reduces the likelihood of success dramatically, so stick to three goals or less.

REVIEW THE TEAM’S PROGRESS Out of sight will truly be out of mind.

The team needs to review progress at least once a month. Staying on top of your goals will not only help you see if you are on track to accomplish them but will also identify accountability issues within the team. If you have hired an expert to help you facilitate your strategic planning, that expert should also be involved in your reviews.

CELEBRATE VICTORY If you have championed the process of hitting the company goals and held people accountable along the way, make sure you celebrate as a team when you hit your goals. One of the most often identified attributes that employees desire is a sense of purpose. Including them in your strategic plan and celebrating strategic victories will give them that sense of purpose that they so desire. Make sure you celebrate wins. Your team will be glad that you did.

John J. Kimmel is the author of “Selling with Power” and has spoken for many state and regional petroleum marketer associations. Kimmel provides custom solutions to increase the effectiveness and profitability of sales teams for petroleum marketers all over the United States. To learn more, visit www.johnjkimmel.com.

FMN Magazine SUMMER 2022 | 27

TRAINING UP TRUCKERS

By Stephen Bennett

28 | FMN Magazine SUMMER 2022

FuelsMarketNews.com

Apprenticeship programs are fast becoming a favored model for getting more people into the industry.

L

ast December, the U.S. Department of Transportation (USDOT) and the U.S. Department of Labor (DOL) launched a Trucking Action Plan to increase the supply of truck drivers. The agencies said they aimed to do this by “creating new pathways into the profession,” and “cutting red tape” to expand training, primarily through Registered Apprenticeship Programs.

During the span of the action plan, which Biden Administration officials referred to as “a 90-day sprint,” more than 100 trucking firms launched Registered Apprenticeship Programs, including Groendyke Transport and Carbon Express.

Executives of both tank truck carriers, along with Ellen Voie, president of Women in Trucking, attended a White House event on April 4 marking the conclusion of the Trucking Action Plan, but the effort to promote and launch registered apprenticeship programs continues to be as strong as ever, a Department of Labor spokesperson emphasized in a conversation after the White House event.

Another 75 trucking firms are developing apprenticeship programs, the DOL spokesperson said.

Holly McCormick, vice president, Talent Office, Groendyke Transport, based in Enid, Oklahoma, said transporters of petroleum products have a special interest in heightening awareness and recognition of the role of drivers.

Hauling tank trucks is unlike any other segment of the trucking industry, McCormick said.

“It requires a special skill set that enhances and elevates the professional job of truck driving.

By signing up as a Registered Apprenticeship Program participant we can get access to individuals that do not yet have this skill,” McCormick said. “Additionally, we’re able to look at transitioning veterans that may already have much of this skill set.”

FuelsMarketNews.com

Formal apprenticeships are fast becoming a favored model for training people to drive trucks, as the trucking industry, trade groups and the Labor Department work together to shore up depleted driver ranks.

APPRENTICESHIP PROGRAMS ARE A WIN-WIN Registered apprenticeship programs work, the DOL spokesperson said, because apprentices are employees from the start of the process.

Employers are hiring, training and paying apprentices, and as apprentices build more skills, they earn wage increases. For these reasons apprentices are more likely to stay in driving jobs, the spokesperson said.

In occupations such as operating petroleum tank trucks, the necessary specialized education and training can be provided through the apprenticeship program, the DOL spokesperson noted.

FASTPORT, a company contracted by the U.S. Department of Labor, helps carriers set up apprenticeship programs and register them with the department, which can make both the carriers and apprentices eligible to receive certain benefits. The Labor Department provided federal funds to FASTPORT, among other partners, to work with employers to start apprenticeship programs.

FASTPORT provides consulting support, free of cost to employers who want to start apprenticeship programs. It is also working with industry associations and groups, including the National Tank Truck Carriers and Women in Trucking. Dave Harrison, executive director, ​ workforce development and government relations for FASTPORT, pointed out that among benefits available to registered apprentices are housing allowances for eligible veterans transitioning to truck driving careers.

FMN Magazine SUMMER 2022 | 29

“This is truly an earn-while-you-learn program.”

Registering an apprenticeship program need not be a complicated, lengthy process, according to Harrison. “Usually in about 30 minutes I can outline a path that will get a company to a registered apprenticeship just as fast as they want to,” Harrison said. Some employers can be onboarded in 48 hours, he said. “Some companies dive right in; other companies take months,” Harrison said.

FASTPORT works with a wide range of associations that agree to sponsor apprenticeship programs for their members.

The National Association of Publicly Funded Truck Driving Schools, S.H.E. Trucking, the Minority Professional Truckers Association, The North American Punjabi Trucking Association and The Trucking Alliance are current sponsors.

The American Trucking Associations (ATA) earlier this year signed an agreement with the DOL to become a registered apprenticeship sponsor, with FASTPORT administering the program for participating companies in that group.

The trucking industry is short more than 80,000 drivers, according to the ATA. Diesel technicians are also in high demand and short supply, the group noted. Apprenticeships can help fill that gap by combining paid, on-the-job training with instruction to prepare new drivers and technicians, ATA said.

30 | FMN Magazine SUMMER 2022

OPTIMIZE YOUR APPRENTICESHIP PROGRAM A version of the RAP is currently in development with the National Tank Truck Carriers, Harrison said. The apprenticeship model that most associations and trade groups have adopted for their members is a two-year competency-based program, Harrison said. “That doesn’t mean it has to take two years.”

The curriculum is an employer’s curriculum, and employers, as operators of the competency-based programs, determine “who or who is not qualified, safe and productive,” Harrison said.

Literature on the program, disseminated

by FASTPORT, states: “Employers define skill requirements, recruit apprentices, provide on-the-job training, select mentors, pay progressive wages as skills increase, and validate related instruction in-house or in partnership with training providers.”

Harrison said, “The reality is that less than 10% of the carriers in the nation actually train people with little or no experience.”

Apprentice drivers may come from other industries, looking for an opportunity in a sector where there are jobs that can provide family-sustaining wages, the DOL spokesperson said. There is still a lot of work to be done to make trucking an accessible, safe and attractive job for women, the spokesperson acknowledged. There is opportunity for tank truck drivers to be home nightly, which is a strong draw, the spokesperson noted.

Ellen Voie, president of Women in Trucking, said, “A lot of times women have trouble getting the tuition and the funding” they need for training. “We have a scholarship foundation,” Voie said.

“Our scholarships are a $1,000 per person.” She added, “Drivers will have their whole training paid under this apprenticeship program, which is great.”

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“This is truly an earn-while-you-learn program,” ATA President and CEO Chris Spear said. “But it’s more than just a paycheck for apprentices. By participating in a registered program, they are eligible for things like child care, housing allowances and other support as they start down this new career path.”

Under the apprenticeship program, ATA’s members will need to meet certain training and compensation standards as they bring in new drivers for a two-year apprenticeship that will provide graduated wages as drivers develop and expand their skills, the group said.

RONNACHAIPARK/SHUTTERSTOCK

The trucking industry partnered with veterans’ organizations to launch “Task Force Movement: Life-Cycle Pathways for Veterans and Military into Trucking,” chaired by former congressman and veteran Patrick Murphy, to support the recruitment and retention of veterans and military family members. The new task force is meant to create more seamless pathways that recognize skills that people already have—particularly important for ensuring access to CDLs, the DOL spokesperson noted. That includes taking into account practical, concrete experience, such as the types of trucks apprentices drove while they were in the service. That experience can be especially significant in the fuel tank industry, said the DOL spokesperson.

MAINTAINING HIGH-QUALITY, ESSENTIAL WORKERS Another benefit of apprenticeship programs is that job seekers who visit American Job Centers see the programs as offering high-quality training that leads to jobs. The DOL supports American Job Centers, which are designed to provide a full range of assistance to job seekers “under one roof.” Established under the Workforce Investment Act, the centers offer training referrals, career counseling, job listings and similar employment-related services.

Steve Rush, founder and CEO of Carbon Express, Wharton, N.J., which hauls motor oil and other products, has a Registered Apprenticeship Program at his company. Rush said that there’s another step he’s looking to government to take to complement registered apprenticeships. “To complete the play, the government has to declare driving a truck a specific skill,” Rush said. He also criticized the absence of overtime pay for many drivers. Under the federal Fair Labor Standards Act, some truck drivers are exempt from overtime. “That is terrible,” Rush said. “Now, I’m an owner and I’m telling you that’s terrible. That’s demoralizing.” Rush added, “The country can’t run without you. [The country] can’t win a war without the truck driver. And yet, he’s not eligible for overtime. That’s wrong.”

McCormick of Groendyke Transport is leading an effort to win formal federal recognition of the job of tank truck driving. “As head of the Workforce Committee for National Tank Truck Carriers, I’ve worked with my committee to submit a new occupation, specific to tank trucks, to FuelsMarketNews.com

“The reality is that less than 10% of the carriers in the nation actually train people with little or no experience.”

FMN Magazine SUMMER 2022 | 31

To learn about federally recognized apprenticeships, visit www. apprenticeship. gov.

the Department of Labor,” McCormick said.

“While tank trucks represent only 6% of the industry, we haul a third of the nation’s tonnage,” she said. Tank truck drivers are responsible for loading and unloading, McCormick added.

“Our drivers require a completely different skill set. It’s more customer/shipper interaction, more hands-on loading/unloading, understanding products and ‘slosh.’ Imagine hauling a product that moves when you hit the brakes.

It’s hard to loop our segment into ‘all trucking.’

“Our safety standards are much higher than that of other segments of trucking,” McCormick continued. “Our insurance providers would agree.

Simply in the nature of what we’re hauling we have to be” following specialized safety standards, McCormick said. “And we can prove that we are.”

McCormick said that creating a DOL occupation for tank truck drivers such as those who

work for Groendyke “creates a streamlined way to get drivers into our training programs.

It differentiates us from other segments and allows us to market ourselves as such, creating our jobs as the elite career destination for truck drivers. We’re in a full-out war for talent and drivers, and we want to distinguish ourselves” as, among other things, “a higher-paying segment of the industry.”

“Not to mention,” McCormick said, “if it weren’t for the diesel fuel that we haul, no other truck could keep running.”

Stephen Bennett is an editor and reporter specializing in the fuel and transportation industries.

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In the Lead

HEDGING PO Alan Levine has been advising the industry on fuel hedging since he helped make it an option.

By Keith Reid

34 | FMN Magazine SUMMER 2022

FuelsMarketNews.com

WERHOUSE ALAN LEVINE

CHAIRMAN, CEO POWERHOUSE

A

FuelsMarketNews.com

lan Levine founded Powerhouse 11 years ago to offer clients consulting on the design and use of customer hedge instruments, as well as finding counter parties for hedging transactions that cannot be satisfied with on-exchange instruments. He serves as chief executive officer and chairman, with Elaine Levin serving as president. David Thompson is executive vice president. Powerhouse has been working with Fuels Market News since its founding and provides access to the Powerhouse Weekly Market Situation newsletter.

Levine is in many ways the father of fuel hedging and helped develop the initial New York Mercantile Exchange heating oil contract.

Here, we look at his 40+ years in the industry, as well as the current fuels market, the value of hedging and his thoughts on the future.

Hedging itself is seen as a risk reduction exercise, or form of insurance, rather than a means to “gamble” with the market as might be the case with a “speculator.” It involves taking an offsetting position with financial instruments to protect against significant market swings, but at the same time might limit some opportunities for profit taking.

Levine was born in 1937 in Jersey City, New Jersey. His father was an electrician who provide a comfortable—but not posh—upbringing. After four years in an integrated high school, FMN Magazine SUMMER 2022 | 35

The New York Mercantile Exchange was looking for another commodity to trade, and somebody came up with the idea of heating oil.

36 | FMN Magazine SUMMER 2022

a microbiologist, after an extended courtship dating back to 1953. They soon after had their first child, a daughter, Victoria, and later a son, Jason. After a stint ashore, he left the Navy for a job at Johnson & Johnson for a brief dalliance in health care before he discovered the world of petroleum.

HOW DID YOU GET INTO THE INDUSTRY? I began in the industry in 1969. I worked for a fellow named Walter Levy, a well-known petroleum economist at the time. He had helped the major oil companies work through the difficulties of realigning their interests in the Middle East after Mohammad Mossadegh nationalized BP’s Iranian operations in 1951 and was then deposed by the CIA in 1953 and replaced by the Shah of Iran.

After seven years I left to work for several consultancies, and I soon went on from there to Washington, D.C., because in the early- to mid-1970s oil and gas were suddenly becoming important.

Around 1976 I joined up with an economist named Arnold Safer, and we set up a consultancy in Bethesda, Maryland, and developed a small but very nice business. But then the New York Mercantile Exchange was looking for another commodity to trade, and somebody came up with the idea of heating oil. So, we became their oil consultant and set up the first heating oil contract, and we continued to act as consultants to them, and we’d make speeches on their behalf.

It was really the first contract of that kind in history.

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PREVIOUS SPREAD: CIGDEM/SHUTTERSTOCK

he attended Rutgers University over the strenuous objections of his father, who believed college was a waste of time. For Levine, that only held true for his first major in marketing.

“The only interesting thing that ever happened in there was they took us on a field trip down to a place that sold workingman’s clothing—guys who worked on the railroad, plumbers, electricians and similar trades. They’d come in and buy overalls and so on,” Levine said. “It was a nice enough store, but it was all old wooden cases and stuff. Somebody asked the owner why don’t you get nicer fixtures? And the guy says, if I got nicer fixtures, I’d be out of business in a week because my customers would not be happy. They would be uncomfortable. Well, over 60 years later and I’ve never forgotten that story because history has proven that to be exactly the case.”

Levine was required to take economics, and an instructor convinced him to change his major and acted as an early mentor. He eventually earned a master’s degree from the Columbia School of Business.

Just days after graduating from Rutgers, Levine received his draft notice into the U.S. Army. He decided that the Navy was more his taste, and he entered the service as an ensign in 1960. His naval time saw him sailing the Pacific and crossing the equator to receive “shellback” status as the supply officer on the landing ship tank (LST) USS Wexford County. “It was exciting. It was interesting. It was fun. It was rewarding in so many ways,” Levine said.

During this time, he married his wife, Priscilla,

SCANRAIL/BIGSTOCK

“If you’re exposed because [hedging] is intimidating, how does bankruptcy hit you?

How much more boldly can I put it?”

The first trades were in 1978 and it was doing OK. Of course, in 1979 the Ayatollah Khomeini overthrew the Shah, and heating oil went from like 35 cents a gallon to $1.05. If you held a contract there you had yourself a pile of dough, and if you had 10 contracts, you had a real pot of dough. And there were people who had a hundred contracts. So, this was a very impressive thing.

And you can’t keep a thing like that secret.

Arnold ran into some personal issues, and we decided to go our own ways. I joined Merrill Lynch in 1982, which had its own commodities company at the time. Over the years through acquisitions and mergers we became Dean Witter, which acquired Morgan Stanley and assumed that name shortly afterward. Elaine Levin had joined me by this time.

There was a lot of confusion in the marketplace and tension in the organization over the changes, and I almost came to blows over it with one of the guys from New York Morgan Stanley.

I literally went across the table at him. This guy’s threating my life, my career, and remember I FuelsMarketNews.com

grew up in Jersey City and you didn’t put up with stuff like that. So, on Sept. 6, 2012, we left and established Team Levine LLC, dba Powerhouse.

And we’re free of all the inhibitions we faced. Not surprisingly, we brought virtually all our customers with us.

VOLATILITY ALWAYS EXISTS, BUT WE ARE IN A PERIOD OF HIGH VOLATILITY LIKE WE SAW EARLIER IN THE 2000S. HOW DO YOU SEE THIS PLAYING OUT? Well, the problem is I don’t know what’s going to happen in Ukraine. We’re now starting to impose limitations on Russian exports of crude oil. Of course, they’ll find ways to subvert this, but still it will have some impact. So, I think we’re in for a period of relatively high prices, up and down, depending upon what else goes on and until we get something that seems like a resolution in connection with the Russians. I think we are in for a period of tremendous uncertainty over the next several months. Then we have an election coming up, and I just can’t imagine how nasty that FMN Magazine SUMMER 2022 | 37

counter where we are doing a land office business with people wanting to do 35,000, or maybe it’s a 100,000, but they spread it out over eight months. So, they can’t use a standard contract.

In addition to the many listed contracts that we could talk about, you also have over the counter.

Even some of our biggest clients are using them if they have a specific deal that they don’t want to just average into their pricing and they want to keep it separate.

is going to be. I think we’re in for a long period of uncertainty and, therefore, relatively high volatility as well.

WHAT SIZE OPERATION BENEFITS FROM LOOKING INTO HEDGING TO STABILIZE VOLATILITY? Everybody is exposed to market volatility. Now, some guys say, ‘I’m going to avoid that and buy fixed price.’ Well, that’s all fine, until you come into a period when we’ve decided everything is cool and prices fall apart on you, and we’ve seen that happen. In 2008 we saw prices fall two bucks or more, and they were locked in at ridiculous prices—levels where a few of them are no longer in business and have been absorbed.

I don’t want to sound trite, but I think there’s a place for everybody in hedging.

HOW CAN A LOWER VOLUME OPERATION TAKE ADVANTAGE OF HEDGING? The Merc with its 42,000-gallon contract is extremely important because it allows you to execute so fast. But if you’re smaller than that, we now have contracts available which are over the 38 | FMN Magazine SUMMER 2022

DO YOU NEED A LOT OF IN-HOUSE EXPERTISE TO HEDGE BEYOND WHAT MIGHT BE TYPICAL OF THE INDUSTRY? I would say it’s not been a difficulty. The customers we have don’t have big departments.

The biggest companies don’t have that many people involved in their hedging operations.

Even Southwest Airlines has relatively few folks involved in it, and Southwest has done very, very well with hedging over the years.

Like everybody else we stopped in-person education. But in May we had the first of our renewed series on hedging training. And if you go to these, you’ll learn everything from what’s a futures contract, an option, a long, a short and how you can use it in your business. Do you want to offer a cap? And if you do, how do you want to do it intelligently?

I FIRST BECAME AWARE OF THE USEFULNESS OF HEDGING RELATIVE TO HEATING FUELS, WHERE FUEL RETAILERS WANTED A STABLE PRICE TO OFFER THEIR CUSTOMER TO HEAT A HOUSE OVER THE WINTER. I ASSUME YOU GET INTO THE SAME OPPORTUNITIES AT THE WHOLESALE MOTOR FUELS SIDE. Those guys do all kinds of interesting things.

Sometimes they’ll sell options to bring in cash so they can reduce costs. If you understand FuelsMarketNews.com

PHOTOFRIDAY/SHUTTERSTOCK

I’ve been trying to get everybody to focus on the fact that we may, in fact, not be having further globalization, and, if anything, perhaps the reverse.

THE IDEA OF HEDGING CAN BE INTIMIDATING FOR THOSE WITHOUT A FINANCIAL BACKGROUND, WHICH CAN ENCOMPASS SMALLER OPERATIONS. WHAT WOULD BE AN ARGUMENT FOR THOSE FOLKS? Well, if you’re exposed because it’s intimidating, how does bankruptcy hit you? How much more boldly can I put it? Ultimately, you get into a situation where your customers find themselves with somebody who is protecting themselves and can meet the market on pricing. If you can’t and you have to shut down for a period, what happens? What kind of business is that even for the big guys?

how futures, contracts and options on futures contracts work, there’s no end to what you can do. You can limit your own risk. You can define it. Of course, the more you define it, the less risk you have or profit you’ll make, too. But that’s also something that you have to understand.

There’s no reward without some risk. If you’re so risk averse that you can’t handle any, you’re going to find yourself in a worst position because then you’re completely at the mercy of the markets.

WHAT DO YOU SEE LOOKING TO THE FUTURE? You remember George Orwell’s 1984? It divided the world up into interest blocks, and they were in constant conflict with each other. Now, everybody at the time said, this is ridiculous.

We’re beyond that. We got into a more globalized world, where we are opening boundaries. There is the EU, and we’ve had that for decades. Now, it’s just kind of accepted that you can take cargo from Spain and deliver it into Poland without

much difficulty. That’s been a tremendous boom to European growth. And there was maybe the idea that we were in a new era and one where there would be no more [major] war. I think that is one of the reasons that the Ukraine situation is so particularly interesting at the present time.

And then you realize you still have nutcases like Putin. And you see growing unease out of China.

I’ve been trying to get everybody to focus on the fact that we may, in fact, not be having further globalization, and, if anything, perhaps the reverse.

Keith Reid is editor-in-chief of Fuels Market News. He can be reached at kreid@fmnweb.com.

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FMN Magazine SUMMER 2022 | 39

Can E-Fuels Help Solve Climate Change?

G

lobal dependence on fuel makes it imperative for cleaner, more innovative methods of fuel production. The fuel industry needs to move away from current methods of production to improve issues surrounding climate change. Electric fuel is a possible option for green fuel production. Electric fuel (e-fuel) is produced from hydrogen and carbon dioxide through electricity that is derived from renewable energy sources. The primary method involves producing hydrogen and combining it with carbon dioxide to produce fuels like gasoline, diesel and kerosene.

The gaseous or liquid fuels produced are carbon-neutral, meaning there are no net greenhouse emissions according to the EFuel Alliance.

The goal is for e-fuels to replace fossil fuels and potentially even biofuels. Methods like natural gas reforming have high carbon emissions and are a big contributor to climate change. A

40 | FMN Magazine SUMMER 2022

carbon-neutral method of fuel production is highly advantageous and can greatly benefit the environment. However, the production of e-fuels depends on the sustainability of renewable energy sources; as such, e-fuels have risks associated with costs and efficiency. The replacement of current fuel production is a difficult task and may not come to fruition for several years.

Electric fuels are a promising technology, but to fully understand their potential, the process needs to be analyzed. The primary component is green hydrogen produced from renewable energy.

The hydrogen is combined with carbon dioxide, which is most commonly obtained from the air but can also be extracted from carbon capture systems or industrial exhaust gases. The ability to use carbon dioxide from the environment and apply it to synthetic fuel production is highly advantageous for providing fuel and reducing greenhouse emissions.

FuelsMarketNews.com

With innovation and support, electric fuels could one day be a carbon-neutral alternative to fossil fuels.

By Dr. Raj Shah, Muqsit Khan, Blerim Gashi, Dr. Vikram Mittal

FuelsMarketNews.com

FMN Magazine SUMMER 2022 | 41

E-FUEL BENEFITS Electric fuels are similar to their conventional counterparts. The similarities between the products allow for existing technology to be incorporated into e-fuel production, supporting the global transportation of e-fuels, which boosts the economy according to VDA, the German Association of the Automotive Industry.

However, it shouldn’t be lost that the primary benefit of e-fuels is environmental friendliness.

This is the determining factor for making e-fuels viable and standard. Additionally, e-fuels are associated with better storage capacity because of the high energy density. The compatibility allows for several applications in approximately a billion vehicles. Countries with large renewable energy sources can produce large amounts of e-fuels and transport them to less developed countries. International usage will result in a global decrease in carbon emissions and will help create a greener planet. The benefits of e-fuels are numerous, and advancements in technologies will only create more advantages.

42 | FMN Magazine SUMMER 2022

PRACTICAL USE AND TECHNOLOGIES The utility of e-fuels hinges on several factors.

The state of matter is a critical factor for applying e-fuels. Different alternative fuels have different properties, such as efficiency. These differences can help make sure e-fuels are being advantageously utilized and optimized. The types of fuels discussed are separated by state of matter: solid, liquid and gas.

Solid fuel is quite popular in energy-demanding applications, especially electricity production. The main goal that e-fuels can accomplish is neutralizing the large amounts of carbon emissions produced in power plants.

Solid e-fuels depend on proper waste management and treatment.

Liquid fuels are mainly used in vehicles like cars and trucks. Alternative liquid fuels may not carry the same importance because electric vehicles are being standardized. Nevertheless, liquid fuels are still necessary currently and continue to be valuable for situations where EVs are lacking.

Lastly, gaseous fuels are used in gas turbines and steam boilers. Hydrogen, ammonia and biogas are common gaseous fuels that are beneficial for applications like transport.

FuelsMarketNews.com

PREVIOUS SPREAD AND THIS PAGE: MARCUSMILLO/GETTYIMAGES

Countries with large renewable energy sources can produce large amounts of e-fuels and transport them to less developed countries.

WITH BENEFITS COME RISKS There are various benefits of electric fuels, but the associated risks must also be examined. The current issues with e-fuel risks are linked to cost and the lack of political framework. E-fuels are costly, and it’s difficult to compete with conventional current fuel production methods. It could potentially take decades for e-fuels to be competitive.

The cost of renewable energy is still relatively expensive when compared to electricity from fossil fuels. In addition, the electrolysis production process is expensive because of the high cost of catalysts and electrolyzers. Another critical issue is the current low efficiency of e-fuel production.

According to the International Council on Clean Transportation, e-fuel production efficiency is only about 50%. The process seems inefficient, and viability seems grim, especially when compared to other popular alternatives.

Regardless, e-fuels still have potential. The price of renewable electricity is decreasing with respect to time. Research and innovation are needed for technologies that create an environment where e-fuels can flourish.

TECHNOLOGIES WITH ALTERNATIVE FUELS Fuel cells are a common technology that will greatly benefit from alternative fuels like e-fuels. Currently, fuel cells depend on hydrogen, which is already having a commercial impact. Hydrogen has a big role in fuel cell development because of its use in Proton Exchange Membrane (PEM) fuel cells and Solid Oxide (SO) fuel cells. Additionally, hydrogen is one of the most common components of e-fuels. According to the study “A Review on Alternative Fuels in Future Energy System,” integrating the two ideas will result in fuel cells with an efficiency of 50-60%.

Ammonia has the potential to also be incorporated into fuel cells. Electric ammonia is easy to transport and store. What’s more, under the proper methods, the fuel can be carbon neutral, making it more impactful. However, the review found ammonia to be less efficient than hydrogen. The alternative fuel’s efficiency is only between 39-50%. However, there is a possible solution to low efficiency. Ammonia can be strictly used as an energy carrier and can be reformed to hydrogen when applied in fuel cells. This technique reduces energy spent and potentially boosts efficiency by upward of 20%, according to further research published in ACS Sustainable Chemistry & Engineering.

Internal combustion (IC) engines can utilize liquid e-fuels on a commercial scale. The crucial benefit of incorporating e-fuels into IC engines is the significant reduction in carbon emissions. The quality of fuel, including the viscosity, flash point and density, can determine the usefulness of e-fuels in engines.

E-fuels are satisfactory for use in IC engines and pass the minimum requirements; however, the quality of e-fuel is still behind when compared to fossil diesel. The use of e-fuels would be detrimental to the engine’s efficiency, and a reduction in carbon emissions is unable to make up for the loss as the Future Energy Systems review

indicates. However, the combination of conventional fuel and e-fuels is still a valid competitive option on the commercial scale.

The efficiency of mixed fuel is slightly lower than conventional fuel, but the reduction in carbon emissions is worth the minor loss.

However, carbon emissions are still present, and if a green future is the goal, then mixed diesel will not remain satisfactory. As environmental issues worsen, the needfulness for green alternatives surges. Overall, further research and improvements are needed before e-fuels could be independently employed in IC engines.

The last application discussed for e-fuels is gas and steam turbines. These turbines mainly rely on solid e-fuels. The use of solid e-fuels is very similar to liquid e-fuels. The ability to mix with conventional fuel is advantageous in reducing carbon emissions, and efficiency is only slightly hindered. However, solid e-fuel usage shares the same drawbacks; solid e-fuels need to be independently used in the future to effectively neutralize carbon emissions. The addition of gaseous fuels along with solid fuels can help the issues with gas and heat turbines.

The ability to combine the two will significantly increase efficiency because of better combustion.

Additionally, with the help of gaseous e-fuels, the entire operation may become carbon neutral, according to the Future Energy Systems review.

Other techniques can help further reduce carbon emissions in turbines utilizing mixed fuels.

The use of amine scrubbing for carbon dioxide removal is potentially useful. Also, hydrocarbon content can be increased by using co-pyrolysis with biomass at high temperatures. The increase in hydrocarbon content increases combustion and efficiency. However, these methods produce a few minor drawbacks that require improvements.

The addition of gaseous e-fuels results in greater acidification than conventional fossil fuels. This shortcoming can result in greater costs and reduce efficiency long term.

E-fuels are costly, and it’s difficult to compete with conventional current fuel production methods.

FuelsMarketNews.com

FMN Magazine SUMMER 2022 | 43

These multiple technologies can potentially benefit from the use of e-fuels. The mutual advantage between these technologies is the significant reduction in carbon emissions. The central purpose of e-fuels is to neutralize overall carbon emissions, and it seems that with sufficient time and research, this goal can be achieved. E-fuels appear to have possible use in future technologies, but current systems lack adequate support. The applications and chemistry of e-fuels are apparent, but the economic portion needs to be evaluated.

Dr. Raj Shah is a director at Koehler Instrument Company. He is an elected Fellow by his peers at IChemE, CMI, STLE, AIC, NLGI, INSTMC, Institute of Physics, The Energy Institute and The Royal Society of Chemistry. An ASTM Eagle award recipient, Dr. Shah recently coedited the bestseller, “Fuels and Lubricants handbook,” details of which are available at https://bit.ly/3u2e6GY.

Dr. Vikram Mittal is an assistant professor at the United States Military Academy in the Department of Systems Engineering. He earned his doctorate in Mechanical Engineering at the Massachusetts Institute of Technology where he researched the relevancy of the octane number in modern engines.

Blerim Gashi is a chemical engineering student from SUNY, Stony Brook University, where Drs. Shah and Mittal are on the external advisory board of directors.

Muqsit Khan is a chemical engineering student from SUNY, Stony Brook University.

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INDUSTRY NEWS ADD SYSTEMS ANNOUNCES SYGIC INTEGRATION

ADD Systems, a supplier of back-office and mobile software solutions for the petroleum and convenience store industries, announced a new integration with Sygic, a worldwide supplier of professional GPS navigation for fleets. The combined solutions enable users to optimize routes and maximize profitability according to vehicle parameters and truck-related attributes. Drivers will benefit from premium functionalities, including offline maps, the most accurate ETA and lane assistance.

GORMAN-RUPP AGREES TO ACQUIRE FILL-RITE

The Gorman-Rupp Company, a designer, manufacturer, and international marketer of pumps and pump systems, has agreed to acquire the assets of FillRite and Sotera (“Fill-Rite”), a division of the Tuthill Corp., for $525 million. When adjusted for about $80 million in expected tax benefits, the net transaction value is roughly $445 million. Gorman-Rupp expects to fund the transaction with cash on-hand and new debt. Subject to customary closing conditions and necessary regulatory approvals, the transaction is expected to close in the second quarter of 2022.

D&H UNITED ACQUIRES COCHISE

D&H United Fueling Solutions, a provider of petroleum fueling and EV charging system service, equipment and installation in the Southwest, has acquired Cochise Contractors, Services and Petroleum Equipment of Phoenix, Arizona. Cochise is a full-service turnkey petroleum industry supplier covering the entire state of Arizona. The combined companies will have about 570 team members, including 400 field technicians with 16 branches operating across the Sun Belt and Mountain West.

The acquisition of Cochise further diversifies the company’s customer base, provides expansion in a key strategic growth market and broadens the company’s services.

VEEDER-ROOT AND TOTAL METER SERVICES INTRODUCE ADDITIVE INJECTION SYSTEM

Veeder-Root, a provider of fuel management technology, and Total Meter Services (TMS) have partnered to launch an Additive Injection System that automates the injection of additives into fuels, such as gasoline and diesel. This enables retailers to buy fuel off the rack and create premium and Top- Tier-compliant offerings that differentiate their brands and drive consumer loyalty at lower costs. The AIS is designed around a flexible architecture that can be configured to meet the needs of any site type. It uses 46 | FMN Magazine SUMMER 2022

a combination of proprietary software, instrumentation and integration with Veeder-Root automatic tank gauges to customize and elevate fuel quality. AIS gives retailers complete and automated control over the additization process, alleviating the need for intervention by store personnel or fuel delivery drivers.

PALMDALE OIL SELECTS IRELY FOR NEW ERP SYSTEM

Palmdale Oil Co. has selected iRely LLC, a privately held global provider of innovative software solutions for petroleum distributors and convenience stores, as its partner of choice for its comprehensive back-office solution. Palmdale Oil is a family-owned distribution business with 38 years of experience meeting industry-specific fuel, oil and chemical needs. Palmdale will utilize iRely’s comprehensive warehouse management system that will automate logistics, inventory planning and billing, reducing process time from days to minutes.

Palmdale’s business model includes the complexity of hedging in its daily activities, enabling the company to leverage iRely’s integrated hedging and risk management modules.

Palmdale also will tap into iRely’s automated document processing and its CRM mobile functionality for its on-the-go sales team.

ACE APPOINTS LAMBERTY CMO

The American Coalition for Ethanol (ACE) has tapped Ron Lamberty as chief marketing officer. Lamberty was senior vice president and market development director for ACE. Separately, Ashley Borchert, former digital marketing and social media intern at Midcontinent Communications (Midco), has been named communications manager.

FUEL REWARDS PROGRAM ADDS NEW BRANDS

PDI, a management software company, has added new brands to the Fuel Rewards program, allowing consumers to earn rewards by fueling up at Shell and shopping the everyday brands they love across categories including grocery, banking, dining, fitness, automotive services and more. Recently added brands to the Fuel Rewards program include Bank of America and Advance Auto Parts. They join existing brands such as T-Mobile, AAA, Stop and Shop, Giant, Dunkin’ and Planet Fitness to create one of the largest and broadest lists of options for consumers in the industry. The Fuel Rewards program at Shell was also named the top Loyalty Program in the Gas and Convenience category of the 2021 Loyalty Report by Bond Brand Loyalty.

FuelsMarketNews.com

REG LAUNCHES BRANDED FUEL PRODUCT LINE

REG has introduced four high-quality, cleaner fuel brands to the market. These include: InfiniD biodiesel for use in most diesel applications; PuriD next-generation biodiesel for use in higher biodiesel blending year-round in most markets and for blending with renewable diesel; VelociD clean-burning, renewable diesel that can be blended at almost any level; Ultra Clean BlenD 100% renewable fuel made from a blend of VelociD and BeyonD low fossil carbon Sustainable Aviation Fuel.

LEIGHTON O’BRIEN APPOINTS CHRIS COOPER AS CEO

Leighton O’Brien, a fuel analytics software and field technologies provider, has appointed Chris Cooper as chief executive officer. Cooper is currently the company’s chief operating officer and takes over from co-founder and CEO Reed Leighton, who will become executive chair of the board. Leighton also will continue directing business development in the U.S. and will provide strategic guidance on global market growth opportunities. Cooper has been with the company for almost three years, first as global president of field technologies before being promoted to COO in late 2020.

OUR ADVERTISERS

COMDATA PARTNERS WITH MOTORQ FOR EV FLEET MANAGEMENT

Comdata, a FLEETCOR company and a leader in payment innovation, has launched a new solution in partnership with Motorq, a connected-car data and analytics company. This solution would enable the capture of charge event data directly from electric vehicles and allow for fleet managers to accurately pay employees for EV charging costs—even when employees charge company vehicles at home. Comdata’s “Charge Anywhere” solution, powered by Motorq, helps to remove charging as the biggest barrier for EV adoption.

INCHARGE ENERGY OFFERS FLEET CHARGING AS A SERVICE

InCharge Energy, a fleet electrification services provider, announced the launch of its latest turnkey solution, InCharge as a Service. This EV charging subscription provides commercial fleets the infrastructure they need pegged to an uptime standard and paid for on a monthly or variable basis, without directly owning and operating the infrastructure themselves. InCharge as a Service is an option for fleets wanting a flexible EV charging solution that will scale as they add more EVs to their ranks. InCharge Energy bundles all the costs of an EV charging infrastructure into a monthly fee that varies based on utilization, making it simpler for fleets to forecast and shifting the cost from a capital expenditure to an operating expenditure.

Thank you to these advertisers who have demonstrated their support of the fuels industry by investing in Fuels Market News.

ADD Systems...............................................................................................Back Cover addsys.com

NACS GLOBAL..........................................................................Inside Back Cover

AMERICAN COALITON FOR ETHANOL...........................................................25

NACS MEMBERSHIP................................................................................................45

flexfuelforward.com

www.convenience.org

CUMMINS & WHITE........................................................................................................44

NORTHWEST PUMP....................................................................................................5

www.cumminsandwhite.com

www.nwpump.com

IRELY............................................................................................. Inside Front Cover

OPIS, A DOW JONES COMPANY .....................................................................33

www.irely.com

info.opisnet.com/fuel-retailer-rankings

LOCK AMERICA, INC................................................................................................32

SOURCE NORTH AMERICA CORPORATION................................................39

www.petrodefense.com

www.sourcena.com

MIDCONTINENTAL CHEMICAL COMPANY INC............................................3

TRINIUM TECHNOLOGIES..................................................................................... 24

www.mcchemical.com

www.triniumtech.com/fuel

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www.convenience.org/world

FMN Magazine SUMMER 2022 | 47

REMEMBER THIS?

The First Economy Cars Arrive

BY KEITH REID

T

he October 1957 issue of NPN magazine touted: “Small Car Boom: It’s Raising New Problems for You.” At first glance the article could serve as a parallel to the current, aggressive CAFE standards which, despite the buzz over EVs, represent the most significant impact on gallons sold in the United States in the near future. However, it also provides parallels to the state of EV penetration today.

America was undergoing an enormous economic boom, and the 1950s and 1960s was an iconic era for the U.S. automobile. Size, power and opulence were features the public wanted, and Detroit certainly delivered. As a perfect example, the year this article was written saw the launch of the classic ’57 Chevy, which offered the brand’s first V8 since 1918, with up to 220 horsepower and “hot” performance at the time (in exchange for 13 mpg fuel economy). Gasoline averaged 0.31 cents per gallon, which adjusted for inflation is about $3 per gallon. Not particularly cheap, but then times were good.

That was not the case in Europe, which was slow to recover from World War II. Cheap to buy and cheap to operate were the basic requirements for an

automobile for most Europeans. A number of these models were imported to the United States at an “extraordinary” level, at least historically.

Economy car sales were on the rise from a flat average of 25,000 between 1951 and 1954, which had sharply jumped to an estimated 200,000 units by 1957. Still, that only represented 3% of total U.S. sales (comparable to EV sales today).

Most of the import brands were operating on borrowed time in the U.S. due to almost legendary unreliability. MG lasted a while, Jaguar is still around after changing hands several times.

Volvo, Mercedes and BMW (the article listed the extraordinarily quirky Isetta, which helped BMW recover post war) built their success over the decades that followed, though with a focus on luxury and performance over economy. Most notable was the venerable Volkswagen Bug, which stayed in production internationally until 2010.

Who was buying these cars? The article quoted auto executives as saying these “cheap” cars were a perfect “second car” for many budgets. Similarly, they offered first-time car buyers a new alternative to a used car.

The article cited a poll by Fortune

magazine showing that 49% of small car buyers listed economy of operation as their primary motivation, 20% ease of handling, 19% cost and 3% simply wanted to be “different.” Interestingly, California and the Northeast were the primary adopters.

U.S. automobiles at the time averaged about 15 miles per gallon, and some import brands could practically double that, saving owners about $100 a year (about $1,000 in 2022 dollars). It should be noted that a lot of the performance cars produced by Detroit at the time also required a higher grade of fuel for their higher compression engines.

The idea that gasoline price was driving buyers to these vehicles was seen as ludicrous in the fuels industry.

As one marketer noted, “We only make the kind of gasoline required for the cars being produced. If people want fuel economy, they could have had it long ago.”

Wikipedia shows economy cars reached 14% penetration by 1959.

Detroit began producing more “compact” cars throughout the 1960s, though they were hardly economy or compact in true sense. Even a neat little two-seat sports car like the 1955 Thunderbird had become a typical four-seat sedan by 1958 (and saw a big increase in sales). All that would change with the 1973 oil crisis and the inflation-heavy economic downturn of the era. Americans suddenly demanded affordability and economy, and Detroit was left scrambling. The cars to fill the need would come from Japan with Toyota, Datsun (Nissan) and Honda.

And this time they offered reliability and quality as well (aside from some initial rust-proofing issues.)

Keith Reid is editorin-chief of Fuels Market News. He can be reached at kreid@fmnweb.com

For more than 100 years, from its founding in 1909 to when it went out of business in 2013, National Petroleum News (NPN) documented the rise of petroleum marketing and retailing in the United States. NACS, PEI and The Fuels Institute have catalogued the rich history of NPN in its entirety. Each issue of Fuels Market News will look back at the history of our vibrant industry, through the eyes of NPN, to see how it reflect the issues, challenges and opportunities we face today.

48 | FMN Magazine SUMMER 2022

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