Fuels Market News Magazine Winter 2022

WINTER 2022

PETROLEUM EQUIPMENT SUPPLY CHAIN

FLEXIBILITY IS KEY

In the Lead:

TXB’s Kevin Smartt

Canceling Corrosion

How to Maintain Fuel Quality

800.909.7845 skybitzsales@ametek.com

Increase Margins and Cash Flow Utilizing a Digital Logistics Platform

Our powerful Petroleum Dispatch and Delivery logistics platform helps you exceed your margin per hour benchmarks and quickly realize the benefits of converting to a digitized process. Monitor the status of every tank across your customer base and build dense, efficient and profitable routes. Everyone in the company, from driver to back-office becomes more productive and efficient.

SkyBitz Inc., a wholly-owned subsidiary of Telular Corporation, a business unit of AMETEK, Inc. AMETEK Inc. (NYSE: AME) a leading global manufacturer of electronic instruments and electromechanical devices with annualized sales of approximately $5 billion.

From monitoring to reconciliation, only SkyBitz delivers it all. Our SMARTank, SMARTLynx, and SMARTruck solutions streamline communication between your other software solutions so you can transform your operation into a nearly paperless business environment.

Visit skybitz.com or give us a call. We’ll get your business delivering better margins and profitability.

WINTER 2022

28 Strengthening the Chain COVER STORY

Amid raw materials shortages, extended lead times and price increases, suppliers and distributors say to over prepare and over communicate.

34 In The Lead

From Texas Born to McGraw Oil, Kevin Smartt’s companies serve North Texas and Southern Oklahoma.

40

FuelsMarketNews.com

Canceling Corrosion

A Fuels Institute report covers best practices to keep diesel fuel quality high and liability low.

FMN Magazine WINTER 2022 | 1

4 6 8 12

From the Editor Meet the FMN Editorial Council NACS News Fuels Institute The Carbon Reduction Conundrum

14 Fueled for Thought RETAILER OPERATIONS 16 Empty Shelves and Trucks

Eight tips for dealing with out-of-stocks and other supply chain issues.

18 Burden of Truth

Inadequate diesel dispenser filtration regulations put onus on stations to protect vehicle equipment.

16

COMMERCIAL FUELS 20 Diesel Demand Looks Hot in 2022

Analysts see robust and growing demand for future diesel products in on- and off-road applications.

22 Supply Chain Issues Hit Fuel Haulers

Truck and tank manufacturers are limiting orders and delaying equipment deliveries.

20

FUEL MARKETERS 24 T echnology Solutions for Fuel Efficiency

How companies can tackle jobsite fuel storage issues to prevent losses and mitigate costs.

26

Beyond the Supply Chain Technology alone cannot create transformation within a business.

46 Industry News 48 Remember This?

26 2 | FMN Magazine WINTER 2022

FuelsMarketNews.com

When will you be able to offer customers the low carbon fuels everyone is after?

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

FROM THE EDITOR

Supply Chain Blues At this time a year ago, I was excited at the prospect of replacing my fiveyear-old obsolescent gaming computer graphics card with one of the new “breakthrough” offerings from the two major card manufacturers. This year, with an even newer generation of graphic card preparing to be launched, I’m still using my now six-year-old obsolescent gaming card.

Between chip shortages, COVID stuck-at-home demand, logistics failures, scalper “bots” buying up every card that became available online within seconds, and the fact that a popular and profitable crypto currency is still mined using graphics cards made virtually all performance cards—old tech and new tech—unobtainable. I’d not only given up on a replacement by this Christmas, but I’m skeptical that anticipated supply breakthroughs will occur late in the first quarter of 2022.

My little tale of woe is all too common for a range of consumer products, and unfortunately, many of the products the industry relies on both inside the store and on the forecourt. This sets the primary theme of our coverage this issue of the challenges facing the industry and its customers.

Roy Strasburger talks about how retailers can work around shortages on the store shelves. A lot of that involves communicating with your customers and then meeting expectations as best you can with a willingness to be creative.

Maura Keller interviewed distributors about the supply chain issues they are experiencing with fuel infrastructure equipment. No single manufacturer was highlighted because this is, by and large, a universal issue and one with specific and variable product shortages.

Steve Bennett looked at trucks and trailers and some of the issues that 4 | FMN Magazine WINTER 2022

EDITORIAL

Hopefully, today's supply chain disruption will settle out in 2022. have arisen in meeting marketers and jobbers needs for fuel transport.

In Remember This, I delve into the National Petroleum News archives to explore the most intense period of supply chain interruption the industry has ever faced—World War II. In the process of focusing most of our mammoth (at the time) industrial manufacturing capacity on war production, anything but the absolute necessities of a normal consumer/ commercial economy were a low priority. People on the homefront found themselves rolling out of the Great Depression with full employment and more money than they had on hand for over a decade, but with very little to spend it on. That would launch the economic boom of the late 1940s and 1950s, as well as the golden age for the U.S. automobile, gas stations and fuel jobbers.

Hopefully today’s supply chain disruption will settle out in 2022. With that in mind, Happy New Year from FMN!

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, Robert Ingham, Maura Keller, Joseph Kratochvil, Jeff Lowe, Joe O’Brien, Allen Schaeffer, Roy Strasburger DESIGN Imagination www.imaginepub.com Cover image by Thinkstock 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 Fuels Market News Magazine is published quarterly by the National Association of Convenience Stores (NACS), Alexandria, Virginia, USA. Subscription Requests: circulation@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.

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

He can be reached at kreid@fmnweb.com.

1600 Duke Street, Alexandria, VA, 22314-2792

PUBLISHED BY

FuelsMarketNews.com

EDITORIAL COUNCIL

Meet the 2022 FMN Editorial Council

F

uels Market News welcomes the 2022 Editorial Council, which will provide insights and ideas to the FMN editorial team to help expand the quality of our publications and consider innovative developments for the brand. The council consists of a blend of marketers/retailers and supplier/vendors. Here are the 2022 members:

RETAILER/MARKETER MEMBERS Josh Asche, senior vice president, COO, Hy-Vee Fast & Fresh Hy-Vee Inc., parent company of Hy-Vee Fast & Fresh, is an employee-owned corporation operating more than 280 retail stores across eight Midwestern states with sales of $11 billion annually and more than 91,000 employees. Hy-Vee ranks in the Top 10 Most Trusted Brands and has been named one of America’s Top 5 favorite grocery stores. Hy-Vee provides fuel, including E85 and diesel, at 179 locations across eight states and has recently been recognized as one of the best gas station brands in the nation

by USA Today and GasBuddy. In 2020, it began offering full-service at some pumps for customers who were concerned about COVID-19 and continues the service today, by request. The company also offers the Hy-Vee Fuel Saver + Perks which allows customers 6 | FMN Magazine WINTER 2022

to earn discounts at the pump and get exclusive deals with the purchase of certain items.

Mark Fitz, president, Star Oilco Star Oilco is a Portland, Oregonbased petroleum company that was founded in 1936.

It is one of the largest distributors of biodiesel to both retail and commercial customers in the Portland area. Every diesel engine in the company’s fleet runs on biodiesel. Star Oilco also provides cardlock fuel services through Pacific Pride, as well as on-site and bulk delivery of motor and heating fuels.

With over 40 years of experience in cardlock systems, Star Oilco has been providing fuel cardlock services since before computer-aided cardlock security was even an option. It later pioneered commercial cardlock security via software options. In Oregon and Washington, heating oil is diesel fuel. In these states, the allowance for pollutants in the fuel is more flexible for heating and boiler fuels. Star Oilco is committed to only delivering the cleanest, most advanced fuel possible: ultra-low sulfur diesel.

Derek Gaskins, chief marketing officer, Yesway Yesway, based in Fort Worth, Texas, owns and operates 402 convenience stores in Texas, New

Mexico, South Dakota, Iowa, Kansas, Missouri, Wyoming, Oklahoma and Nebraska, including the 304-store Allsup’s Convenience Stores chain.

Yesway’s promise is to make its customers’ lives easier, their day a little bit more pleasant and give them a terrific shopping experience. This includes customer service, quality product selection, expanded foodservice and clean and well-lit facilities.

In addition to competitively priced gasoline, Yesway stores offer a fleet management card program where fleet operators can control all of their vehicle-related expenses in one convenient and flexible program. Cards can be used at any fueling location where WEX is accepted. For consumers, the Yesway Rewards program rewards its most loyal customers. Use the Rewards card in stores and at the pump to earn points.

Kevin Smartt, CEO and president of TXB Stores (Texas Born) TXB is a 47-store convenience store chain with locations across Texas and Oklahoma.

Over the past 15 years, the chain has doubled in size, developed a unique customer loyalty program and is currently implementing cutting-edge point-of-sale technology.

Headquartered in Spicewood, Texas, the company is a leader in charitable giving programs. TXB was previously Kwik Chek, which began rebranding in 2020 to emphasize the company’s FuelsMarketNews.com

EDITORIAL COUNCIL

Texan roots and values that the brand has been built around: integrity, hospitality and authenticity. Smartt is also the owner and CEO of McCraw Oil Company, a regional supplier of propane for home heating and commercial autogas, wholesale fuel and lubricants in Texas and Oklahoma; McCraw Transport Inc., a fuel delivery company; and Texas Born, a food product company. McCraw Oil Company also offers onsite fueling and Go Fuel Card.

VENDOR/SUPPLIER MEMBERS Regina Balistreri, director of marketing, ADD Systems Since 1973, ADD Systems has been a leading provider of back office and mobile software for companies in the commercial bulk fuels, heating oil, propane, HVAC, wholesale petroleum, lubricants distribution and convenience store industries. ADD’s software solutions improve clients’ interactions with their customers and bring efficiency, ease of use and greater profits to their organizations. In addition to its software, ADD offers full-service IT support, including cloud hosting, networking, firewall setup and more, with an overall emphasis on security. ADD’s on-site and remote training is tailored to the specific needs of each individual client. Additionally, ADD clients are welcomed into a strong community of users through its ADD User Group, a self-directed, ADD-supported group of users who assist each other and influence ADD product development.

FuelsMarketNews.com

Gary Lackore, director of sales – Americas, MidContinental Chemical Company Inc.

Since 1994, MidContinental Chemical Company (MCC) has built a reputation for delivering superior results for its customers. MCC views itself as a problem solver, not simply a provider of commodity chemicals.

MCC manufactures and distributes high quality petroleum additives that enhance the performance of fuels and lubricating oils in vehicles, equipment and machinery. Its products, innovative programs and specialized services reduce the cost of operations and improve profitability for its customers. MCC creates value in numerous ways. For example, gas and diesel engines perform more efficiently with enhanced fuels; engines experience less wear and tear due to superior lubricants, etc. MCC has sales offices located strategically throughout North America to provide comprehensive solutions and services to customers.

Kaylie Scoles, marketing director, RDM Industrial Electronics Inc.

RDM is a premier U.S. manufacturer of the wired Classic and Performance

Series intercoms. RDM also manufactures speakers, call boxes and accessories. RDM additionally manufactures Defender One® pump security products, patented to stop a transaction in progress and deactivate a breached fuel dispenser. Retrofit alarm kits are available for new and existing fuel dispensers. The company is also a leading remanufacturer of petroleum electronic equipment.

RDM specializes in circuit boards, intercoms, displays, printers, card readers, motors, keypads and overlays, POS systems, consoles, tank monitors and probes with new replacement products available. RDM has five fully stocked locations in Colorado, Florida, Indiana, North Carolina and Texas.

RDM employs only degreed technicians and engineers and offers free technical support and training.

Jen Threlkeld, product marketing manager, Dover Fueling Solutions Dover Fueling Solutions, part of Dover Corporation, comprises the product brands of Wayne Fueling Systems, OPW Fuel Management Systems, ClearView, Tokheim, ProGauge and Fairbanks, and delivers advanced fuel dispensing equipment, electronic systems and payment, automatic tank gauging and wetstock management solutions to customers worldwide. Headquartered in Austin, Texas, DFS has a significant manufacturing and technology development presence around the world, including facilities in Brazil, China, India, Italy, Poland, the United Kingdom and the United States.

FMN Magazine WINTER 2022 | 7

Get Key Insights at the NACS SOI Summit The NACS State of the Industry (SOI) Summit is the only convenience and fuel retailing industry event that delivers insights—not just data—on the latest financial, operational, categorical, market and consumer trends in convenience.

Registration for the 2022 NACS SOI Summit is now open. The NACS SOI Summit will be held April 12-14 at the Hyatt Regency O’Hare in Chicago. The event will mark the first live SOI Summit since 2019 and the first to be presented exclusively by NACS. Get a first look at 2021 consumer, financial and operational data months before the NACS State of the Industry Report is released. Benchmark your business against competitors in your region and across the country. Get ahead of trends before they get ahead of you with the latest economic, consumer, convenience and adjacent channel trends that impact your business.

Retailers and industry experts will share insights that will help you capitalize on trends, avoid pitfalls and

optimize the performance of your business.

Denton Cinquegrana, chief oil analyst, OPIS, will headline the Fuel Outlook session on day two of the summit. The industry all-star speaker lineup also includes Jared Scheeler, NACS chairman and CEO of The Hub Convenience Stores Inc.; Charlie McIlvaine, chairman and CEO of Coen Markets Inc.; Chuck Maggelet, CEO of Maverik Inc.; Lori Stillman, NACS vice president of research, and more. Plus hear category management insights directly from leading retailers including Casey’s, Loop Neighborhood Markets, Newcomb Oil, OnCue Express, Parkland, Sheetz, Square One Markets, St. Romain Oil Company, TXB and Yesway.

Who should attend? Leading retailers and industry partners who want to make data driven decisions and appreciate the value of using insights and benchmarking to improve their businesses.

Go to www.convenience.org/events/SOI to learn more and register.

Technology Roadmap

Technological change happens fast, and for convenience retailers, prioritizing which innovations to seize—and which to bypass—is yet another challenge in the race to stay ahead of the competition, especially as the pandemic forced quick shifts in operations and services to meet customer demands.

What was important before the pandemic, for instance, implementing technology to support loyalty rewards programs, in many cases has been overtaken by newer customer-facing initiatives like omnichannel shopping and enabling contactless payments to speed in-person checkout.

8 | FMN Magazine WINTER 2022

NACS Research surveyed convenience retail technology leaders this past spring to gather feedback on these challenges and the current landscape of convenience retail technology. The results and recommendations are shared in a white paper, “Building Convenience Retail Success Through Technology,” available at www.convenience.org/ research.

The findings help retailers set priorities for implementing specific technologies based on convenience retailer business impact ratings. Benchmarking helps identify whether your company is ahead or behind other retailers in adopting certain technologies, understanding what to consider before implementing a technology and initiating the request for proposals for new technology providers.

You can also download the Convenience Retail Technology Implementation Mapping & RFP Guide—a benchmark on the current landscape of tech adoption and what retailers should consider when scoping for their next tech provider and building a technology RFP. The technology adoption analysis is presented as a radar graphic that covers the implementation progress, business impact and implementation difficulty for 41 technologies across six key categories.

FuelsMarketNews.com

AIRCRAFT FUELS I GASOLINE I ETHANOL I BIODIESEL I FUEL OIL I PETROCHEMICALS I MANY OTHER PETROLEUM BASED PRODUCTS

Gorman-Rupp manufactures a complete line of self-priming centrifugal and positive displacement pumps designed for pumping non-abrasive petroleum products.

From transferring fuel at bulk plants to off-loading rail cars, we have the pump to safely meet your fuel transporting needs. All backed by the best distributor network and parts inventory in the industry. Contact your local Gorman-Rupp distributor today for more information on our line of petroleum-handling products.

GORMAN-RUPP PUMPS

GRpumps.com 486

© 2022 The Gorman-Rupp Company.

P.O. Box 1217 I Mansfield, Ohio 44901 I USA 419.755.1011 I grsales@gormanrupp.com Gorman-Rupp Pumps USA is an ISO 9001:2015 and an ISO 14001:2015 Registered Company

Educate in 2022 Mark your calendars for executive education opportunities from NACS coming up this year.

There’s a program for every leader on your team, as well as yourself. NACS Executive Education has partnered with world-class, Ivy League institutions—boasting some of the best educators in the world—to provide exclusive training to shape the forward-thinking, determined leaders who will illuminate and seize the opportunities of tomorrow.

The NACS Executive Education series is the only comprehensive, multidiscipline industry curricula that offers customized, Ivy League training exclusively for senior convenience management.

When it comes to transformative learning for the

topmost sector of the convenience channel, NACS brings 60 years of industry experience and the global network to deliver an unparalleled, prized education experience.

The NACS Master of Convenience designation acknowledges the leaders from around the globe who have invested in their personal leadership development and attended three or more NACS Executive Education programs.

Each immersive program is designed to actualize potential. Which one will you and your team attend?

For questions or to register, contact Brandi Mauro, NACS education manager, at bmauro@ convenience.org or (703) 518-4223.

2022 Executive Education November 6-11 NACS Innovation Leadership Program at MIT MIT Sloan School of Management Cambridge, Mass.

July 17-22 NACS Financial Leadership Program at Wharton The Wharton School University of Pennsylvania Philadelphia, Pa. Sponsored by

July 24-29 NACS Marketing Leadership Program at Kellogg Kellogg School of Management, Northwestern University, Evanston, Ill. Sponsored by

10 | FMN Magazine WINTER 2022

Sponsored by

July 31-August 4 NACS Executive Leadership Program at Cornell Dyson School, Cornell University Ithaca, N.Y. Sponsored by

November 13-18 NACS Women’s Leadership Program at Yale Yale School of Management New Haven, Conn.

Sponsored by

FuelsMarketNews.com

fees with our non-cash adjustment.

NAB makes it easy to offset your credit card processing fees with our non-cash adjustment.

REDUCE YOUR CREDIT CARD PROCESSING FEES ELIMINATE UP TO 100% ELIMINATE UP TO 100%

OF YOUR CARD PROCESSING FEES! FEES! OF CREDIT YOUR CREDIT CARD PROCESSING NAB makes it easy to offset your credit card processing NAB makes it easy to offset your credit card processing fees with our non-cash adjustment. fees with our non-cash adjustment.

Rates as low as .05%*

Accept EMV/NFC (Apple Pay, ETC.) EBT, Snap, Checks and more

Pay-at-the-pump compatible

Next Day Funding with weekend settlement

FREE Credit Card Terminal Placement Wireless/Landline/High-Speed/Dial-Up

FREE Credit Card Terminal Placement Wireless/Landline/High-Speed/Dial-Up

Easy setup (with no setup fees and quick approvals)

Easy setup (with no setup fees and quick approvals)

Seamless integration with your current POS

Seamless integration with your current POS

$295** towards your early$295** termination feeyour (if you have one) withfee your current towards early termination (if you haveprocessor one) with your current processor Access to Payments Hub –Access our secure, online Hub merchant portal online merchant portal to Payments – our secure, Free paper**

with 4G / Wifi

Free paper**

• FREE NFC & COMPATIBLE WITH EMV-Ready Terminal COMPATIBLE WITH FREE Credit Card Terminal Placement Wireless/Landline/High-Speed/Dial-Up FREE NFC & EMV-READY FREE NFC & EMV-READY FREE Credit Card Terminal Placement Wireless/Landline/High-Speed/Dial-Up & Pin Pad or wireless GAS CARDS GAS CARDS TERMINAL & PIN PAD TERMINAL & PIN PAD Easy setup (with no setup fees and quick approvals) terminal.

Easy setup (with no setup feesEXPRESS and quick approvals) WRIGHT WRIGHT EXPRESS OR WIRELESS OR FLEET CARDS WIRELESS FLEET CARDS Seamless integration with your current POS • Accept payments VOYAGER Seamless integration with your current POS VOYAGER TERMINAL TERMINAL AND MORE… AND MORE…your early termination fee (if you have one) in-store, online, $295** towards with your current or processor $295** towards your early termination fee (if you have one) with your current processor on-the-go.

Access to Payments Hub – our secure, online merchant portal Access to Payments Hub – our secure, online merchant portal Free paper** Free paper** GROW YOUR BUSINESS. PARTNER WITH

GROW YOUR BUSINESS. PARTNER WITH NAB TODAY! OPTIONAL PROGRAMS:

866.481.4604 866.481.4604

NAB TODAY!

Make the same profit margin with • Curbside Ordering WWW. NY FREE NFC & EMV-READY payments!

WWW. NYNAB.COM FREE NFC & EMV-READY GAS CARDS & PIN PAD • PAD Point of Sale Systems GAS CARDS TERMINAL TERMINAL & PIN COMPATIBLE cash COMPATIBLE andWITH non-cash WITH

• Cash Discount

©2019 North American Bancard is a registered ISO of Wells Fargo Bank, N.A., Concord, CA, and The Bancorp Bank, Philadelphia, PA. American Express may require separate approval. *Durbin regulated Check Card percentage rate. A per transaction fee will also apply.

OR WIRELESS OR WIRELESS TERMINAL VOYAGER VOYAGER AND MORE… TERMINAL as you do with cash payments AND AND MORE… MORE… with our cash discount program.

WRIGHT EXPRESS ©2019 North American Bancard is a registered WRIGHT ISO of Wells Fargo Bank, N.A., Concord, CA, and The Bancorp Bank, Philadelphia, PA. WRIGHT EXPRESS EXPRESSapply. This advertisement is sponsored by an ISO of North American Bancard. Apple Pay is a trademark of Apple Inc. **Some restrictions FLEET CARDS American Express may require separate approval. *Durbin regulated Check Card percentage rate. A per transaction fee will also apply.

FLEET FLEET CARDS CARDS VOYAGER NAB makes it easy to make the same profit fromBancard. non-cash payments **Some restrictions apply. This advertisement is sponsored by an ISO of North American Apple Pay is a trademark of Apple Inc.

Recommendations, Solutions & Integrations

GROW YOUR BUSINESS. PARTNER WITH NAB TODAY! GROW YOUR BUSINESS. PARTNER WITH NAB TODAY!

866.481.4604 866.481.4604

WWW.WWW. NYNAB.COM NYNAB.COM

©2021 North American Bancard is a registered ISO of Wells Fargo Bank, N.A., Concord, CA, and The Bancorp Bank, Philadelphia, PA., BMO Harris N.A., Chicago, IL and Citizens Bank N.A., Providence, RI. American Express may require separate approval. *Durbin Bancard regulated Card per Concord, transaction feeThe willBancorp also apply. restrictions ©2019 North American is aCheck registered ISOpercentage of Wells Fargorate.

Bank,AN.A., CA, and Bank,**Some Philadelphia, PA. American Express mayisrequire separate regulated Check Card percentage transaction fee will alsoInc. apply. apply. This advertisement sponsored byapproval. an ISO*Durbin of North American Bancard.

Apple rate.

Pay Aisper a trademark of Apple **Some restrictions apply. This advertisement is sponsored by an ISO of North American Bancard. Apple Pay is a trademark of Apple Inc.

The Carbon Reduction Conundrum

BY JOHN EICHBERGER

G

lobal leaders have made it clear that they want to transition away from hydrocarbons to address their concerns about climate change. But sharp increases in energy prices and, in some regions, actual energy shortages, in the latter half of 2021 compelled some to at least temporarily reverse course and increase their reliance on fossil fuels. According to a recent report from the United Nations, “The world’s governments plan to produce more than double the amount of fossil fuels in 2030, with just a modest decrease in coal production.” There are many factors that have contributed to this development, but I would suggest that one of the catalysts for the situation at the end of 2021 very well could have been the COVID-19 pandemic shutdown.

In a nutshell, the disruption in miles traveled and fuel consumption was acute, causing a sharp decline immediately followed by a relatively quick recovery in demand. The energy sector took a significant economic hit, and one might expect the resumption of demand would inspire increased production. But in the shadow of global political priorities indicating that traditional energy shall be phased out, energy companies may be less motivated to ramp up production, despite higher prices and increased demand (compounding this is increased scrutiny from investors to be more diligent about financial returns).

FIGURE 1 | Gasoline Demand and Miles Traveled (2020) 9,500

270,000 250,000

8,500

230,000

8,000 7,500

210,000

7,000

190,000

6,500 6,000

170,000

5,500 5,000

J

F

M

A

M

J

Gasolline Demand

12 | FMN Magazine WINTER 2022

J

A MilesTraveled

S

O

N

D

Thousand Miles Traveled

Thousand Barrels/Day

9,000

150,000

SOURCE: US DOT FEDERAL HIGHWAY ADMINISTRATION U.S. ENERGY INFORMATION ADMINISTRATION

THE HIT TO THE GUT If we look at the first quarter of 2020, the experience was certainly shocking.

In the first month (April) following the issuance of general stay at home orders, U.S. total miles traveled dropped 25% and brought the first quarter drop in miles traveled to 34%. But the market recovered relatively quickly, at least compared to the beginning of the year. By July 2020, total vehicle miles traveled and overall gasoline demand had recovered significantly to exceed January’s total.

When compared to 2019, however, the recovery was not as strong. Year over year, gasoline demand in July remained 9% below the same month in 2019, and miles traveled remained nearly 30% below the prior year. Fast forward to summer 2021, however, and miles traveled and gasoline demand were on par with summer 2019. Oil prices, on the other hand, represented a different story.

A ONE-SIDED RECOVERY Without a doubt, the impact of the COVID-19 shutdown was immediate and severe and showed up in the price of oil. Yet, as demand and travel began to recover, the production and supply of oil did not keep pace. Following the precipitous drop in prices in 2020, oil prices recovered to pre-pandemic levels

by March 2021 and have continued to climb until passing the $80 per barrel mark in October. Why? A review of domestic production statistics provides some insight. After dropping 20% in May 2020 compared to 2019, crude oil production has recovered slightly. For the first seven months of 2021, production was only off 2019 levels by 8%. Yet, that 8% is significant when compounded with the impact of the prior year, which was also down 8%. The result is an oil market deficit, with supplies in July 2021 trailing 2019 by nearly 2.5%. This may not seem like much, but it was enough FuelsMarketNews.com

FIGURE 2 | Domestic Crude Oil Production 410,000 390,000 370,000 350,000 330,000 310,000 290,000 270,000 250,000

J

F

M

A 2018

M

J 2019

to help drive prices to current levels.

Meanwhile, domestic oil and natural gas rigs in production remain 37% below pre-pandemic levels. Again, one might ask—why? And that is when we look to governments.

THE GLOBAL LEADERS’ CONUNDRUM Consider if you were engaged in crude oil production. When the pandemic hit, the economic impact it had on your business was staggering. If you were able to hang in there and survive, the inconsistent policies affecting the global recovery provided no certainty regarding the future of your business.

While ground travel seems to have recovered domestically, air travel is not projected to return to “normal” until 2022 or 2023. Meanwhile, although prices have recovered, the messages you are receiving from the government about the future demand for your product create even greater uncertainty.

World leaders have declared that the path to address climate change is to move away from petroleum.

Governments overseeing more than 50% of the global automotive market have declared their intent to ban sales of combustion engine vehicles within the next 20 years. In the U.S., President Biden signed an executive order setting the goal of displacing 50% of combustion engine sales by 2030. Meanwhile, FuelsMarketNews.com

J 2020

A 2021

S

O

N

D

U.S. ENERGY INFORMATION ADMINISTRATION

investors are moving funds away from hydrocarbon investments, and the increasing pressure of ESG policies is rendering oil companies personae non gratae. Where is the motivation to increase production? Higher prices at the pump accelerate the economic competitiveness of electric vehicles, yet they impose a disproportionately negative impact on lower income consumers who may not be able to afford higher fuel prices or a new vehicle, be it combustion or electric. How will leaders balance encouraging a market evolution to address their climate concerns while protecting the financial viability of consumers and preserving equitable access to affordable and reliable transportation?

A PATH FORWARD The answer must be found in a more dynamic approach to carbon mitigation than simply banning combustion engines and promoting zero emissions vehicles. The reality is, even if EVs were the best solution, the transition will take decades. In the meantime, affordable transportation is the backbone of economic growth. Leaders must adopt a more comprehensive view of the transportation sector, identify solutions that fit specific vehicle duty cycles and achieve emissions reductions in the most affordable manner possible.

Higher prices at the pump accelerate the economic competitiveness of electric vehicles, yet they impose a disproportionately negative impact on lower income consumers.

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

FMN Magazine WINTER 2022 | 13

Taking a Fresh Look at Renewable Fuels It’s time to refocus on fuel supply vulnerabilities, environmental policies and contingencies.

BY JOE O’BRIEN

I

f ever there was a bigger picture that is difficult to bring into focus, that picture is the United States renewable fuel program.

In its current form, the Renewable Fuel Standard significantly influences the composition of the U.S. motor fuel supply by mandating renewable fuel volume obligations. The program teeters on a combination of greenhouse gas emission reduction goals, consumer demand, automotive technology, agricultural market conditions, regional fueling capabilities and federal oversight, which oscillates with the political leanings of the administration in office at the time.

That notwithstanding, because such a critical resource rests in the balance, care must be taken to advance a fuel/energy program that is as thoughtful in its implementation as it is ambitious in its efforts to reduce carbon emissions. With the Environmental Protection Agency set to review the RFS program for 2022 amid continued efforts to set biofuel volume requirements for 2023 and beyond, now is a judicious time to take a step back and reconsider the dynamics at work to bring the bigger picture back into focus.

14 | FMN Magazine WINTER 2022

VULNERABILITIES TO ADDRESS The eventual depletion of global oil reserves isn’t the only fuel supply vulnerability facing the United States.

If you accept that climate change is plausible, then you must also consider how changes to the environment could affect fuel production. Conditions for growing feedstocks used in biofuels could diminish production capabilities.

Extreme weather conditions may test the reliability of refining infrastructure. And it’s not just unstable weather conditions the fuel industry needs to be concerned about—digital threats also persist. The Colonial Pipeline cyberattack that shut down the largest fuel pipeline in the U.S. illustrated what’s at stake. And while the breach demonstrated susceptibility in the petroleum sector, it is by no means the only critical energy source that is susceptible to a hack.

These types of vulnerabilities have the potential to compromise the supply of fuel for large regions of the country.

This is an extremely important consideration because the United States may be moving toward a hub-andspoke model of fuel distribution. This distribution model will maximize economically viable energy sources that are available in geographical areas. For example, electric vehicle charging is likely to expand where wind farms and solar energy support the electrical grid.

However, if there were a catastrophic failure of the electrical grid in those regions, supply challenges could cripple a region dependent on that form of transportation.

ENVIRONMENTAL POLICY APPROACHES Some of the discussion about new policies to reduce greenhouse gases centers around low-carbon fuel standards, such as those adopted by California, Oregon and Washington. Minnesota FuelsMarketNews.com

PHOTO©GETTY IMAGES/© SANTIAGO URQUIJO

FUELED FOR THOUGHT

is considering a standard that would require a 20% reduction in the “aggregate carbon intensity” of transportation fuel supplied to the state by the end of 2035.

The Minnesota intensity measure factors in pollution beyond tailpipe emissions. For instance, pollution resulting from electricity generation for EVs or producing crops for biofuels also would be counted. Under the Minnesota bill, each supplier of fuel, whether that be ethanol, gasoline, electricity or natural gas, would be assigned a score representing the life-cycle greenhouse gas output of their product. The Minnesota standard

Basics of RFS, RVOs and RINs RFS: Administered by the U.S. Environmental Protection Agency, the Renewable Fuel Standard requires refiners or importers of gasoline or diesel to meet specified renewable fuel quotas. The refiners and importers are known as obligated parties.

The RFS is designed to reduce greenhouse gas emissions by lowering the total quantity of petroleum-based fuel introduced into the marketplace.

RVOs: Renewable Volume Obligations are the amount of renewable fuel the EPA requires refiners and importers to blend into petroleum fuels. The volume the EPA requires from each obligated party is based on a percentage of the company’s petroleum product sales.

RINs: Obligated parties who are unable to meet the RVO set by the EPA may buy blending credits known as Renewable Identification Numbers, alphanumeric codes assigned to every gallon of renewable fuel and which are tradable commodities. Obligated parties who blend more than the volume required by the EPA will have a surplus of RINs that they may sell to other parties, including companies unable to meet their RVO.

FuelsMarketNews.com

would also craft a cap-and-trade system for accountability similar to the EPA’s Renewable Identification Numbers (RINs). Suppliers who meet pollution standards would earn credits, and those who don’t would need to buy credits to make up the deficit.

CONTINGENCY PLANNING Minnesota’s proposed approach to reducing carbon emissions would seem to level the playing field among alternative energy sources vying for market position. A level of diversification is also important to energy security, but left unguided, the diversity may not be enough to substantially mitigate the effects of a widespread regional fuel supply failure. For example, let’s say the Midwest light-duty vehicle fleet becomes fueled by 50% ethanol blends, 30% biodiesel, 10% EV, 5% CNG and 5% hydrogen fuel cells. If 50% of the vehicles rely on ethanol blends alone and the ethanol supply is jeopardized, more than half of the Midwestern vehicle fleet is vulnerable to a fuel shortage.

Many people view hybrid vehicles as a steppingstone to a vehicle fleet 100% powered by an alternative energy source designed to lower greenhouse gases. However, this viewpoint may be short-sighted, failing to recognize the value hybrids could bring toward developing a U.S. vehicle fleet—and energy supply—that enables consumers to pivot amid challenging supply conditions. Just as renewable fuels didn’t expand based on consumer demand alone, the adoption of a hybrid fleet would require substantive policy support. The resiliency of the nation’s fuel supply may depend on it.

Note: At the time of this writing, the EPA had proposed extending RFS obligations for 2019-21 and for 2022 and beyond.

Care must be taken to advance a fuel/ energy program that is as thoughtful in its implementation as it is ambitious in its efforts to reduce carbon emissions.

Joe O’Brien is vice president of marketing at Source™ North America Corporation. Contact him at jobrien@ sourcena.com or visit sourcena.com to learn more.

FMN Magazine WINTER 2022 | 15

RETAIL OPERATIONS

Empty Shelves and Trucks Eight tips for dealing with out-of-stocks and other supply chain issues.

BY ROY STRASBURGER

“O

h, dearest father. If my heart’s greatest desire is not fulfilled by Christmastide, surely I will perish from this earth and my ghostly remains will wander these lands for the rest of eternity.”

This, or something like it, is what my then six-year-old daughter told me many years ago when she was informed that the hottest Christmas toy on the market was sold out everywhere in our fair city. The fact that there was a supply issue did not ease her pain or lessen the consumer demand element of the market economics that ran through our house.

However, through heroic efforts I 16 | FMN Magazine WINTER 2022

was able to save Christmas for her that year. (By the way, the toy was never seen after the second week of January.)

This was the memory I recalled when I heard that the product shortages and supply issues that we have been facing may extend through the holiday season and affect Christmas shopping.

In one form or another, we have been dealing with product issues in almost all our stores. They range from not being able to get items because of actual product shortages (drink cups) to products not being delivered because of the lack of truck drivers (soft drinks and groceries).

No one wants empty shelves in their

store. It obviously directly impacts sales because the items that you don’t have can’t be sold. But it also indirectly affects your sales since it gives your customer the impression that you are going out of business and the items that are left on the shelf may be old or unsalable.

I thought it might be helpful to share some of the approaches that we have taken to deal with our supply issues.

Communicate. The first thing you should do is talk to your supplier to find out the issues they are facing. It is in your supplier’s best interest to get items delivered to you—that is how they make their money—and they should be willing to work with you to come up with creative solutions.

Understanding the problems they are facing will help you determine your response.

Plan. If the supplier is having issues with transportation, plan your ordering to anticipate delivery delays. If you can only get a delivery once every two weeks rather than weekly, you need FuelsMarketNews.com

PHOTO©GETTY IMAGES/ CRAIG HASTINGS

RETAIL OPERATIONS

to double up on your orders to have enough product on hand until the next delivery. This may affect your cash flow as your cost per order will increase, and you may need to find additional storage space since you will have more stock on hand. You may also be able to arrange with the supplier to pick up your products at their warehouse.

Substitute. If the supplier is having a supply issue, meaning that they can’t get the product into their warehouse, talk with them to see if they have something in stock that can act as a substitute. Having a different brand of the same type of product is better than not having the product at all. Most customers will accept a short-term alternative for their favorite brand if they understand the problems you are facing. The same is true with foodservice supply items— what does your supplier have that can be a reasonable substitute but performs the function safely? Is it time to reevaluate how you are currently packaging your foodservice products and change to more cost efficient or sustainable packaging?

Change. If your supplier can’t help you, start sourcing alternatives. There may be other distributors that can provide you with some, or all, of the items you need. There may also be vendors that will provide you with only what you are missing—such as a specialty cup supplier.

Shop. The wholesale clubs can be a good source of products. I don’t usually recommend this alternative as it takes your time away from the store, causes your product selection to be inconsistent because you can only buy what the big stores have in stock, and may also FuelsMarketNews.com

have an impact on your cash flow. But desperate times can call for desperate measures.

Share. Be creative and ask your customers to help you out. I was recently in a store where they were running short of coffee cups and the operator was offering customers a 50-cent discount if they brought in their own cup.

In this case, the customer and retailer were sharing the burden to meet the customer’s need.

Reset. If you know you are going to be out of stock of an item for a while and you don’t have a suitable replacement, do a reset of your shelves to cover the gaps. You can expand to three or four facings of a product to take up more shelf space. This makes your shelves look fuller and gives the image of you being in stock. Also, make sure all your shelves are fronted—everything is pulled up to the front of the shelf edge.

Communicate, again. If you notice that customers cannot find what they are looking for, be sure to tell them that the product has been ordered, your supplier is out of stock, when you are expecting to receive the next delivery and that you are sorry for the inconvenience. You can also put pictures of the missing items on the shelf with a message that you are currently out of stock. This will let customers know that you are still carrying their favorite items, and they are temporarily unavailable.

Your customers will be understanding, and once you have explained the situation to them, will be sympathetic.

But you won’t escape the look of disappointment in their eyes—like that of a six-year-old girl.

Most customers will accept a shortterm alternative for their favorite brand if they understand the problems you are facing.

Roy Strasburger is 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 WINTER 2022 | 17

RETAIL OPERATIONS

Burden of Truth Inadequate diesel dispenser filtration regulations put onus on stations to protect vehicle equipment.

BY ROBERT INGHAM

D

iesel marketers take notice: The Fuels Institute’s Diesel Fuel Quality Council (DFQC) has suggested that state dispenser filtration standards may not be stringent enough to sufficiently protect modern diesel engines.

Most people know that filters, including fuel dispenser filters, are rated to capture a certain size and quantity of contaminants. This capability is represented by the filter’s micron rating. A micron is equal to one-millionth of a meter or 1/25,000th of an inch. (To put micron size in perspective: Human hair is usually between 40 and 100 microns, a red blood cell measures 8 microns and bacteria is 18 | FMN Magazine WINTER 2022

2 microns.) Unfortunately, there is growing evidence that microscopic particulate in high-pressure common-rail (HPCR) fuel systems can lead to big problems with diesel vehicles, including clogged fuel filters, fuel pump failures and injector failures.

In fact, the DFQC report “Diesel Storage Tanks: Industry Practices to Minimize Degradation and Improve Fuel Quality” suggests that a 30-micron dispenser filter may not provide HPCR engines adequate protection from contaminated diesel that can cause such problems and that 10-micron dispenser filters may be necessary to capture damaging particulate.

DISPENSER FILTRATION STANDARDS When it comes to fuel dispensers, there are numerous entities influencing filtration requirements. As such, it can be challenging for station operators to know if they are adequately filtering their fuel. That said, fuel site operators are generally obligated to meet the expectations of these three parties: • The filtration requirements established by their state • The warranty conditions issued by the dispenser manufacturer, and/ or the requirements for meeting the manufacturer’s National Type Evaluation Program (NTEP) certificate of conformance • Customers’ expectations for high-quality fuel There are several recognized technical standards that prompt the need for adequate filtration practices. For instance, ASTM International standards, which are frequently adopted by states by incorporation or by reference, require finished fuel to be free of adulterants and sediments. In terms FuelsMarketNews.com

RETAIL OPERATIONS

of regulating operational standards for fuel dispensers, two main documents are frequently referenced as authorities on the subject: NIST Handbook 130 and NIST Handbook 44.

The requirements in NIST Handbook 130, which publishes regulations about metrology and fuel quality and includes standards for dispenser filtration, are fairly clear-cut. The 2020 NIST Handbook 130, which is the most current version available at the time of this writing, states that “all biodiesel, biodiesel blends, diesel, and kerosene dispensers shall have a 30 micron or smaller nominal poresized filter.” The handbook requires all gasoline, gasoline-alcohol blends, gasoline-ether blends, ethanol flex fuel, and M85 methanol dispensers to have a 10-micron or smaller nominal pore-sized filter. About half of the states in the U.S. adopt some version of the fuel dispenser filtration standards established by The National Conference on Weights and Measures in NIST Handbook 130.

NIST Handbook 44 is not as direct in its dispenser filtration specification. This document covers technical requirements for weighing and measuring devices, including standards for dispenser totalizers, displaying prices and transactions, and accuracy classes and tolerances for flow rates. While dispenser filtration standards are not discretely addressed in NIST Handbook 44, it does require that “a device shall be installed in accordance with the manufacturer’s instructions, including any instructions marked on the device.”

Fuel site operators will also need to meet requirements issued by the manufacturer. This usually comes in the form of warranty verbiage that stipulates the dispenser must be maintained in accordance with the manufacturer’s service instructions, which may specify the micron rating that the dispenser’s filters need to meet. For dispenser manufacturers issued a certificate of conformance by a National Type FuelsMarketNews.com

Evaluation Program (NTEP) lab for a dispenser that was approved with a specific filter, the filter needs to be included and maintained to meet the obligations of the certificate.

Agency-issued penalties for failing to meet the minimum standards for dispensers range from “red-tagging” a dispenser to civil penalties. However, risking long-term customer loyalty and brand trust may ultimately be the most damaging consequence.

RECOMMENDED BEST PRACTICES Although fuel may become contaminated at many points in the supply chain, the fuel dispenser represents the last chance to prevent the contaminants from damaging vehicle equipment. The DFQC report states that high-volume fuel sites such as travel centers reported few complaints about fuel quality during research for the report, suggesting that fuel sites that do not quickly turn over their diesel supply are more susceptible to water contamination, microbial growth and sediment.

While the DFQC report recommends that fuel site operators use 10-micron filters to capture smaller particles in diesel, 2- or 5-micron dispenser filters will provide the greatest protection.

For instance, PetroClear’s 40502P and 40502P-AD spin-on dispenser filters capture particulate 2 microns (nominal) or larger, and the 40505P and 40505W-AD filters capture particulate 5 microns (nominal) or larger. These capabilities provide diesel customers high levels of protection against contaminants that will pass through 10-micron and 30-micron filters and can lead to vehicle malfunctions and engine repairs.

To learn more about dispenser filtration micron rating requirements in the U.S., see PetroClear’s State-by-State Guide to Dispenser Filter Regulations at https://petroclear.com/academy/ state-by-state-guide-to-dispenser-filter-regulations.

There is growing evidence that microscopic particulate in HPCR fuel systems can lead to big problems with diesel vehicles, including clogged fuel filters, fuel pump failures and injector failures.

Robert Ingham is business director for PetroClear, a brand acquired

by First Brands Group LLC, a global automotive parts manufacturer. He has more than 25 years of experience serving filtration and automotive technology markets.

FMN Magazine WINTER 2022 | 19

COMMERCIAL FUELS

Diesel Demand Looks Hot in 2022 Analysts see robust and growing demand for future diesel products in on and off-road applications.

BY ALLEN SCHAEFFER

L

ike other industry sectors, diesel engine and equipment makers are working through supply chain issues for parts and key components like computer chips, but overall demand for new advanced diesel engines, vehicles and equipment is strong in all sectors and forecast to continue to grow. Today’s advanced diesel engines offer customers more fuel 20 | FMN Magazine WINTER 2022

efficiency, more productivity and lower operating costs compared to previous generations of the technology. Here’s a look at three sectors and insights on their current and future markets.

Power Generation: Demand for generators continues, particularly in the residential segments. Diesel dominates the larger range of generators (51 to over 1,001 kilowatt) for commercial

applications. Overall production of diesel generator sets grew in every category (2021 vs. 2020), according to data from Power Systems Research. In the 51-300 kW size, diesel dominates all fuel types with a 12.3% production increase to over 41,000 units for 2021 compared with 2020. Positive influencers in this segment include low financing rates, outlook for boosted investments from the new infrastructure legislation in Congress, growing concern about weather events and reliability of the electrical grid.

Medium- and Heavy-Duty Trucks: The medium- and heavy-duty truck industry is limited only by supply chain issues. Diesel is the predominant technology for the heaviest commercial trucks—Class 7 and 8—powering over 94% of vehicles. According to ACT FuelsMarketNews.com

COMMERCIAL FUELS

PHOTO©GETTY IMAGES/BESPALYI; GETTY IMAGES/ JOSEF MOHYLA

Research, demand for Class 8 vehicles today is the best in history. Forecasts are for full-year 2021 at 288,000 units and for 2022 at 359,000 units.

Demand for commercial vehicles is a function of freight demand and driver and equipment availability, all three of which were impacted by the pandemic.

Freight demand has skyrocketed, but drivers are in short supply. While expectations are for GDP at 6.2% in 2021 and 2022, freight growth is projected at 12.6% and 5.8%, respectively.

Off-Road Construction and Farm Equipment: Machines and equipment that plant and harvest crops, move earth to build homes and infrastructure and handle materials have been critical during the pandemic.

Most are powered by diesel, and all are expected to see growth in 2021, with sales of earthmoving equipment projected to be up 20%, material handling equipment up 30% and agricultural equipment up 10%, according to data from yengstassociates.com.

Tremendous investment in compact construction equipment in 2020 drove sales up 10%, sustaining the equipment sector that saw drop-offs in other larger machine categories. In the agriculture sector, sales of tractors under 40 horsepower were higher in 2020 and are expected to level out in 2021.

Future drivers include the overall state of the economy, federal spending and the potential for investment from the infrastructure bill now in Congress.

Today’s advanced diesel engines offer customers more fuel efficiency, more productivity and lower operating costs compared to previous generations of the technology.

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.

FuelsMarketNews.com

FMN Magazine WINTER 2022 | 21

COMMERCIAL FUELS

Supply Chain Issues Hit Fuel Haulers Truck and tank manufacturers are limiting orders and delaying equipment deliveries.

BY STEPHEN BENNETT

T

railer and tank manufacturers are coping with challenges as we kick off 2022. These include chassis allocations and longer lead times for materials and components, sometimes triggered by labor shortages. Together, these factors can result in not just higher costs and higher prices but also extended wait times for fulfillment of equipment orders placed by fuel transporters and fuel marketers.

22 | FMN Magazine WINTER 2022

“The supply of trucks is choked very significantly,” Jason Soulon, sales manager for Westmor Industries, said. Baltimore, Maryland-based Westmor supplies its customers with a diverse group of product offerings used to store, transport and dispense petroleum, propane and other liquids and gases. “Those who need trucks into next year, and possibly into 2023, are going to be very challenged,” Soulon said. OEMs have set

chassis allocations, allowing customers between 35% and 50% of what annual orders averaged over two or three years, Soulon said. For fuel transporters and marketers, that means, “If they do obtain a truck, it’s going to be at a very high price relative to pre-allocation days,” he said.

Trey Hill, owner of upfitter Oilmen’s Truck Tanks, in Spartanburg, S.C., said, “That seems to be pretty common across the industry, as most of the dealers have been placed on allocation.”

And the impact is predictable. “That just kind of trickles down,” he said.

“Mainly where it’s showing up for us in our industry is in hiccups that have been experienced as far as trucks being delivered,” Hill said. “And the chip shortage has caused problems for the truck manufacturers, which has in turn delayed them being able to get the trucks to us in time to get the tanks and equipment onto those FuelsMarketNews.com

COMMERCIAL FUELS

PHOTO©GETTY IMAGES/THINKSTOCK IMAGES

chassis. So, yes we’re experiencing that.”

To a lesser degree, some of Oilmen’s Truck Tanks’ equipment suppliers “have run into some problems,” Hill said. “But the trucks are the biggest challenge.”

John Pruchnicki, a partner in Coastal Carriers, a fuel carrier based in Ansonia, Connecticut, has been living with the tighter vehicles and tanks market.

The carrier operates a fleet of about 35 trucks. At the lowest point of economic activity during the pandemic, roughly half of that equipment was “parked,” Pruchnicki said. As fuel demand and economic activity surged, Coastal brought that idled equipment back into service, and though it has ordered new equipment, it has been slower in arriving than before the pandemic. “A truck we were supposed to get two, three months ago—it’s coming in today,” Pruchnicki said in late November 2021.

Manufacturers said the current conditions are likely to continue into 2022.

“The particular challenge we foresee in 2022 is marketers who are hoping to build a truck next year, a straight truck with a truck-mounted tank, may not be able to get that product because of the chassis allocation issue,” Westmor’s Soulon said.

LABOR CONSTRAINTS Both materials and labor are tight.

“Raw materials have been tough,” Matt Niemeier, a vice president with MAC LTT, said. MAC Liquid Tank Trailer is a leading manufacturer of stainless steel and aluminum liquid tank trailers and trailer equipment.

“Especially on the stainless [steel] side but aluminum as well, our partners that do the aluminum extrusions have had a lot of challenges, primarily due to labor. We recently got a letter from one of them that they were struggling with manpower—as we are—and it’s creating lead time issues, supply issues.”

FuelsMarketNews.com

Niemeier continued, “Probably our biggest challenge has been staffing for people that fabricate and build.”

In Northeast Ohio, where MAC LTT is based, skilled workers are at a premium. “There are a lot of jobs there,” Niemeier said. “There are a lot of good-paying jobs if you’re a skilled worker. We’re competing with a lot of companies for that same workforce.”

STRONG DEMAND But he pointed to the bright side.

“With all the struggles that everyone’s having with manpower, supply chain— the demand has been great. Customer demand for the product has stayed strong. I wouldn’t have predicted with the pandemic and everything that’s happened that the business would be this strong, but it’s been remarkable.

The tank trailer, gas trailer industry has just flourished. We’ve got a lot of demand.”

Looking ahead, a company like MAC LTT, operating in the market it operates in, has a way to anticipate changes in demand, Niemeier added. Historically, there are indicators of what’s ahead, whether it’s going to be a slowdown or a pickup, he said. “We typically lag behind Class 8 truck sales, which are still strong. If we see that drop off, we typically know we’ve got a few months before we see the same thing. And even the [dry] van sales tend to trend up before us and down before us.”

Equipment specing processes tend to stay consistent and have for the most part continued to do so during the economic pickup of the past several months, according to manufacturers. The effect of the tight supply chain is that there is some buying of what’s available, some manufacturers acknowledged. “There’s been a lot of buying what dealers already have on the ground, what’s already in the pipeline,” Niemeier of MAC LTT said. “But we’ll build what the customer wants.”

Probably our biggest challenge has been staffing for people that fabricate and build. There are a lot of good-paying jobs if you’re a skilled worker.

We’re competing with a lot of companies for that same workforce.

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

FMN Magazine WINTER 2022 | 23

FUEL MARKETERS

Technology Solutions for Fuel Efficiency How companies can tackle jobsite fuel storage issues to prevent losses and mitigate costs.

BY JEFF LOWE

W

hen it comes to running a business, everything points to profitability.

Staff management, equipment efficiency and even something as simple as fueling can have a huge impact on the bottom line. In the scope of any project or job, the cost of fuel often accounts for one of the most significant expenses. When considering 24 | FMN Magazine WINTER 2022

additional factors affected by fuel availability and quality, the stakes are even higher.

From the cost of lost fuel to theft, to engine issues associated with contaminants in the fuel, to lost productivity due to lack of fuel; the storage, transportation and distribution of jobsite fuel has the potential to significantly affect the bottom line. However,

changing technology in fuel storage is helping companies tackle those issues and mitigate costs.

REMOTE TANK MONITORS The most fundamental concern with fuel tanks is making sure there are always adequate fuel levels to power the productivity of the jobsite. Without fuel, both time and money are lost.

New technology in fuel storage tanks includes remote tank monitoring systems, which allow operators to track inventory levels and location at any time, helping users take control of fuel supplies and avoid downtime associated with a depleted fuel supply.

The data is transmitted to a browser or phone app, where users can generate specific reports to enable efficient, accurate and timely refill orders. The FuelsMarketNews.com

FUEL MARKETERS

systems also help flag abnormal level changes due to theft or leaks and reduce the risk of overfill. Knowing exactly how much fuel is on hand (and the remaining capacity) also helps operators to capitalize on low prices when they appear. Personalized alerts sent as emails or texts are available for situations like above-average consumption rates, overfill incidents and more.

On a large jobsite, tank monitors use GPS to help operators precisely locate their fuel tanks. Fuel delivery trucks quickly and easily locate the truck or trailer carrying the tank, saving them the time of driving around looking for the tanks to fill.

CARD-LOCKED DISPENSE CONTROLS Loss of fuel, or fuel that goes unaccounted for, is a sometimes-overlooked expense. Losing upward of $500 a month on misplaced fuel and chalking it up to “the cost of the job” happens more than one might expect. In fact, fuel theft is nearly a $133 billion issue that includes stolen, adulterated and defrauded product. But here’s the good news: Fuel loss can be prevented, and the bottom line can be protected.

Card-locking control technology combats the potential of fuel theft by only allowing authorized individuals to access fuel. With card-locking technology offered by some manufacturers, drivers use a phone-based app to enter their driver number, vehicle number and what type of fuel they need. Only after they’ve answered the required information does the fuel pump dispenser turn on and distribute fuel.

FuelsMarketNews.com

This not only prevents loss but also helps determine which operator and equipment is using the bulk of the fuel.

This valuable information can help determine overall efficiency or even cost/price structures. In the rare event of technical difficulties, administrators simply bypass the app with a key to allow for fueling, ensuring minimal downtime.

FUEL FILTRATION UPGRADES While fuel availability and loss prevention are no-brainers in terms of impacting the bottom line, fuel filtration and quality are often overlooked.

Some may find it surprising that most diesel is delivered with a fairly “dirty” ISO rating. This has led more and more users to realize the benefits of dispense filtration. A system using contaminated fuel can damage the engine, resulting in unwanted downtime and repairs.

Engineers design new engines to meet changing environmental standards, and fuel tank manufacturers are designing filtration systems to keep up with those standards. Clean, contaminant-free fuel means higher usage time and fewer issues when it comes to dispensing.

When fuel can account for up to 50% of a job’s total operating costs, it’s important to do everything possible to protect fuel assets. Pinpointing issues—and utilizing the latest technology—is an effective way to support the bottom line. Clean, readily available fuel means project movement, and project movement means profit.

While fuel availability and loss prevention are no-brainers in terms of impacting the bottom line, fuel filtration and quality are often overlooked.

Jeff Lowe is the director of product management for Western Global, an international designer and manufacturer of tanks and equipment for fuel and fluid handling. Building on a legacy that spans five decades, Western Global offers a wide range of solutions for the safe transportation and storage of fuel, diesel exhaust fluid, lubricants and more.

FMN Magazine WINTER 2022 | 25

FUEL MARKETERS

Beyond the Supply Chain Technology alone cannot create transformation within a business.

BY JOSEPH KRATOCHVIL

O

ver the past nine months, supply chain pressures have been building, and nearly every business vertical has been affected. Everyone recognizes the situation has evolved, regardless of political affiliation, root cause identification or environmental conservation or energy independence position. The global economy is in flux, presenting unprecedented challenges sourcing supply, moving supply to manufacturers and delivering finished product to consumers.

The energy supply chain and corresponding energy distributors are the beginning (and often the end) of the supply chain for nearly every business.

The downstream energy distribution 26 | FMN Magazine WINTER 2022

industry is the life blood of the economy. When our industry struggles to find supply or deliver product it resonates in every business sector and household across the country.

Recently, I visited with a well-known and successful energy distribution executive for one of the largest energy distributors in the United States. This executive has often been my sounding board, and what I learned from him was surprising.

The biggest operational challenge to this national, multibillion gallon a year distributor is not supply chain centric or external in nature. The company has consistently grown year over year via traditional organic revenue farming and the larger dynamic growth fueled

by significant acquisitions. This growth has generated many benefits but also Image Caption Goes Here unique challenges.

What this team identified as they worked through market-induced issues were a series of organizational inadequacies and process driven inconsistencies between technologies, processes and states of technology implementation. Every geographic location managed logistics and supply differently using different technology sets. Each location struggled to utilize technology to reliably source and deliver product from terminal to end clients across the enterprise. While these challenges are exacerbated by high-velocity strategic growth, the core issues he and his team are solving for have plagued downstream energy marketers of all sizes for years.

What owners, business unit leaders and logistics groups have clamored for is a reliable, purpose-built technology platform, intentionally and intelligently implemented. They want it to drive business case specific processes from the top down throughout FuelsMarketNews.com

PHOTO©SHUTTERSTOCK/ MARQUISPHOTO

FUEL MARKETERS

the enterprise to ensure replaceable success sourcing, procuring and distributing reliable supply for commercial and consumer clients. They need visibility to verifiable metrics mined from a single source of truth, encompassing the entire business, and focused through a supply and distribution operational lens and socialized to key leaders and teams allowing them to steer the business. This is the technology they believe will change their reactionary businesses into agile, proactive enterprises.

I would suggest this is not the answer, but the outline for a technology-based, process-powered toolset to enable the solution.

Technology alone cannot create transformation within a business. The industry understands the challenges around, and the need for, efficient logistics and rolling asset management.

The need to optimize assets and reduce rolling risk is a strategic initiative for many of our clients. Businesses within this sector realize changes need to be made. Where our industry (even some of the largest businesses in this space) fail, is understanding the function that powerful technologies have for the companies that deploy them.

Technology only does what we tell it to do. If we deploy advanced logistics systems to operate the business using the same methodologies and processes of 20 years ago, we are not going to create the ability to solve the challenges of today or scale for the opportunities of tomorrow. We will have found a way to replicate current issues in a faster way.

Fortunately, my visit with this thought leader and his team was refreshing. Instead of looking to technology as a solution, he and his business unit leaders identified standardized process and process FuelsMarketNews.com

development as the key to their corporate success. They want to develop a business process review initiative for every process across every business segment of their enterprise landscape to evaluate, refine and re-tool the entire transactional flow from order entry to customer-facing delivery. Their goal is to create consistent success through highly visible, replaceable and easily trainable processes and re-tool their technology portfolio to facilitate this effort. They are transitioning away from viewing technology as an organizational “solution” and pivoting to utilizing tech as a tool to enable the business. They understand the significance of this project.

Buying and turning on new technology to try and solve problems is significantly easier than evaluating, challenging assumptions and substantively changing HOW they operationally do business and serve customers. This new approach is centered on the people working across their organization and employs continuous process improvement as the pivot point for their success and scalable growth. This concept is the definition of transformational. It has potential to create true service differentiators for customers in terms of SLAs, smooth out supply chain disruptions and allocation issues via transparent, proactive metrics and forecasting and generate increased margin captures through efficiencies and ease of culture, technology and process adoption through acquisitions.

What I heard from this team was excitement and a general enthusiasm from an organization to meet challenges in a different way. This kind of entrepreneurial, adventurous solutions-oriented approach is infectious. I certainly hope it catches on!

Where our industry (even some of the largest businesses in this space) fail, is understanding the function that powerful technologies have for the companies that deploy them.

Technology only does what we tell it to do.

Joseph Kratochvil is the CEO of WEnd Consulting. Serving coast to coast, WEnd is bringing years of consulting experience to marketers around the country who are looking to improve processes, implement software and update their technology in the fastpaced environment.

FMN Magazine WINTER 2022 | 27

Amid raw materials shortages, extended lead times and price increases, suppliers and distributors say to over prepare and over communicate.

By Maura Keller

By First Name Last Name

28 | FMN Magazine WINTER 2022

FuelsMarketNews.com

CHAIN STRENGTHENING THE

W

hen working seamlessly, supply chain management and logistics solutions effectively combine manufacturing, warehouse, distribution and transportation processes so that end users have access to products when and where they need them. But when there’s a proverbial “kink” in that chain, the entire process breaks down and can have dramatic impacts on an entire industry. Today’s supply chain issues are requiring manufacturers, distributors and end users to rethink their business processes and reevaluate their needs.

Bo Sasnett, CEO of equipment distributor and serice provier D&H United Fueling Solutions Inc., is seeing supply chain issues across a variety of products and materials. Specifically, both demand and supply chain issues have impacted fiberglass and steel storage tanks (both underground and aboveground), piping, conduit, steel for buildings, electronic parts and even fuel filters.

“There is a robust demand for the industry’s products and services. This demand, combined

FuelsMarketNews.com

with the general supply chain issues from COVID19, issues with key imported materials, logistics challenges and the general employment situation, has caused the perfect storm in not only the general economy but also our industry,” Sasnett said.

“The biggest impacts are threefold.”

First, as Sasnett explains, in some areas, retailers are facing a challenge in getting certain replacement parts. Second, retailers and commercial customers alike are having to engage in a longer planning horizon for projects. And third, supply chain issues are causing prices to increase on certain materials and products.

Bryan Kohler, vice president and general manager at Acterra Group Inc., says the biggest supply chain issue impacting the petroleum equipment industry is the procurement of materials and materials costs. The Marion, Iowa-based company is both a supplier and manufacturer in the petroleum industry.

“We typically see one cost increase a year from most of our vendors that starts at the beginning of each year. As of today, we have seen multiple FMN Magazine WINTER 2022 | 29

Our company has been proactively communicating lead times and planning with our customers.

Joe O’Brien, vice president of marketing for national equipment distributor Source North America, also points to extraordinarily long lead times on made-to-order items.

“Underground storage tanks can be a year out.

Various fiberglass pipe and fittings have unreliable supply due to manufacturers not being able to gets resins to make the items,” O’Brien said.

“Some common items for normal maintenance, such as fuel filters, are susceptible to the same kind of stockouts that surprise you when your brand of cereal or crackers is not on the shelf at your local grocery store. This makes everyone scramble, and the shortages often come with very little advance notice.”

30 | FMN Magazine WINTER 2022

THE ROOT CAUSE AND IMPACT

Historically speaking, manufacturers have relied on acquiring components and materials using just-in-time inventory models, lowering carrying costs and being more efficient (and thus more profitable).

As O’Brien stresses, this model assumes that the “tap would flow.” But between production shortages for raw materials around the world in nations affected by the pandemic, to production shortages in the U.S. to create the resins, microchips, rubber gaskets and more finished components, the mitigating factors surrounding the supply chain issues are complex.

“Many manufacturers initially told us they had labor issues that they presumed would be resolved once extended unemployment benefits expired— that reason has gone away, and they still have labor issues,” O’Brien said.

Kohler also believes what we are seeing is, in part, caused by the ongoing effects of COVID-19 and the recovery from this pandemic.

“The supply chain delays have reduced the availability of goods, which when combined with labor shortages, have caused a slowdown in production,” Kohler said. “A lot of the suppliers in this industry shut down or reduced the amount of staff allowed to work at the same time in their manufacturing facilities to be able to ensure that they were not contributing to any outbreaks within their factories.” This, of course, caused supply on hand to dwindle or be depleted.

Kohler says the most common comment he hears from companies Acterra Group currently does business with when asking how things are going is, “Great, other than trying to hire new employees, we just are not getting much for applications.”

Lead times for parts from time of order can vary tremendously, and the petroleum industry is not only affected by the petroleum equipment supply chain but also by the electrical industry supply chain.

“We are currently seeing long lead times from all of our suppliers that are impacting how quickly we are able to complete projects or even get the project started,” Kohler said. Aboveground tanks, for example, can have lead times of 12 weeks to 24 weeks, depending on tank size.

Availability of other equipment can range from in-stock to a year.

“We are working with multiple suppliers in order to find ways to overlap our supply,” Kohler said. For instance, in the past, Acterra Group had relied on one vendor for certain petroleum FuelsMarketNews.com

PREVIOUS SPREAD PHOTO©GETTYIMAGES/THINKSTOCKIMAGES

“

cost increases as our suppliers are not able to hold their costs due to the volatility of their raw materials,” Kohler said. “Of course, those suppliers are having problems with procuring raw materials, which in turn, causes longer lead times for us to procure their product and thus causes our customers to have extended wait periods.”

Acterra Group is currently unable to hold pricing for an extended period on its shop-fabricated above-ground tanks due to the volatility of the steel industry. “Our costs for steel have increased dramatically over the year compared to the same time period the last couple of years,” Kohler said.

Experts at Northwest Pump, a West Coast petroleum distributor, say raw material shortages of things like resin, steel and microchips are impacting gas stations and c-store owners’ ability to install new equipment and maintain existing gear.

“As a distributor, our takeaway to combat the supply chain issues is to over prepare and over communicate as problems arise,” a Northwest Pump spokesperson says. “This can be tricky with things changing so quickly, so overstocking items and expanding our warehouses has become our new normal.”

“

PHOTO©GETTYIMAGES/ALISTAIR BERG

Overstocking items and expanding our warehouses has become our new normal. equipment. That supplier has been experiencing issues with raw materials, so Acterra Group is now working with multiple vendors that can supply the same equipment, ensuring that the company has overlap in its supply chain.

Everyone involved in the planning for new fueling sites or major upgrades knows that their scheduling is unpredictable and subject to delays.

As O’Brien says, the most significant impact is on unexpected price increases and surcharges.

“Not only have most manufacturers had three or more announced price increases in 2021, but several have also begun applying raw material surcharges between 3% and 10% to each order shipped—and some of these were even applied unilaterally and retroactively to purchase orders placed before the surcharge was announced,” O’Brien says. “This began a cascading chain of events between the manufacturer, the distributor, the contractor and the end user customer for absorbing the extra costs of those surcharges.”

To lessen the impact of the supply chain situation on the petroleum industry, Sasnett recommends customers and distributors/service providers communicate well regarding the issues.

“Distributors and service providers should be proactive to communicate whatever the situation is,” Sasnett said. Even when lead times are not available it is critical to let all parties know of the status. In addition, try to establish a longer planning horizon for those projects that could be impacted.

“It’s also time to think ‘outside of the box’ and be creative to solve problems,” Sasnett said. “Our company has been proactively communicating FuelsMarketNews.com

lead times and planning with our customers.

We are looking for creative and alternative ways to solve supply chain issues for customers. In addition, we have invested more in our inventory to try to anticipate and have more stock of longer lead time products and materials for our customers.”

PLANNING FOR THE FUTURE

New construction and major upgrade projects within the petroleum industry are still proceeding, and the materials are being ordered and brought into a distributor and logistics provider like Source North America, but many projects will remain on hold for delivery until key items come in.

“This might be 1% or 2% of the project value, but the project can’t really start in earnest without them,” O’Brien said. “A normal project in a normal year would be handled confidently when ordering six weeks in advance—now three months would be optimistic and six months is not far-fetched—and if the project requires a tank, then it could even be a year.”

So how long is this situation going to last?

Kohler believes it’s going to get worse before it gets better.

“Based on some of what I have heard from suppliers, we will be dealing with some of these supply chain issues through 2022 before it gets better,” Kohler said. There may be a silver lining.

“I have already heard of some of our suppliers bringing some production back to the United States,” Kohler said. “If this is the case, this would be a benefit to our economy with the added jobs, FMN Magazine WINTER 2022 | 31

as well as hopefully alleviating some of the supply issues.”

Jason Blake, executive vice president at Petroleum Equipment Institute, says PEI’s members are now planning out more than two years ahead to adjust to supply chain shortages. “In some cases, they are putting projects on hold,” he said.

No one can predict how long this supply chain shortage will last, but remembering to work with the customer to troubleshoot issues and figuring out an option B or C has been Northwest Pump’s way of pivoting and moving forward. “Our customers and their feedback are the best way to get ahead of upcoming needs and frustrations,” a Northwest Pump spokesperson says. “We try to maintain a constant flow of open communication.”

Source North America’s customers realize that these shortages are not the company’s fault and are temporary, and the Source team appreciates that they need to cooperate with customers so that Source can identify the most critical items and communicate with manufacturers on those

Cvoicesw_June2021_half.pdf

1

5/12/21

items that they should produce.

As an example, a piping manufacturer might produce 150-200 separate SKUs from the same basic set of raw materials, but to keep up with demand they should focus on 10 or so.

“As a stocking distributor we can identify and advise on those 10 key items. As a distributor, we have been able to secure the resources to build up our inventories—in terms of both capital investment and physical warehouse space,” O’Brien said. “If the customer and distributor and manufacturer do truly work together, the reward is in the long-term relationship that can survive any future issue.”

Maura Keller is an award-winning freelance writer, editor, book author and proofreader with over 22 years of experience in the downstream petroleum and convenience store industries.

3:28 PM

Get inside consumers’ minds.

And shape your future accordingly.

This year, you won’t just know why.

You’ll see why.

convenience.org/voices

32 | FMN Magazine WINTER 2022 FMN_Half Horz.indd 1

FuelsMarketNews.com 1/7/2022 2:57:51 PM

2022 NPGA SOUTHEASTERN CONVENTION & INTERNATIONAL PROPANE EXPO ™

PROPANE RETURNS TO THE STAGE

Energy

Experience our

IN MUSIC CITY!

APRIL 24-26, 2022

MUSIC CITY CENTER, NASHVILLE TN FMN_Half Horz.indd 1

FMN_Half Horz.indd 1 FuelsMarketNews.com

NPGA Southeastern Convention & International Propane Expo™ is the industry’s largest event— bringing together marketers and suppliers from across the United States and beyond.

FOR MORE INFORMATION WWW.NPGAEXPO.COM

1/10/2022 10:36:07 AM

1/6/2022 4:04:24 PM FMN Magazine WINTER 2022 | 33

IN THE

LEAD From Texas Born to McGraw Oil, Kevin Smartt’s companies serve North Texas and Southern Oklahoma.

By Keith Reid

34 | FMN Magazine WINTER 2022

FuelsMarketNews.com

KEVIN SMARTT

CEO, TXB STORES AND CEO, MCCRAW OIL COMPANY

K

evin Smartt is the CEO of Texas Born (TXB), a 48-store chain with locations across Texas and Oklahoma. Over the past 15 years, the chain has doubled in size, developed a unique customer loyalty program and is implementing cutting-edge point-of-sale technology. The Spicewood, Texas, company is also a leader in charitable giving programs.

TXB was previously Kwik Chek, which began rebranding in 2020 to emphasize the company’s Texan roots and values that the brand has been built around. The evolution of Kwik Chek stores to TXB also included a new line of TXB private-label products, including jerky, trail mix, bottled water and coffee.

FuelsMarketNews.com

In addition, Smartt is the owner and CEO of McCraw Oil Company, a successful regional supplier of propane for home heating and commercial autogas, wholesale fuel and lubricants in Texas and Oklahoma; McCraw Transport Inc., a fuel delivery company; and Texas Born, a food product company. McCraw also offers on-site fueling and the Go Fuel Card.

As CEO of TXB, Smartt has helped guide the growth of the company for more than 25 years, leading the chain to double in size. Current staffing includes more than 600 professionals.

Smartt has been heavily involved with NACS and served as the organization’s 2020-21 chairman. In May 2020, he testified at a U.S. Senate hearing on behalf of NACS and the convenience and fuel retailing industry in support of liability protections for essential businesses during the COVID-19 pandemic. He also is involved with Conexxus, the Texas Fuel & Food Association and the Oklahoma Petroleum and Convenience Store Association.

FMN interviewed Smartt to tap into his insight in managing both a successful convenience store operation and a diverse wholesale and commercial fueling operation.

FMN Magazine WINTER 2022 | 35

FN: You operate a range of business units.

How are they managed under your corporate umbrella?

Smartt: It’s a more complicated universe when you operate all those things. Not just because of the extra work and manpower, but it does add complication to the ethos of all the businesses.

We keep them as separate corporations. I have a president of the fuel wholesale company, Bill Wilson, who is dedicated to running that business and driving growth and profits. I do the same with the retail business.

FMN: Even though you take point on retail, you have abundant familiarity with the wholesale side.

Smartt: Yes, I do, because that’s how the company started. When I first came into the industry, I spent several years working within the wholesale

company. I drove bobtail trucks, I fixed gasoline pumps, I installed tanks—I did it all. So, I’m very familiar with it. And since I’m the owner, I’m involved in the business, strategy and the growth of accounts—the overall performance.

FMN: What’s the biggest difference between the retail and wholesale operations?

Smartt: There’s a lot of capital involved in retail when you own your own retail assets. There’s 36 | FMN Magazine WINTER 2022

capital involved on the wholesale side where it’s your inventory, your trucks, your bobtails, your tanks—things like that. So, there’s that difference.

There’s the amount of people. Typically, you have more bodies in retail but on average probably a little bit lower in pay scale than in the wholesale business.

I feel like the wholesale has a more of an environmental burden. We have hazmat trucks rolling up and down the road. We also have about 150 dealers that we sell fuel to, and we are their environmental experts a lot of times. We’re constantly trying to keep them updated on environmental regulations. And a lot of times we may own a lot of the equipment at some of those dealer locations.

With our physical sites, we can have environmental issues, but it just feels like there’s a little bit more of an environmental burden on the wholesale business.

FMN: Do you get extra efficiency by having both a retail and marketing operation?

Smartt: We probably had much more of an advantage in the past because we lived and breathed the fuel business. We may have had more foresight into the fuel markets. And I think there is some insight that goes along with the procurement aspect when deciding which areas to operate in because you might not have buying advantages in some areas. But with technology, retailers today have incredible access to information at their fingertips. We find that [even the smallest] store operators are pretty darn sharp with their fuel. It’s interesting for me to see that, and I think it’s good for the industry.

We operate our own fleet of trucks, and a lot of times there are advantages there for us. Not necessarily a cost advantage, but your stores get taken care of. It’s not a third party hauling your fuel, so they take a lot of pride in making sure we don’t run out of any of the grades of fuel even in tough markets. I think that’s a big advantage.

FMN: How do you go about hiring and retaining quality drivers?

Smartt: Unfortunately, there’s no magic sauce for anyone today. I think we’re all in the same boat and trying to do the best we can. We’ve been very fortunate, not that we haven’t had challenges. One of the things that we did is we didn’t lay anybody off during the pandemic. Our driving team FuelsMarketNews.com

appreciated it, and they talked about it around the terminals. That was not the case universally, and rightfully so. It was a challenging time. Most groups lost 40 to 50% of their gallons. Our reaction was—we’re going to hold the line. And I think it’s paid dividends over the last year.

Another thing we’ve done is leverage our retail assets to help with hiring drivers. We have billboards up and down the road. We have all these great stores with people going to them every day.

So, why don’t we use all those assets to find our drivers? We created a marketing campaign to get people to join the company and drive.

However, just recently we have felt [some pressure]. Pay and signing bonuses have become so outlandish.

FMN: How do you leverage fuel in your convenience offering?

Smartt: I would have to say quality fuels, as part of a quality experience. From the pumps to the windshield washer dispensers—everything. We put a lot of effort around it. We also have our own in-house maintenance repair team that can handle most of the issues on a dispenser. Our team does a really good job of taking care of the whole facility.

I think if customers have trust and confidence in you then that’s where they shop. They know what to expect.

FMN: Branded or private brand?

Smartt: We are branded in most of our facilities (Exxon, Valero, Shell and Mobil) but we have recently started going the private-branded route with our newest TXB Stores.

FMN: What’s the market for home heating where you are operating?

Smartt: It’s been good, and we’ve continued to grow and expand that part of the business. When I first bought the company in 2001, we didn’t have any propane business. In the past 20 years I think we rolled up about 10 small propane wholesalers.

And recently we built a couple of organic branches in the DFW market. We’ve been building gallons from day one. We service North Texas and Southern Oklahoma, with our emphasis being on the growth within the DFW market. That market has been good for us because of a decent average home size and a lot of appliances in those homes that are fueled with propane. Volatility and FuelsMarketNews.com

seasonality are typically good for businesses, and the last couple of years we’ve had those.

FMN: What about the autogas side?

Smartt: We do quite a bit of fleet business. Our new pro propane branches are also highly focused on commercial—bottled propane for warehouse forklifts and different things like that. We’ve seen that growing quite a bit over the last few years.

FMN: Describe your lube business.

Smartt: Honestly, we’ve scaled back on the lube business and made our bet on propane. We used to be a bulk lube distributor, and I think we’ve pretty much sized ourselves out of that market.

We still do a lot of lubes when it comes to drums or buckets for commercial purposes.

FMN: How important is technology in your operations?

Smartt: I think there’s all kinds of opportunities from technology that will help us gain efficiencies, but not necessarily to reduce headcount. A lot of times it’s just about getting the right bodies in the right places and taking care of your customers, or solutions that give you greater business intelligence at your fingertips when you need it to move quicker and bring money to the bottom line.

We have a tremendous mobile app, a loyalty program and we’re testing mobile food ordering.

We’re doing at-home delivery in a lot of stores.

I’d put our retail technology up against any 50-store chain, or against a lot of bigger chains.

And we have a lot of technology in our wholesale business.

FMN: Do you have an electric vehicle strategy today?

Smartt: I think it’s probably a long way off before we see a lot of electric vehicle penetration on the road. But also, I don’t want to be the third or FMN Magazine WINTER 2022 | 37

fourth person in, right? I want to be the first one in, and I want consumers to think about us as a place to go, to get your fuel, liquid or electric. We put chargers in the store we just built, and we’re not setting the world on fire. But we’re getting about 100 to 120 charges a month, and we’ve got a lot of happy customers.

I think you should do it while there is grant money accessible so you can start learning. Don’t wait five or 10 years and start trying to figure it out. We’re learning a lot about those consumers.

But if you don’t have grant money, I don’t think it works right now. The equipment is so expensive, the installation is so expensive and the demand is so low.

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

STICKERS DON’T STOP SKIMMERS!

You Need A Security Lock!

95% of Skimmers found BEHIND Security Tape Seal.

(Florida Institute for Cybersecurity Survey.)

Block Skimmers with High Security Retrofit Kits.

.

Lock America kits fit virtually every brand and model of dispenser.

•

Unique key cod for each customer, master key option.

• Weather-resistant brass and stainless steel.

Get GetSecure!

Secure!Call Call800-422-2866 800-422-2866

www.laigroup.com

www.laigroup.com

FMN_Half Horz.indd 1 38 | FMN Magazine WINTER 2022

sales@laigroup.com

sales@laigroup.com 1/7/2022 3:05:33 PM FuelsMarketNews.com

April 12-14, 2022

Hyatt Regency O’Hare Chicago, Rosemont, IL

DRIVE YOUR FUTURE. There is a big difference between data and insights.

Data can help describe what’s going on. Insights inform the actions you should take.

NACS SOI Summit provides insights to help you drive your future so you can get out ahead of current trends and challenges, and win in convenience.

It’s all about moving from reactive to proactive—plus, making more confident decisions.

Make more confident decisions. /

convenience.org/SOIsummit

CANCELING

CORROSI A Fuels Institute report covers best practices to keep diesel fuel quality high and liability low.

By Keith Reid

40 | FMN Magazine WINTER 2022

FuelsMarketNews.com

ION FuelsMarketNews.com

F

uel quality concerns date back to the earliest days of the industry, but serious public concerns died out decades ago. Various oil companies still market heavily on fuel quality, especially in the premium gasoline grades, but for the most part, this focuses on enhancing the brand rather than quelling consumer fears. However, several issues have started to bring fuel quality to the forefront in recent years, specifically with diesel.

The 2007 conversion to ultra-low sulfur diesel came to pass efficiently, despite initial concerns. But reports started to come in shortly after the deadline passed noting significant—and perplexing—corrosion with metal pipes and equipment inside underground storage tanks.

Another issue also began to arise as the latest generation of Tier 4, high-efficiency diesel engines penetrated the market using high-pressure rail systems that are more demanding relative to particulate and other contamination.

The primary concern is water in the fuel, which can significantly damage the engine if it gets past safeguards. These engines have water separators and can include water resistant filters; however, these safeguards can be overwhelmed, especially with poor operator maintenance or ignoring warning signs. The engines are similarly sensitive to particulates, such as those generated by corrosion. Vehicle fuel filters provide a line of defense, but heavy particulate contamination can lead to rapid clogging and potential failures.

As problems arose, engine manufacturers began blaming the fuel and threatening not to honor their warranties. When an engine is damaged and a delivery disrupted, who is liable?

The retailer? The wholesaler? The common carrier? Being able to establish that it was not your point in the supply chain that caused the damage becomes crucial.

It was this issue that led the Fuels Institute to form the Diesel Fuel Quality Council. The council is a consortium of fuel retailers, engine OEMs, tank service providers, fuel producers and regulatory agencies to address diesel fuel concerns.

The council has completed three reports on the issue. Diesel Storage Tanks: Industry Practices to Minimize Degradation and Improve Fuel Quality and Diesel Fuel Loading and Delivery: Industry Practices to Minimize Degradation and Improve Fuel Quality address the practical issues to establish and maintain fuel quality best practices in retail tank operations and the wholesale fuel delivery process, respectively. The Diesel Fuel Sampling Study will be covered in the future in a separate article.

Pulling from the industry best practice reports, Part 1 of this article looks at insights and recommendations for preserving fuel quality in diesel storage tanks. Part 2, in the FMN spring issue, will cover diesel fuel loading and delivery.

FMN Magazine WINTER 2022 | 41

The primary concern is water in the fuel, which can significantly damage the engine if it gets past safeguards. rate at that both the water fuel interface and just the water phase by itself,” said Prentiss Searles, marketing issues manager, American Petroleum Institute, during the NACS Show education session. Searles was heavily involved in the controlled laboratory CRC study.

Water drives microbial growth. The CRC study reached no conclusions regarding corrosion associated with specific types of microbes or the acids excreted by those microbes. Laboratory

42 | FMN Magazine WINTER 2022

observations did support the hypothesis that acetic acid formation is linked to microbial action on ethanol contamination in the diesel fuel underground storage tank, but direct correlations between acetic and corrosion were inconclusive.

However, microbial growth can dramatically increase particulate contamination and sludge in the tank.

While the primary concerns involve diesel, gasoline tanks are not immune (though the corrosion tends to occur more in the vapor phase, and it starts to eat the metallic components from the outside in compared to diesel, which works from the inside out).

SAFEGUARDING THE DELIVERY Reducing contamination begins with the fuel delivery to the tank. It is recommended that the tank operator and the fuel wholesaler or hauler have good communications and a strong agreement that strict fuel handling and sequence guidelines will be followed. Basically, the fuel should be free of undissolved water and sediment.

The fuel itself can be visually tested for clarity before the delivery and should be clear and free of debris. It is recommended that a sample be collected and stored in a clear quart jar that could be used for analysis should a fuel contamination issue be detected before the tank is turned over.

The fill port area itself should be free of standing water to avoid direct contamination during the delivery process.

TRACKING THE TANK A best practice is to track the tank for trends relative to water. This can include sticking with a water detection paste and keeping track of the results or using a more sophisticated in-tank water level monitoring system. Measurements should be done before and after delivery to detect any potential water influx during delivery.

Scott Boorse, director of technical programs and industry affairs, Petroleum Equipment Institute, suggested during the NACS Show session that operators go beyond basic testing. “You really need to get in and analyze it,” he said. “If your tank is tilted you need to find where that’s FuelsMarketNews.com

PHOTO©SHUTTERSTOCK/ DOLAN MBENGI

“

GET THE WATER OUT The 2021 NACS Show education session Inspect, Detect, Correct & Maintain: How to Maximize Diesel Fuel Equipment Uptime focused on fuel quality and tank issues by touching on elements of the Fuels Institute diesel tanks report, along with some additional industry best practice experiences and the results of the recently completed Coordinating Research Council Report: Identification of Potential Parameters Causing Corrosion of Metallic Components in Diesel Fuel Underground Storage Tanks, sponsored in part by NACS. This was a controlled, laboratory study of steel coupons immersed in 128 sample environments containing different variables that might be linked to corrosion.

What is the big take away? Get the water out.

“The most severe corrosion [in the CRC study] was observed at the water fuel interface. And substantial corrosion was visible within a week into the exposure. Water was the only control variable that correlated unequivocally with the corrosion

occurring, and you need to find out if you have microbial growth attached to your tank walls. If you don’t take these things into account, you may have problems that you’re unaware of.”

EQUIPMENT MAINTENANCE: TANKS The first line of defense is to visually inspect as much of the accessible system as possible, such as sumps, on a regular basis for signs of water entry, damage and corrosion. As noted previously, any water detected should be removed as rapidly as possible.

• Sumps should be inspected for signs of water entry and damage. If there is evidence of water entry fittings for pipes, conduits and seals should be inspected to locate any source of water entry from groundwater or surface runoff.

• Spill buckets require periodic maintenance as outlined in PEI’s Standard RP 1200. They should be inspected before delivery, and any fluid that is accumulated removed.

• Vent piping should be examined for damage or restrictions from pests or other debris. It’s also important to verify that gasoline and diesel tanks do not share a common vent stack. As the report notes, this is critical for fire safety, but gasoline vapors might also result in the formation of acid in a diesel tank, increasing corrosion risk. Of course, the vent should also have a “rain cap” to prevent the direct entry of precipitation into the top of the vent pipe.

• Submersible turbine pumps are important to monitor since they can be susceptible to corrosion.

TANK AND FUEL REMEDIATION What happens if there is evidence that you have fuel contamination? There are a variety of solutions that can produce food depending upon the severity of the situation.

• Fuel polishing is one option. As the Fuels Institute report notes, it is an inexpensive remediation technique for a contaminated tank. This is usually accomplished through multistage filtration. This will generally clean the fuel but not necessarily fix contamination inside the tank.

FuelsMarketNews.com

“

The first line of defense is to visually inspect as much of the accessible system as possible, such as sumps, on a regular basis for signs of water entry, damage and corrosion.

• A biocide can be added to the fuel polishing process to kill live microbes. The report recommends consulting an expert to match the appropriate biocide to the specific contamination. It’s worth noting that high-flow sites where tanks are turned over daily may not be as appropriate for biocides because they don’t allow time for the biocide to react.

• Tank cleaning is an option that will remove sediments and affixed contaminants from the walls and the bottoms of USTs. The tank can be cleaned empty or full. It is also recommended that a tank be clean before it is filled with higher levels of biodiesel because biodiesel has a “scouring effect” on the tank.

“We have the annual testing of all our [U.S.] tanks,” said Chip Hughes, manager, environmental, Pilot Travel Centers, when describing his company’s maintenance program during the NACS Show session. “We sample approximately 400 tanks a month and clean approximately 175 tanks based upon that sampling. We clean tanks based upon what we’re seeing, and what this has done is reduce our cost as we don’t have emergency shutdowns.”

Pilot also monitors for water 24/7. The company delivers its own fuel, and the trucks are dedicated to specific stores and their compartments are dedicated to specific products to minimize the FMN Magazine WINTER 2022 | 43

chance of cross contamination. The drivers are also tasked with monitoring their tanks as well as the trucks.

THE DISPENSER FILTER As the report notes, filtration is the final line of defense. The national conference on weights and measures, which sets standards states may choose to adopt, allows a minimum of a 30-micron filter at the dispenser. Since damage can be caused by hard particles as small as 4 microns, the report recommends using 10-micron filters in the dispenser in applications where the diesel is likely

RESEARCH ON DEMAND

Download a complimentary copy of Diesel Storage Tanks: Industry Practices to Minimize Degradation and Improve Fuel Quality at www.fuelsinstitute.org/Councils/Fuel-QualityCouncil#research.

for automotive use to minimize the impact on vehicle filtration systems. However, a high-turnover travel center might be able to continue using a high flow 30-micron filter as long as there is less than 1 inch of water present in the tank. That is because high turnover sites are less likely to see as significant microbial growth. A trade-off with using a more effective filter is decreased filter life.

If water is an issue, a water-detecting-and-removal filter is recommended. The filter also offers an additional opportunity to monitor the status of the tank since it can show the presence of sludge, slime or other contaminants or even active corrosion. (Read more about filtration in “Burden of Truth” on page 18.

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

WHOLESALE FUEL & LUBRICANTS CARDLOCK MANAGEMENT INTEGRATED ACCOUNTING

Business Software for Fuel Marketers of All Sizes “Trinium has enabled us to upgrade our technology to a more modern and functional system, while providing us the necessary flexibility to customize the system to fit our specific needs."

Dave Olson, Partner Ernie’s Fueling Network www.erniesfuelingnetwork.com Call (310) 214-3118 to schedule your one-on-one demo today or email sales@triniumtech.com

www.TriniumTech.com/Fuel

Horz.indd 1 44FMN_Half | FMN Magazine WINTER 2022

1/6/2022 4:06:36 PM FuelsMarketNews.com

A new year, offering tremendous opportunities.

With a full line-up of programming in 2022, NACS has something for everyone.

convenience.org/events

Signature Event

Leadership

NACS Show

NACS Leadership Forum February 9-11, 2022 Miami Beach, FL

November 6-11, 2022 MIT Sloan School of Management Cambridge, MA Supported by: Gilbarco, Mondelez, Shell

Global

NACS Leadership for Success

NACS Women’s Leadership Program*

NACS Financial Leadership Program*

New Haven, CT Endowed by: Altria, Frito Lay

October 1-4, 2022 Las Vegas, NV

NACS Convenience Summit Europe May 31-June 20, 2022 Berlin, Germany

NACS Convenience Summit Asia Summer 2022 Singapore

Government Relations NACS Day on the Hill March 8-9, 2022 Live Virtual

NACS In Store

Throughout 2022

May 15-20, 2022 Richmond, VA

July 17-22, 2022 The Wharton School University of Pennsylvania Philadelphia, PA Endowed by: Cash Depot

NACS Marketing Leadership Program* July 24-29, 2022 Kellogg School of Management Northwestern University Evanston, IL Endowed by: Keurig Dr Pepper, Nielsen

NACS Executive Leadership Program*

NACS Innovation Leadership Program*

November 13-18, 2022 Yale School of Management

Staff | Operations NACS Human Resources Forum March 21-23, 2022 ChampionsGate, FL

Industry Insights & Data NACS State of the Industry Summit April 12-14, 2022 Rosemont, IL

July 31-August 4, 2022 Dyson School Cornell University Ithaca, NY Endowed by: Reynolds

*PLAN NOW! Achieve the Master of Convenience designation by completing 3 of the 5 Executive Education programs.

INDUSTRY NEWS WESTMOR LAUNCHES NEW TRANSTECH TRAILER

Westmor Industries, one of North America’s most comprehensive energy storage, transportation and dispensing equipment manufacturers and suppliers, announced its new Transtech Distribution Trailer. The trailer allows for bulk transport or metered deliveries. The new design is modeled after Westmor’s Transtech Truck Tank line. Maximize fleet utilization by using a single tractor paired with a distribution trailer or propane trailer, with the added flexibility of metered deliveries or bulk transport. The trailer is available in multiple sizes and models. Westmor supplies its customers with a diverse group of product offerings used to store, transport, and dispense petroleum, propane, and other liquids and gases from Pipeline to Pump®. In addition, Westmor provides customers with vast aftermarket support including parts sales, product repair, infrastructure installation and in-field services.

BENNETT PAYMENT SYSTEM EMV CERTIFICATIONS

Bennett has received letters of acceptance for Verifone POS systems on Fiserv and Heartland payment networks using the Bennett EMV Simply Secure Payment (SSP) solution. Three levels of certification are required for active outdoor EMV at any retail fueling site. Bennett payment solutions cover levels 1 and 2 with the EMV hardware and software. The POS providers are responsible for Level 3 certification with payment networks.

Bennett’s EMV Upgrade kits provide a factory-fit solution for most Gilbarco, Wayne and Bennett fueling dispensers. Bennett EMV upgrade kits represent an economical method for retailers to quickly become EMV compliant regardless of which dispenser manufacturer they use at their facility.

D&H UNITED ACQUIRES VALLEY TANK TESTING

D&H United Fueling Solutions, a leading supplier of fuel system equipment, installation and services in the Southwest, announced that it has acquired Valley Tank Testing. The deal broadens D&H United’s compliance services offerings while providing Valley Tank Testing with additional repair and project services capabilities. Valley Tank Testing was founded in 2004 in Houston, Texas, by PJ Kane and Brian Berkle, both of whom have many years of experience in environmental compliance, maintenance and repairs. The company has grown to provide a complete suite of underground storage tank and above ground tank system testing and inspection services from Florida to Arizona, doing business in over 30 states.

46 | FMN Magazine WINTER 2022

DFS AND SHEP DIGITAL SOLUTIONS COLLABORATE

Dover Fueling Solutions, a part of Dover Corporation and a leading global provider of advanced customer-focused solutions in the fuel and convenience retail industries, announced a collaboration with Shep Digital Solutions, a leading merchandising platform that helps convert fuel-only consumers into multiproduct purchasers. The data analytics-driven merchandising platform combines local, relevant “infotainment” with targeted, retailer-branded, marketing messages to create transactions throughout a customer journey. By using DX Promote’s open infrastructure and integrating it with a subscription to Shep’s merchandising platform, fuel retailers can drive in-store traffic using their sales data and predictive analytics to amplify promotional messaging.

EDWARDS OIL ADOPTS ADD SYSTEMS SOFTWARE

Advanced Digital Data® Inc., a leading supplier of software solutions to the convenience store and energy distribution industries, has partnered with Edwards Oil Inc. as the back office and home office software provider for its Lucky Seven General Stores. Edwards Oil needed a software solution that could streamline day-to-day operations across its Lucky Seven General Stores. Edwards decided to partner with ADD Systems to accelerate its daily operations and gain a deeper insight into the activity at its stores. Edwards implemented ADD eStore® for store management and Atlas Reporting for business intelligence analytics.

GASBOY INTRODUCES EMV CAPABILITY FOR ISLANDER, ICR PRIME

Gasboy, an industry leader in fleet fueling technology, has launched EMV payment capabilities for the Islander and ICR PRIME payment terminals. The Gasboy Islander PRIME EMV system combines the best-in-class fuel management controller with a PCI compliant EMV card reader and PIN pad and is used by leading unattended retailers across the country to accept credit card payment without the need for a separate point-of-sale system. With Gasboy’s PCI-approved EMV solution, consumers’ credit card information is protected, and retailers are protected from chargebacks associated with fraudulent transactions. Gasboy’s Islander PRIME EMV system is ideal for unattended retail fueling like cardlocks, co-ops, airports and marinas.

KEMPOWER PARTNERS WITH GILBARCO VEEDER-ROOT FOR EV CHARGING

Kempower, an e-mobility charging technology provider, has partnered with Gilbarco Veeder-Root (GVR), a provider of technology solutions for the retail fueling and convenience market. GVR will offer Kempower’s EV chargers FuelsMarketNews.com

as part of its EVerse offering, which also includes network management software, installation and maintenance services. Kempower’s DC fast charging solutions are built to scale as the number of EVs on the road rises. The company’s charging solutions are suitable for all types of EVs, including passenger cars, buses, off-highway vehicles, commercial service fleets and marine vessels.

LEIGHTON O’BRIEN LAUNCHES NEW IHUB PLATFORM

Leighton O’Brien, a global SaaS fuel analytics and technology provider, has launched Intelligence Hub— iHUB—a single platform interface for customers to access real-time data from Leighton O’Brien’s key SaaS solutions to make informed decisions that have a positive impact on their network operations and customer experience. iHUB enables fuel retailers to access their compliance, fuel inventory, alarm, SIR and wetstock management data on a secure, centralized platform, with predictive analytics and AI-driven automated workflows to proactively manage forecourt operations.

PDI AGREES TO ACQUIRE ORBIS TECH

PDI, a global provider of leading enterprise management software for the convenience retail and petroleum wholesale industries, has agreed to acquire Orbis Technologies Ltd. (Orbis Tech), a global provider of cloud-based point of sale, back-office and home-office business solutions. The acquisition enhances PDI’s international software offerings with a seamless POS, back-office, and home-office cloud platform that will help businesses simplify complex in-store and

OUR ADVERTISERS

forecourt operations. In addition, Brad McGuinness joins PDI as senior vice president of PDI Point of Sale Solutions, bringing 30+ years of expertise in POS technology and the petroleum and convenience retail industries. Orbis Tech has developed modular POS, cloud-based back-office and home-office software that works seamlessly as an end-toend solution.

SOUND PAYMENTS EXPANDS TEAM

Sound Payments welcomed two additional industry experts to the petroleum team to accommodate continued growth and its plans to offer more technology solutions in the petroleum industry beyond EMV at the pump. Chad Ellis will serve as the Western region vice president of sales for the petroleum channel and will help lead efforts for Sound Easy Pump in his region. Joshua Pierre will lead the Eastern region as the vice president of sales.

Additionally, Sound Payments recently promoted Mike White to senior vice president of its petroleum channel.

WARREN DAY NAMED OPW’S NEW VICE PRESIDENT, GENERAL MANAGER

OPW, a Dover company and a global leader in fluid-handling solutions, has named Warren Day as the new vice president and general manager for its Vehicle Wash Solutions (VWS) business. OPW VWS is an industry leader offering a full suite of best-in-class solutions, including in-bay automatic, tunnel wash systems, payment systems and software management. Prior to this role, Day was the general manager for ICS, a recent OPW acquisition.

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

ADD SYSTEMS.........................................................................INSIDE BACK COVER addsys.com

SKYBITZ PETROLEUM LOGISTICS.............................. Inside Front Cover skybitzsales@ametek.com

AMERICAN COALITON FOR ETHANOL..............................................................3 flexfuelforward.com

THE GORMAN-RUPP COMPANY.............................................................................. 9 www.grpumps.com

BIOBOR FUEL ADDITIVES............................................................................................. 5 www.biobor.com

TRINIUM TECHNOLOGIES......................................................................................44 www.triniumtech.com/fuel

CUMMINS & WHITE..................................................................................................33 www.cumminsandwhite.com

NACS STATE OF THE INDUSTRY SUMMIT..................................................39 www.convenience.org/SOIsummit

LOCK AMERICA INC..................................................................................................38 www.petrodefense.com

NACS 2022 EVENTS..............................................................................................45 www.convenience.org/events

NORTH AMERICAN BANCARD..................................................................................11 www.NYNAB.com

NACS CONVENIENCE VOICES................................................................................ 32 www.convenience.org/voices

RDM...............................................................................................................Back Cover www.rdm.net

NATIONAL PROPANE GAS ASSOCIATION...................................................33 www.npga.org

FuelsMarketNews.com

FMN Magazine WINTER 2022 | 47

REMEMBER THIS?

The Supply Chain at War

BY KEITH REID

T

he supply chain issues facing the industry today are extreme and extend from both the convenience store shelf to the petroleum equipment buried underground on the forecourt. However, these challenges pale in comparison to the supply chain disruptions the United States experienced during the Second World War. The shift to producing war products instead of consumer products left those on the homefront scrambling.

The Dec. 10, 1941, issue of National Petroleum News was already on a war footing (including some ads) three days after the attack on Pearl Harbor.

The article “Oil’s Supply of Critical Materials From South Pacific Guarded

by Navy” shows that even the pre-globalized world relied on global supply chains.

“Flaming guns of the U.S. Navy, supported by strong units of the British and Dutch East Indies fleets, have been given the job of keeping open the supply lanes from the South Pacific—supply lanes that bring in critical materials with a direct bearing on the oil industry.”

Materials of interest included rubber, chromite, manganese, tungsten, graphite, mica (for insulation), manila fiber,

pig bristles for brushes and a host of other commodities.

At the time, 90% of U.S. rubber came from Asia-Pacific. Synthetic rubber would eventually more than make up for the shortages, but in the meantime, rubber needed to be rationed, which was cited as the primary reason to limit consumer gasoline purchases to reduce miles traveled and extend tire life. A 35-mph speed limit was also set.

All drivers were given a basic “A” fuel ration book with an allotment to support 2,880 miles per year. Drivers who felt they needed more gasoline for commercial use could apply for a supplemental allotment. This disrupted demand, making it difficult to project a stable business model. Jobbers and retailers were similarly given a fuel allotment, and prices were fixed by the U.S. government. Smaller independent marketers and retailers complained that larger operators, such as major oil company sites, were advantaged in this environment.

Rationing, production repurposing and price controls by the Office of Price Administration and War Production Board saw virtually every major manufacturer and a great many minor manufacturers shift production

from consumer products to military equipment and subcomponents. For example, one major retail fueling dispenser maker shifted production to machine guns, so existing dispensers had to be maintained and parts scrounged from junk yards, fading supply stocks and rebuilds.

The primary source of auxiliary profits for retailers was tire batteries and accessories. Without new cars, keeping the existing civilian fleet on the road became an important objective and a potential profit driver. That was easier said than done. New tires virtually disappeared, and spare parts for automobiles and service equipment were hit or miss.

Today, we have a bottleneck of hundreds of container ships waiting outside ports to unload their cargo. The Second World War saw hundreds of tankers and cargo ships sunk by enemy submarines or diverted to military use.

Rolling stock found itself pulled in multiple directions to meet war needs. And for jobbers, the availability of tanker trucks became a distinct challenge.

The July 8, 1942, issue of NPN noted that the government allotted 78,000 new trucks for commercial use, compared with the previous 700,000 required annually.

There were a myriad of disruptions to virtually every industry during the war years. World War II helped pull the country out of the prolonged Depression, and the sacrifices made on the homefront were needed for the ultimate victory against tyranny. But it was a challenging time.

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 WINTER 2022

FuelsMarketNews.com

Release Your Potential

It starts with the right software Modern energy distribution presents unlimited opportunities for growth. Let ADD Systems help you realize all those possibilities as we meet today’s challenges of speed, accuracy, mobility, and ever more important, scalability.

ADD Systems has been providing solutions to the energy distribution industry – retail and wholesale fuel, propane, convenience stores and more – since 1973.

Learn more at addsys.com 800-922-0972

THE PREMIER MANUFACTURER OF WIRED INTERCOM SYSTEMS

Defender One® Pump Security

Retrofit Alarm Kits For New + Existing Fuel Dispensers Protect your station against fuel theft with in-dispenser security and built in siren.

Pump Protection

According to a State of Florida Report, 85% of skimmers are found in gas pumps with new locks or security labels. Don’t let your brand get tarnished by compromised fuel dispensers. Build trust and grow customer loyalty by taking the necessary precautions to prevent fraud with Defender One® products.

US Patented

The Defender One®’s unique patented process can stop a transaction in progress and deactivate a breached dispenser. The Defender One® reduces your risk by disabling a compromised fuel dispenser.

Access Control and Monitoring

Designed to meet the critical safety requirements of a retail fuel station. Underwriters Laboratory certification for use in a Class 1, DIVISION 1, GROUP D hazardous environment. Battery back-up provides protection during power outages.

Customizable Security

The Defender One® allows you to customize security to fit your operations and has the capability to interface with existing alarm panels.

• • • • •

UL listed + certified US patented Prevent fraud + theft Reduce service time Boost customer confidence

523 4 # oth

• • • • •

No contracts or subscriptions AC powered with battery back-up Doesn’t cut power to pump Customizable security to fit your operations Interfaces with existing security and alarm panels

Bo

1.800.282.5183 | sales@rdm.net | www.rdm.net **Part numbers and manufacturer’s names are listed for reference purposes only. RDM remanufactures, rebuilds, and resells electronic equipment by various equipment manufacturers but is not affiliated with or certified by these companies.**