Fuels Market News Magazine Winter 2019

WINTER 2019

Your Source for News and Information

Reversal of Misfortune Oil in the U.S.

Benefits of Centralized Dispatch

Wind of Change

Sales of EVs

Car Wash Maintenance Checklists FMN Interviews Association Leaders

F U E L M A R K E T E R S • F U E L R E TA I L E R S • C O M M E R C I A L F U E L S

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20 Wind of Change

by John Eichberger

24 A Reversal of

by Nancy Yamaguchi, PhD

34 Association

Leaders Look Back at 2018 and Ahead to 2019

by Keith Reid

Checking Them Twice—Car Wash Maintenance

by Todd Klitzke

52 Supply and

Demand—The Answer

by Brian Reynolds

57 The Benefits

of Centralized Dispatch

by Chris Posey

features

Misfortune: Oil in the U.S.

46 Making Lists,

6

8

Lower Oil Prices and Equities

Not So Fast on that High Octane Fuel Proposal

54 Digital Signage Can Change Shopper Perception and Boost Sales at C-Stores

60 Do All

Fleet Fueling Companies Need Petroleum Logistics Solutions?

64

contents

by Department

3

PUBLISHER'S NOTE

FUELS & SUPPLY 6

Lower Oil Prices and Equities

by Joe Petrowski

8

Not So Fast on that High Octane Fuel Proposal

by Keith Reid

14

Fueled for Thought

by Joe O’Brien

19

Pump Up Your Profits with Biodiesel Webinar

by Keith Reid

RETAIL OPERATIONS 40

2018 Top 10 Convenience Store Fuel Tank UST Alarms

by Angela Wisdom

43

How Do Dripless Nozzles Reduce Risk at the Fueling Island?

by Ed Kammerer

54

Digital Signage Can Change Shopper Perception and Boost Sales at C-Stores

by David Warns

WHOLESALE & FLEET OPERATIONS 56

The Benefits of Centralized Dispatch

by Chris Posey

59

The Reconciliation Reflex Webinar

by Keith Reid

60

Do All Fleet Fueling Companies Need Petroleum Logistics Solutions?

by Todd Ward

COMMERCIAL FUELS

The Long Tail and Training Scarcity

64

The Long Tail and Training Scarcity

by Mark Murrell

66

Propane Autogas Refueling Options to Fit Any Fleet

by Michael Taylor

68 ADVERTISER’S INDEX

PUBLISHER’S NOTE

EDITORIAL STAFF CEO & Group Publisher Gary D. Bevers GBevers@FMNweb.com Editorial Director & Digital Publisher Keith Reid KReid@FMNweb.com Director of Production & Managing Editor Kathy Bevers KBevers@FMNweb.com Digital Editor Scott A. Croom SCroom@FMNweb.com Industry Analysts/Editors Frank M. Hunter FHunter@FMNweb.com Nancy Yamaguchi, Ph.D. NYamaguchi@FMNweb.com Columnists and Contributors Greg Cushard Vladimir Collak Shane Dyer John Eichberger Doug Haugh Corey Henriksen Maura Keller Alan H. Levine Joseph H. Petrowski W. Brian Reynolds Fred M. Whitaker Editorial Board Ed Burke Lisa Calhoun George A. Overstreet, Jr. Joseph H. Petrowski Art Director Jeff Beene JBeene@FMNweb.com Marketing Director Joe A. Martinez JMartinez@FMNweb.com

A note from

Gary Bevers, Group Publisher At the risk of sounding repetitive, I again find myself very optimistic as we go to press with the Winter 2019 Issue of Fuels Market News Magazine.

I have written those same words for three years running now, but it has never been more true.

2018 was a record-setting year for our economy, and it handed off the baton in the form of an economic gift that just keeps on giving. The U.S. stock market is off to a record start for 2019—its best performance since 1987.

The market continues its record-setting bull market run despite all predictions for a bear market downturn for 2019.

Main Street is also booming as we have record levels of job creation, rising wages, record low unemployment—particularly for those at our society’s lower economic levels—new business start-ups and the largest number of employees actively participating in the workforce. Consumers have more disposable income, so consumer optimism and spending are up.

For the first time since the 1970s, the U.S. is the world’s number one Oil & Gas producer with both crude oil and refined product exports growing and reaching consumers around the world. Please read Dr. Yamaguchi’s article, “A Reversal of Misfortune” beginning on page 24 for more on our U. S. energy outlook.

And, this past November, the U.S. Department of the Interior’s United States Geological Survey published an assessment of the largest oil and gas discovery in the U. S., which will double our strategic reserves. This shale find in the Permian Basin in Texas and New Mexico ensures that our U.S. energy independence will continue for decades to come.

Further, reduced oil prices from shale (fracking) production have lowered the cost of transportation, food and raw materials. This is good news for the economy and particularly for our sector (fuel and convenience), as it directly raised business profit margins.

By all indicators the U.S. economy is off to a great start for 2019 and is set to continue its upward financial trendline—keeping us the world’s largest and strongest economy as measured on a GDP basis. So, I am very confident that my optimism is well-founded as we all get to work doing our part to contribute to the greatest economy we have seen in years.

I hope you enjoy this issue of Fuels Market News Magazine, and I always appreciate your thoughts and feedback. Feel free to reach out to me personally at GBevers@FMNweb.com or my cell: 832-444-7675. I’m always happy to hear from you.

Advertising Representative Bill Kaprelian 262-729-2629 BKaprelian@FMNweb.com

Gary Bevers CEO & Group Publisher

Mailing Address 15201 Mason Road, Suite 1000-288 Cypress, TX 77433 www.FuelsMarketNews.com © Copyright 2019, FMN Media, LLC All Rights Reserved

FMNMagazine

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Lower Oil Prices and Equities

by Joe Petrowski

Lower oil prices are not a reason for an equity sell-o.

Equity Traders have it backwards. Lower oil prices are a reason to be bullish on America and Equities. Nothing annoys me more than watching TV analysts list declining oil prices and softer earnings at Majors as a reason for our recent Stock sell-o.

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“”

FUELS & SUPPLY

The U.S. macro swing from being the second largest importer to a net exporter is a $500-billion swing in balance of payments, crushing interest rate costs, strengthening the dollar and providing employment growth.

Low petroleum prices have always been good, are good now and always will be. I would suggest to analysts trying to explain market weakness that they say:

Yes, petroleum is in oversupply and probably has more downside (low 30s for WTI) but, consider:

1

The Democrats are circling the Trump Train.

2

The Fed is raising interest rates to fight inflation of the 70s.

3

The Chinese have gone back to going barefoot and using phone booths.

1

The decline in petroleum product prices is a $100-billion gift to consumers.

All are closer to the truth than weaker petroleum prices.

2

The U.S. macro swing from being the second largest importer to a net exporter is a $500billion swing in balance of payments, crushing interest rate costs, strengthening the dollar and providing employment growth.

3

While earnings growth will slow for the integrated majors, they are still in great shape with strong balance sheets and:

In conclusion, petroleum has been priced below $40/barrel for the majority of time since Spindle Top and did not “spike” to $52 until the Suez crisis of 1956. And, with low oil prices we had both an economic and equity boom (doubling equity prices in the 1950 – 1970 period). Only an Arab boycott and OPEC strengthening combined with a besieged President ended the expansion. n

• Price/Earnings ratios of 11 (less than market as a whole)

• Dividend yields averaging 4.5% • Average growth rates of 26%, which even if cut in half would be twice the average of other sectors.

READ MORE at FuelsMarketNews.com

Equity traders are also extrapolating a one-toone relationship between integrated majors’ earnings and oil prices, when in fact, only 8% of earnings on average are coming from exploration and production (E&P) activities.

Most integrated majors have or will be growing refining, marketing, distribution, natural gas and chemicals in lieu of petroleum production, and some of these activities like refining and chemicals benefit from lower petroleum prices.

FMNMagazine

Joe Petrowski Joe Petrowski has had a long career in international commodity trading, energy and retail management and public policy development. He currently serves as Director of Fuels for Yesway, where he oversees all operations of the fuels team, including pricing, procurement and management of the firm’s fleet services program. In 2005, he was named President and CEO of Gulf Oil LP and elected to the Gulf Oil LP Board of Directors. In October of 2008, he was named CEO of the now combined Gulf Oil and Cumberland Farms, whose annual revenues exceed $11 billion and that now operates in 27 states. In September 2013, Petrowski stepped down as CEO of The Cumberland Gulf Group. He is Managing Director of Mercantor Partners, a private equity firm investing in convenience and energy distribution and a member of the Gulf Board.

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Not So Fast on that High Octane Fuel Proposal We live in a new age of abundant

fossil fuels from the fracking process that remains buffeted by a range of forces that continue to push even higher fuel efficiency, carbon reduction and the inclusion of biofuels to power transportation.

For many drivers, particularly those in the United States, there is an often-conflicting desire for cheap fuel, larger vehicles and more powerful engines and performance.

Carbon reduction and efficiency do not seem to be as important in vehicle purchasing behavior. Is there a single solution that can satisfy all of these desires?

“

by Keith Reid

”

FMNMagazine

Higher octane ratings allow for higher compression (typically in smaller turbocharged engines) that generates more power, torque and efficiency per gallon. Further, a primary source of octane is ethanol, and with this solution comes the promise of ethanol volumes that should exceed Renewable Fuel Standard ethanol volume requirements.

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FuelsMarketNews.com

FUELS & SUPPLY A suggestion that I first started to seriously explore when exposed to it in detail at a 2015 Fuels Institute meeting seems, on the surface, to go a long way toward providing such a solution—a single high-octane fuel mated with engines specifically designed to provide optimal performance on that fuel. Higher octane ratings allow for higher compression (typically in smaller turbocharged engines) that generates more power, torque and efficiency per gallon.

Further, a primary source of octane is ethanol, and with this solution comes the promise of ethanol volumes that should exceed Renewable Fuel Standard (RFS) ethanol volume requirements.

A highly active roundtable discussion at the 2015 meeting involving representatives from the California Air Resources Board (CARB), oil companies, biofuels organizations, automakers, fuel retailers and marketers identified a range of likely parameters that would have to be met for any new super fuel solution. Specifically, in addition to any mileage or carbon benefits, the new fuel would have to provide no loss in performance, no significant increase in cost to the customer or retailer and have backward compatibility to existing engines at introduction (or there would still have to be legacy fuels in circulation during a transition period).

Several concerns were raised with this approach as applied to a high octane solution, a primary one being price. This would essentially be a super-premium, and as we know, premium involves a premium price that is generated by both market and production factors. The market factor would eventually be solved as over time it would become the majority dispensed fuel, but there would be a notable transition period. The production process should also see some room for price improvement, but would it ever get down to the cost of regular? And if not, would the efficiency and performance gains equal out the higher costs? The answers are still out on those questions, but the current conventional wisdom is “not quite.” However, in retrospect few expected fracking production costs to be as low as they are today.

likely be problematic for retailers and marketers.

The second issue with the proposed solution was the actual ethanol content.

This new fuel provides the possibility of ethanol content well beyond the RFS. We are currently at a point where somewhat over 10 percent ethanol content (E10) is supported. There is a push from the ethanol lobby and some marketer/retailer sectors for E15. This new fuel would likely fall into the 95 – 100 octane range and likely involve E20 – E30 or even E40.

For the ethanol industry more is always better as long as supply can keep up.

For retailers and marketers E25 has the least issues with compatibility and warranties. The oil industry would be happy with E0.

The Ethanol Industry Was More Than On Board As noted, the high octane fuel approach potentially has a lot of appeal to ethanol producers who want to push volumes beyond E10 – E15, as the lowest initial considerations easily doubled those volumes. This was exemplified by the publication in March 2017 of a standard for the proposed high-octane fuel: ASTM D8076 – 17, Standard Specification for 100 Research Octane Number Test Fuel for Automotive Spark-Ignition Engines. There was particular excitement throughout the ethanol industry over blends as high as E50, though such extreme blends would FMNMagazine

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“While the Corporate Average Fuel Economy-Greenhouse Gas (CAFE-GHG) program has resulted in meaningful progress with respect to fuel efficiency and GHG emissions, this progress will plateau unless EPA increases the octane rating of fuel used in future engines,” said Brian Jennings, who was American Coalition for Ethanol Executive Vice President at the time and who now is the organization’s CEO. “With a blendingoctane rating of 113, American-made ethanol is the lowest-cost, low-carbon source of octane on the planet.”

The excitement continued with presentations at a range of industry conferences and as new opportunities materialized. For example, when in April 2018 the Trump administration announced a likely revision of the aggressive Obama-era CAFE mileage standards, the high-octane approach was presented as an alternative that must be considered in any revision.

Former Renewable Fuels Association (RFA) President and CEO Bob Dinneen offered the following statement: “For too long, our light-duty vehicle fuel economy and GHG emission regulations have focused exclusively on the vehicle.

We have repeatedly encouraged EPA, NHTSA and CARB to also consider the important impact of fuels on fuel economy and emissions. Fuels and engines work as integrated systems, and we have provided mounds of evidence that high-octane, low-carbon ethanol blends in optimized engines would be the lowest-cost means of achieving compliance with future fuel economy standards. We are glad to see EPA took notice of that information, and we again urge EPA and NHTSA to use the upcoming rulemaking to establish the roadmap to broad commercialization of high-octane fuels in optimized internal combustion engines. As we pointed out in previous submissions to the agencies, higher octane fuel would unleash and enable a wide pallet of low-cost engine technologies that offer proven fuel efficiency and GHG emission improvements at a low cost for consumers.”

“

FUELS & SUPPLY

”

POLICY BRIEF: Not So Fast on that High Octane Fuel Proposal

“Since ethanol is one of the lowestcost sources of octane in many areas of the country, a transition from the RFS beginning in 2023 to a national octane specification creates new market opportunities for biofuel producers and gives certainty to refining stakeholders.”

Congressman Bill Flores

The Ethanol Industry Not So Onboard, Now

In addition, there are a range of requirements to prevent misfueling that would have an impact on retailers (nozzles and labeling) and automakers (fill ports). Automakers would have to produce vehicles compatible (and warrantied for) this fuel in 2023. Fuel retailers would not be forced to upgrade their fueling infrastructure except as done voluntarily to carry the fuel.

On November 21, 2018, the concept of a unified high octane solution made inroads into the legislative process. Congressman Bill Flores (Texas-17) and Congressman John Shimkus (Illinois-15) released a discussion draft of the 21st Century Transportation Fuels Act.

While capping the fuel at E20—twice as high as the ubiquitous E10 and a good step above the increasingly popular E15—would seem to be a notable win for ethanol producers, from a market perspective that is certainly not the case with the draft proposal. As the new RFA President and CEO Geoff Cooper noted in a response to the proposal, “…the draft bill would destabilize the considerable progress our nation has made toward greater energy security, economic vitality and environmental health. We simply cannot support eliminating the RFS program, as the draft envisions, without a much stronger signal to the market that ethanol’s role in our fuel supply will continue to grow.

“Much has changed in the markets for vehicles and fuels since the Renewable Fuel Standard (RFS) was established in 2005 and subsequently expanded in 2007. We have learned from robust stakeholder input through hearings, roundtables and meetings that higher octane fuels can bring increased fuel economy and performance for next generation engines. Since ethanol is one of the lowest-cost sources of octane in many areas of the country, a transition from the RFS beginning in 2023 to a national octane specification creates new market opportunities for biofuel producers and gives certainty to refining stakeholders. Most importantly, the draft legislation preserves consumer choice and optimum fuel and vehicle costs for more efficient transportation for future decades,” Flores said in a release.

“Even though ethanol is far superior to other octane boosters in terms of cost, greenhouse gas emissions, air quality, health effects and other factors, a 95 RON standard —when paired with elimination of the RFS conventional renewable fuel requirements—would not result in increased market opportunities for ethanol. RFA strongly believes a high octane fuel standard can work in concert with—not in conflict with—the RFS.”

On December 11 the act was discussed in a public subcommittee meeting. Support from agribusiness and the ethanol industry was far more subdued with this specific proposal. The overarching component was basically replacing the RFS with a high octane fuel standard based on 95 research octane number (RON) and adjustments by fuel retailers/ marketers and automakers to make that possible. It would cap out at a fueling industry favorable maximum of E20 with appropriate Reid vapor pressure (RVP) waivers.

Growth Energy CEO Emily Skor expressed similar concerns during the meeting: “Only by coupling a stable RFS with a significant boost in octane from a mid-level ethanol blend can consumers realize significant cost savings, increased engine efficiency and substantial environmental benefits.

Unfortunately, this draft as proposed will lead to reduced blending of cleaner biofuel and it will raise costs significantly for American drivers.”

Between 2020 and 2022 conventional biofuel (primarily corn ethanol) would be capped at 15 billion gallons to meet RFS volume obligations. That would sunset in 2023 and advanced biofuels like biodiesel, cellulosic biofuels and biomass diesel would be plateaued at 2022 levels until 2033 when those provisions would sunset. States would not be able to go their own way in setting different standards for the fuel.

FMNMagazine

So, essentially, why settle for E20 and leave E30 or E50 or beyond on the table? And while E20 was presented as a maximum blend, it was not set as the exact requirement.

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FUELS & SUPPLY

POLICY BRIEF: Not So Fast on that High Octane Fuel Proposal

The ethanol industry observed some not-so-obvious threats in the proposal, as outlined by ACE’s Jennings: “In fact, while the legislative draft implies support for E20 blends, a recent study commissioned by the Energy Information Agency (EIA) concluded refiners could easily meet a 95 RON standard using just 10 percent ethanol,” he noted during the meeting. “If the goal of the legislation is to increase the octane of motor gasoline, refiners cannot be allowed to insist on man-made limits just because they prefer not to use ethanol, which happens to be the lowest-cost and lowest-carbon source of octane on the planet. There may be ideas in the legislative draft which, in isolation, might seem appealing, but the net effect of the entire legislative package would be very harmful to the ethanol industry and farmers who need pro-growth policies.”

“ ”

industry, U.S. energy security has meaningfully improved and petroleum imports have declined. Ethanol and other biofuels have only marginally contributed to these goals. According to the Department of Energy’s EIA, the RFS “played only a small part in reducing projected net import dependence.”

NACS and SIGMA presented a combined response that was primarily concerned with clarifying retail equipment issues involving nozzles to prevent misfueling and dispenser warranties and replacement. Price posting requirements were also discussed.

NATSO focused on the future of biodiesel and the associated volume issues with the sunset of the RFS. Understandable, given that many of its members who are, of course, high volume diesel retailers have established business models centered on biodiesel blends. The same concerns were addressed by the National Biodiesel Board.

As a result of technological advances by the domestic oil and natural gas industry, U.S. energy security has meaningfully improved and petroleum imports have declined. Ethanol and other biofuels have only marginally contributed to these goals.

Same Old Song and Dance This current battle is hardly a new situation. Since the disastrous gasohol efforts in the 1970s, agribusiness has worked to get ethanol in the fuel supply at the maximum level politically and functionally possible. The oil industry has vehemently opposed ethanol at any significant level.

Perceived wins have been undercut by loopholes of the type ethanol producers are wary of with these latest efforts. Take MTBE, for example, the first major issue I covered in the industry around 2000. It provided an eye-opening insight in to the realm of political combat on the regulatory and legislative fields of battle.

What Other Impacted Parties Think

In a nutshell, the agricultural lobby helped pushed through an oxygenate mandate (requiring an additive with high oxygen content) in the 1990 Clean Air Act that would provide cleaner combustion to meet environmental goals. The supposition was that ethanol would be that oxygenate. The oil industry had other ideas and introduced methyl tertiary butyl ether (MTBE) as an in-house produced alternative.

Refiners generally supported the proposal with some caveats. In the response from American Fuel & Petrochemical Manufacturers the most notable points were that the standard must be limited to 95 RON and that Congress should provide liability protection for retailers and refiners that comply with misfueling regulations. Congress should require EPA and FTC to evaluate and establish misfueling and labeling regulations to prevent misfueling of new vehicles with sub-octane fuel tied to a public education campaign.

All was fine until MTBE started showing up in groundwater from leaking underground storage tanks. While it was never scientifically proven to be a significant health concern, it could be tasted at very low levels which was sufficiently off-putting to the public that a phase out began shortly afterward with ethanol as its replacement. After all, many people already mix ethanol with water in a cocktail glass and then willingly consume the combination.

For American Petroleum Institute, just about any press release on ethanol since the passage of the RFS expresses their position.

Here is part of what they had to say on this proposal: We believe that the RFS program is outdated and broken, and we support bipartisan efforts in Congress to sunset the program. The key assumptions made in 2007 when the Energy Independence and Security Act (EISA) was enacted have since proven in conflict with commercial and technical realities. Congress expected 1) continued, significant growth in fuel demand, 2) increased reliance on imported petroleum, and 3) rapid development of next-generation advanced and cellulosic biofuel technologies.

None of these three expectations came true, which is why the current RFS is incongruent with today’s reality. As a result of technological advances by the domestic oil and natural gas FMNMagazine

The blow up of the MTBE issue stunted the credibility of oil companies on such issues while providing momentum and a natural launching ramp to get even more ethanol in gasoline, and the RFS moved through Congress shortly afterward to be signed by then-president George W. Bush. And so it goes. n

READ MORE at FuelsMarketNews.com 12

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Fueled for Thought

by Joe O’Brien

When it comes to gasoline

formulations, octane is only part of the story. Although there are standards for gasoline specifications that provide a measure of universality, finished motor gasoline that is sold as regular, mid-grade or premium is still subject to quite a bit of variation. The final formulation of these fuels is heavily influenced by the season, a region’s environmental regulations and the cost and availability of blending components. With that in mind, here are some of the frequently asked questions Source North America receives about the variety of finished motor gasoline blends being distributed across the country today.

Q:

What criteria influence the various blends of gasoline that are distributed at U.S. gas stations?

A:

How gasoline is blended is largely informed by ozone-related regulations. There are two types of ozone: the ozone layer that is in the stratosphere, which protects the earth from harmful ultraviolet rays, and ground-level ozone, which is an air pollutant that contributes to smog. In 2015, the U.S. Environmental Protection Agency lowered the amount of ground-level ozone that was considered acceptable.

The EPA reduced the “attainment level” from 75 parts per billion to 70 parts per billion (measured over an 8hour period). Simply put, if your city has 70 parts per billion of ground level ozone or less, it is considered an “attainment area” that has an acceptable level of ozone pollution. If your city has more than 70 parts per billion of ground level ozone, it is considered a “nonattainment area” that has an unacceptable level of ozone pollution.

The Clean Air Act requires state air agencies to take steps to control ozone pollution in nonattainment areas. Two methods states may use to meet the federal ozone emission standards are to mandate Reformulated Gasoline (RFG) or impose lower Reid Vapor Pressure (RVP) requirements for conventional summer blends of gasoline.

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FUELS & SUPPLY

Q: A:

What are the defining characteristics of gasoline blends?

Throughout the year, there are three primary gasoline blend types used in the United States: summer blends, winter blends and RFG. According to the Environmental and Energy Study Institute, summer blend-fuels are required by the U.S. Environmental Protection Agency to reduce ozone formation from June 1 to September 15. RFG is required year-round in areas of the country with the worst smog and where more stringent ozone regulations are mandated.

Because the emissions standards for RFG are stricter than the standards for the summer blends, RFG areas are not allowed to use summer blends. In the wintertime, oxygenates are added to gasoline that reduce inefficient combustion of fuel during cold weather, which could cause higher carbon monoxide emissions.

Q: A:

What are fuel volatility and RVP, and how do they influence the finished fuel blends?

Evaporation of organic compounds contained in gasoline, such as butane, leads to “volatile organic compound” (VOC) emissions, which create higher levels of smog. RVP is a measure of fuel volatility (the fuel’s ability to vaporize). The U.S. EPA sets regulations that limit gasoline’s RVP during the summer months to prevent excessive evaporation of volatile organic compounds. The RVP standard is more stringent for areas that have been designated “volatility nonattainment areas,” meaning they are not meeting ozone limits prescribed in the EPA’s National Ambient Air Quality Standards (NAAQS).

The EPA provides a state-by-state RVP table at www.epa.gov/gasoline-standards/gasoline-reid-vaporpressure#table.

Q: A:

How is reformulated gasoline blended to comply with air quality standards?

Crude oil contains many organic materials that easily evaporate. When refineries create reformulated gasoline blends, they remove more of these volatile ingredients from the crude oil to produce a finished gasoline that creates fewer VOC emissions in the summer. A lower RVP is one of the primary parameters that contribute to an acceptable VOC level in reformulated gasoline.

Q: A:

Why don’t refiners make the lower-VOC summer blends year-round?

A couple of the reasons include costs and performance of the fuel. One of the organic compounds removed for summer blends, butane, is a less expensive blending component compared to other components. Therefore, butane is advantageous to lower fuel prices. Because refiners can use butane and simultaneously meet wintertime RVP standards, gasoline is usually less expensive in the winter. In addition, butane’s volatile qualities actually contribute to favorable performance in the wintertime (butane’s vapors help with ignition on cold days).

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Important Terms and Definitions Finished Motor Gasoline: A complex mixture of relatively volatile hydrocarbons with or without small quantities of additives, blended to form a fuel suitable for use in spark-ignition engines.

Conventional Gasoline: Finished motor gasoline not included in the oxygenated or reformulated gasoline categories.

Reformulated Gasoline (RFG): A finished gasoline formulated for use in motor vehicles, the composition and properties of which meet the requirements of the reformulated gasoline regulations promulgated by the U.S. Environmental Protection Agency under Section 211(k) of the Clean Air Act. Oxygenated Gasoline (Including Gasohol): Oxygenated gasoline includes all finished motor gasoline, other than reformulated gasoline, having oxygen content of 2.0 percent or higher by weight.

Gasohol containing a minimum 5.7 percent ethanol by volume is included in oxygenated gasoline.

Source: U.S. Department of Energy

FUELS & SUPPLY

Q: A:

Fueled for Thought

Who is required to sell reformulated gasoline under the federal RFG?

Alaska, Hawaii and U.S. territories do not have to comply with federal fuel volatility regulations. The Clean Air Act requires areas in 12 states and the District of Columbia to sell RFG. The EPA also gives states the option to “opt in” areas to the RFG program. Very recently, the EPA approved a petition from Kentucky to opt out of the federal RFG program in the northern area of Kentucky. The EPA provides a list of RFG areas at www.epa.gov/gasolinestandards/reformulated-gasoline.

Q: A:

Why would states want to “opt in” to the federal RFG program?

Nonattainment areas receive one of the following classifications depending on the severity of pollution levels: marginal, moderate, serious, severe or extreme. States may opt into the RFG program for areas which had been previously classified as marginal, moderate, serious or severe for ozone, but were subsequently redesignated as an attainment area. States may also opt into the RFG program for areas that are currently or were previously classified as transitional, sub-marginal or incomplete data ozone nonattainment areas.

This flexibility helps states ensure continued compliance with the NAAQS.

Q:

What impact has RFG had on pollution and what are some of the considerations for the future?

A:

RFG has generated both favorable and adverse consequences. In the early years of RFG, methyl tertiary-butyl ether (MTBE) was used as an oxygenating agent in RFG. However, MTBE, which is highly soluble, was linked to groundwater contamination. In 2005, Congress passed the

FMNMagazine

Energy Policy Act that removed the oxygenate requirement for reformulated gasoline. Since then, the use of MTBE as a fuel additive has declined and the use of ethanol has increased.

Further, a 1999 fact sheet from the U.S. Department of Energy (DOE) reported that reformulated gasoline generates less fuel energy than ethanol after factoring in the energy used to produce the fuels. However, it should be noted that this assessment was completed before the widespread adoption of increased ethanol content into the finished motor gasoline supply.

It is also estimated that RFG has reduced smog-forming pollutants 27% more than conventional gasoline since 2000.

There is some discussion about RFG’s practical value in this age of automotive emissions-control advancements. With the costs of RFG contributing to regional economic disparities, some people are beginning to ask if RFG has outlived its usefulness.

Q: A:

Why is a summertime RVP waiver necessary for E15?

During the ‘90s, efforts to control smog in large cities escalated. At about the same time, the potential environmental benefits of ethanol, such as reduced carbon monoxide emissions, gained traction. The addition of 10 percent ethanol to gasoline (E10) raises RVP by approximately 1 psi, which leads to increased evaporation. In 1990, Congress weighed the additional environmental benefits of E10 with E10’s RVP weaknesses and made an RVP exception known as the “1-pound waiver” for the summertime sale of E10. At the time, E15 wasn’t in contention as a future fuel, so it wasn’t considered for inclusion in the E10 Clean Air Act amendment.

That notwithstanding, the National Renewable Energy Laboratory has found the RVP of E15 to be almost the same as E10. Although the federal government has voiced support for an RVP waiver for E15, the waiver has yet to be approved.

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FUELS & SUPPLY

Fueled for Thought

Conclusion Liquid fuels will continue to dominate the fuels landscape for the short- to mid-term. It’s incumbent for today’s fuel marketers to continuously evaluate what fuels should be added—or perhaps removed—from their product mix to remain competitive. For instance, as part of new International Maritime Organizations standards beginning January 1, 2020, commercial ships will be required to use diesel with sulfur content of 0.5% or less. The increased demand in lower-sulfur fuel is expected to raise diesel prices.

Concurrently, some retailers are replacing their diesel pumps with E15. While refiners can deliver finished E15, it is most frequently blended on-site. Fuel marketers who continue to build their awareness of RFG, E15 and related fuel-blending issues will position themselves to optimize their strategic equipment investments. n

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

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Pump Up Your Profits with Biodiesel Webinar whereas your competitors may not be selling biodiesel, you get to enjoy the margins compared to your competitors for selling biodiesel blends.”

Are you taking full advantage of the profit potential of biodiesel blended fuel? This webinar, which was presented in October of 2018, provided information on changing tax laws in Illinois and the implications for biodiesel sales. While this is critical content for marketers and retailers in that state, the webinar also provided a wealth of information on the best practices for handling biodiesel in winter conditions and other tips for building a successful retail operation with biodiesel.

He went on to cover how the sales tax structure changed December 31, 2018, which will negatively impact lower blend products but add even greater profit potential until 2023 for those blenders of B11. In addition, he covered: • Exaggerations about biodiesel and filter and tank issues • Biodiesel performance in modern diesel engines • The exaggerated concerns over retailer biodiesel handing issues in colder climates

The speakers included an expert on biodiesel tax policy and handling issues, and a highly innovative and successful Illinois truck plaza operator.

• Biodiesel and the environment Puthusseril started by covering Greater Chicago I-55 Truck Plaza’s path to biodiesel. “We began to sell biodiesel in 2006 and we sold it pre-blended for nearly seven years. And then in 2011, more or less, we began to learn that we could blend it in house and be able to take advantage of more federal credits that we were not able to take advantage of previously by buying it preblended at the terminal.”

Pete Probst is President of Indigenous Energy and has been working on biodiesel projects for over 10 years.

Probst works with the Illinois Soybean Association on biodiesel outreach projects and technical research. Part of the research involves sampling retail stations for biodiesel content and cold weather operability in the Chicagoland area. Pete has a master’s degree in Environmental Science from the University of Illinois at Chicago.

She noted this insight was provided by Jeff Hove of the Alternative Fuels Council, who outlined the benefits and provided guidance on the benefits of blending it in house.

In addition, Puthusseril covered:

Robin Puthusseril is vice-president and co-owner of the Greater Chicago I-55 Truck Plaza in Bolingbrook, Illinois.

Puthusseril’s father purchased the business in 1995 and she has been in a management position there since 1999.

The truck plaza has carried biodiesel fuel since 2006, and all 10 diesel pumps now dispense biodiesel.

Puthusseril actively promotes biodiesel’s environmental and economic benefits and has testified before Congress on the benefits of the Renewable Fuel Standard.

• How biodiesel fits within their brand image (that includes no tobacco product sales) • How biodiesel blended fuel grew organically over the years as it became a successful product • How they blend the product and other operational insights • How they work with NATSO to support the product • The role of the Alternative Fuels Council in their success • The potential impact of federal tax policies

To watch the Webinar please visit: http://bit.ly/BiodieselProfits. n

Probst began the discussion covering the tax dynamics. As he stated, “So, the way the current Illinois state sales tax works is that anything less than a B10 blend—meaning 10 percent biodiesel, 90 percent petroleum diesel—has a 20 percent sales tax exemption, and anything over B11 percent biodiesel gets a 100 percent sales tax exemption. And what that means is that FMNMagazine

MPACT ATTENDEES! If you have questions and want to speak with presenter Pete Probst (Indigenous Energy) and Rebecca Richardson (ISA) stop by the Illinois Soybean Association, Booth #1101.

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Wind of Change

by John Eichberger

W

ithout a doubt, there is significant momentum behind the electrification of transportation. Just open any newspaper (or more accurately click on any news website) and the headlines scream at you that electricity is coming, kind of like the Red Coats were in 1775. But the U.S. market for electrified vehicles currently is heavily dependent on public policy to support market growth, and if we have learned anything in the past several years it’s that the winds of change are strong in American politics and what once was can soon be no more.

So as the wind blows, let’s take a look at some of the headlines that I like to point to concerning the growth of the electric vehicle market:

This thought prompts some whistling in my head and, in honor of the Berlin Wall opening its gates in November 1989 (almost 30 years ago), I give you the Scorpions:

And then most recently, General Motors’ own press release:

The world is closing in Did you ever think That we could be so close, like brothers The future’s in the air I can feel it everywhere Blowing with the wind of change

• Ford Goes “All In” on Electric Cars. Bloomberg Technology, January 15, 2018 • General Motors is Going All Electric. Wired, October 2, 2017 • Global Carmakers to Invest at Least $90 Billion in Electric Cars. Reuters, January 18, 2018

• General Motors Calls for National Zero-Emissions Vehicles (NZEV) Program, October 26, 2018

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As Mashable wrote last year, “If it seems like every carmaker is going electric, that’s because they are.” This is a pretty compelling headline, and the data seems to indicate that consumers are responding.

According to WardsAuto, through October 2018 sales of battery electric vehicles (BEV) and plug in hybrid electric vehicles (PHEV) combined for 244,480 units sold and represented 1.7% of all lightduty vehicles (LDV) for the year.

By comparison, sales were 58.4% above 2017 sales through October—this is a huge increase and dwarves the 2016 – 2017 sales increase of 26%.

FUELS & SUPPLY

Is the sky the limit for electrified powertrains?

In January 2018, Moody’s Investor Services claimed that automakers lose between $7,000 – $10,000 on each electric vehicle they sell. If this is true and if the ZEV requirements are vacated, will electric vehicles continue to show up on the showroom floor?

It is important to recognize that government policy has had a significant role in the development of the electric vehicle market, but policies can change with a redirection of political winds. And although automakers must be cognizant and responsive to global market demands, policies and pressures, domestically the rate of growth will still be influenced by the direction of policy. The following are some of the governmentrelated issues that should be taken into consideration when thinking about how the U.S. market for electric vehicles might continue to develop:

Tax Credit Limitations—To help offset the higher price of electric vehicles, the federal government provides consumers with a tax credit when they purchase a qualified vehicle. The credit can be as much as $7,500, depending on the battery capacity of the vehicle and applies only to vehicles that receive a charge from an outlet (i.e., a plug-in vehicle; traditional hybrids do not qualify). This has been a major benefit to the electric vehicle market.

California’s Zero Emission Vehicle Program—The vast majority of electric vehicles sold in the United States are sold into California in response to its Zero Emission Vehicle (ZEV) program. (At one point, I heard the number was about 50%.) The program requires automakers to produce ZEVs as a percentage of their total vehicles sold in California each year. In 2018, the target was 4.5% and by 2025 it will rise to 22%. Each vehicle sold generates credits based upon its total electric driving range. Nine other states have adopted the ZEV program: Connecticut, Maine, Maryland, Massachusetts, New York, New Jersey, Oregon, Rhode Island and Vermont. Combined, the ten states represent 30 percent of new car sales in the U.S. However, the program is facing a major challenge. In the SAFE Vehicles proposal to amend the Corporate Average Fuel Economy (CAFE) program, the Administration is seeking to eliminate the ZEV program claiming that it exceeds California’s authority under the Clean Air Act. It is uncertain at this time what will happen with this challenge to the ZEV program, but if it is successful one must wonder what motivation will remain for automakers to continue producing and selling ZEVs into California.

To underscore the value of tax credits, look at the state of Georgia. At one time, Georgia offered a $5,000 tax credit in addition to the federal tax credit for consumers who purchased an electric vehicle. Under this program, Georgia became one of the leading states in terms of electric vehicle sales. When the state repealed this tax credit, electric vehicle sales dropped 90% the following year.

But the federal tax credit does not last forever. Within the program, the tax credit is restricted to the first 200,000 qualified electric vehicles sold by each manufacturer. This applies to the parent company, not the brand. For example, the limitation applies to all electric vehicles within the broad General Motors family. Once the 200,000 limit is reached, the tax credit begins to phase out over the following year and, once it is gone, it cannot come back.

According to Inside EVs, by October 2018 six automakers were in jeopardy of potentially losing their credit eligibility. The publication reported that two companies have entered the phase-out period or will do so very soon (Tesla with estimated sales of 244,333 and General Motors at 196,986). Four others have room but are likely paying close attention to the cap: Nissan (125,747), Ford (110,583), Toyota (90,699) and BMW (77,366).

Plug-In Electric Vehicle Sales Up 58% in 2018

BEV + PHEV Sales

300,000

Tax Credit Legislation—During negotiations on a federal budget towards the end of 2017, there was a very strong chance that Congress would completely repeal the tax credit for electric vehicle sales. In fact, entering the final stage of negotiations, the Housepassed version eliminated the credit while the Senate version did not. At the end of the day, the tax credit survived but the debate exposes a potential issue going forward.

250,000 200,000 150,000 100,000 50,000 0

BEV

What impact might the elimination of this tax credit for the most popular electric vehicles have on their continued market growth?

Jan – Oct 2017 PHEV

Jan – Oct 2018 Source: Wards Auto

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In October 2018, two Senate bills were introduced relative to the tax credit. On October 6, Senator John Barrasso (R-WY) introduced S. 3559 which would eliminate the tax credit and establish a highway user fee for alternative fuel vehicles. Then on October 11, Senator Dean Heller (R-NV) introduced S. 3582 which would eliminate the 200,000-unit trigger for phasing out the credit and begin phasing it out effective in 2022.

FuelsMarketNews.com

FUELS & SUPPLY

“

Wind of Change

Markets that are heavily dependent on government policies (such as the U.S. and even electric vehicle-leading Norway) are susceptible to the changing winds of politics and are therefore not in control of their own destiny.

”

Neither bill has gained any momentum and no action has been taken, but they signal that the congressional debate about government incentives for electric vehicles is far from over.

And with elections comes another blast of potential windy change 2018 Mid-Term Election—The results of the election in November can have an impact on the future of electric vehicle policy. First, the Democratic party assumed the majority in the House of Representatives in January and will take over control of the agenda and all of the committees. As a very broad generalization, members of the Democratic party have historically been more supportive of policies that are deemed to support reductions in carbon emissions and many of the policies supporting electric vehicles are based upon a desire to reduce carbon. This could result in a House of Representatives that is generally more supportive of policies supporting electric vehicles.

The Senate remains in control of the Republican party and it is likely that Senate-based policies pursued during the current Congress will continue to be priorities in the next Congress. Senator Barrasso, who is Chairman of the Environment and Public Works Committee, could very well reintroduce a version of S. 3559. However, Senator Heller was not re-elected. His legislation, S. 3582, has no current co-sponsors so it is uncertain if another Senator would assume leadership of the issues contained within that legislation.

Wind of Change Markets that are heavily dependent on government policies (such as the U.S. and even electric vehicle-leading Norway) are susceptible to the changing winds of politics and are therefore not in control of their own destiny. No single country (including the U.S.) can independently drive or stop the transition to electric vehicles, but they can influence the pace of adoption within their borders. This in turn, for major markets especially, can have an influence on the pace of global adoption as automakers seek to balance their strategies to satisfy global market dynamics.

It is the desire of the electric vehicle industry to reach a point in which electrified vehicles deliver such compelling value (performance and economic) that they can continue to thrive in the absence of supportive policies, and I honestly believe they will someday:

Take me to the magic of the moment On a glory night Where the children of tomorrow share their dreams With you and me Take me to the magic of the moment On a glory night Where the children of tomorrow dream away In the wind of change (the wind of change) At this point, I think all would agree that the planets have not yet aligned to deliver on that vision and that government programs may be necessary for some time yet to enable the vision to become a reality. Of course, winds change, and it could be a bumpy road for a while as the market seeks to react to volatility in the policy world.

Policies today could be gone tomorrow:

Walking down the street Distant memories Are buried in the past forever I follow the Moskva Down to Gorky Park Listening to the wind of change All that said—a 57% increase in BEV and PHEV sales over last year is nothing to sneeze at; will the market continue to grow at such an accelerated rate? Guess we need to see in what way the winds decide to blow. n

READ MORE at FuelsMarketNews.com

John Eichberger

John is the Executive Director of the Fuels Institute. Founded

by NACS in 2013, the Fuels Institute is a nonprofit tax-exempt social welfare organization under section 501 (c) (4) of the Internal Revenue Code. It is dedicated to evaluating issues affecting the vehicles and fuels markets. The Fuels Institute commissions comprehensive, fact-based research projects that are designed to answer questions, not advocate a specific outcome of interests to industry stakeholders and policymakers considering legislation and regulations.

What will happen on electric vehicle policy (along with all other policies) remains to be seen as the Congress enters into a period that most anticipate will be rife with political battles between the chambers and the White House.

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Reversal of Misfortune: Oil in the U.S. Part 1

by Nancy Yamaguchi, PhD

The United States is emerging as a regional and global powerhouse in the petroleum sector.

It was not all that long ago that the U.S. was expected to become more and more heavily dependent on imported oil. Forecasts of U.S. crude production all were pointing down.

Production from mature domestic oilďŹ elds was declining, and the most oil-prospective areas remaining were in diďŹƒcult or environmentally sensitive areas. On the other side of the equation, forecasts of oil demand continued to rise, resulting in a widening gap between supply and demand. This trend seemed the most likely for the future.

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FUELS & SUPPLY

“ ”

It is rare to witness a reversal of fortune on the scale of what has happened in the U.S. oil industry since then. The advent of hydraulic fracturing and horizontal drilling brought the “Shale Boom.” This has transformed the U.S. into one of the world’s top three oil producers, in the company of Saudi Arabia and Russia.

The U.S. Energy Information Administration (EIA) reports that U.S. crude production rose to an average of 11.24 million barrels per day (mmbpd) during the third quarter of 2018. This places the U.S. in the number two spot, since the International Energy Agency (IEA) lists third quarter 2018 oil production from Saudi Arabia at 10.43 mmbpd and Russian output at 11.65 mmbpd.

It is rare to witness a reversal of fortune on the scale of what has happened in the U.S. oil industry.

Saudi Arabia and Russia currently are working to cut oil production to reduce global oversupply and strengthen prices. U.S. producers are under no such compulsion, and their output is expected to rise in 2019.

The EIA forecasts that U.S. production will average 11.9 mmbpd in 2019. Already, there have been times when U.S. crude output has placed it in the number one spot globally, and there appears to be little reason to doubt that it could not claim this top spot on a more sustained basis in coming months.

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FUELS & SUPPLY

A Reversal of Misfortune: Oil in the U.S.

“ ”

We are calling this “A Reversal of Misfortune.” There is an element of judgement here: Is the reversal good fortune, bad fortune, or unknowable? In some countries, abundant resources have been detrimental to economic development.

This is common enough to be known as “the resource curse.”

Resource prices can swing wildly, making revenue projections impossible. If governments rely on a resource extraction economy, tax revenues can spike or plunge, possibly destabilizing entire regimes. When Norway discovered oil in the 1960s, the government declared ownership of the reserves, and many Norwegians worried that oil would ruin their government and their country. The fact that it did not was attributed to the presence of an already-established economy, a competent and forward-thinking government, and strong rule of law. The U.S. may share some of these qualities, but perhaps more importantly, there is no national oil company.

In the U.S., the oil industry is composed of numerous, longestablished, companies. Also, the economy already was large and diverse before oil production began to rise again. The “resource curse” in the U.S. could take another shape, however, since the presence of abundant domestic oil may lengthen the fossil energy era and stifle investment in other energy technologies and prevent us from cutting carbon emissions.

Indeed, we may be on the doorstep of innovations that will make fossil energy obsolete. Perhaps the shale boom will end because oil demand collapses. In that case, the resources will remain in the ground.

The presence of abundant domestic oil may lengthen the fossil energy era and stifle investment in other energy technologies.

amounting to a decrease of 1.9% per year over the fifteen-year period. The U.S. required 7.3 mmbpd less imported crude than had been expected.

To place this volume in context, Figure 1 compares the reduction in U.S. crude imports with the volume of crude exports by each OPEC country in 2017. The U.S. cut its projected crude import requirement by 7.3 mmbpd, a volume greater than the total exports of every single OPEC country, including Saudi Arabia, which exported 7 mmbpd in 2017. Obviously, the impact on the global oil market has been massive.

From a purely pragmatic point of view, the author’s perspective is: First, oil is valuable. It contains so much easily accessible energy, and it is so thoroughly entrenched in the modern world that it will take time to dethrone it. Second, that it is better to have it and not need it, than to need it and not have it. Good, bad or indifferent, the reversal in the U.S. oil balance has been astonishing. How significant are the impacts on trade?

Figure 1: Reduction in forecast U.S. crude imports vs. OPEC country exports (mmbpd)

Forecasts of U.S. Crude Import Requirements, Then and Now Early each year, the EIA publishes its Annual Energy Outlook (AEO.) The AEO is the nation’s official long-term forecasting program. It is a massive data-gathering and computer-modeling exercise, covering a full range of energy supply, disposition, demand and price issues and projecting what might happen in coming decades given pre-determined scenario assumptions.

The country’s oil sector has changed so dramatically that projections of the future are now wildly different than they once were.

Source: OPEC exports per OPEC Annual Statistical Bulletin 2018, AEO2005 forecast and 2017 actual imports per U.S. Energy Information Administration

This chart presents a snapshot of 2017, but the projected change did not stop there. Figure 2 plots the AEO2005 forecast of the national crude import requirement to the year 2025, when the U.S. was expected to import 16.12 mmbpd of crude oil. Note the huge divergence between the AEO2005 forecast and the actual import volumes from 2002 through the first three quarters of 2018, as reported by the EIA.

The AEO2005 report noted that the U.S. crude oil imports had risen from 9.14 mmbpd in 2002 to 9.95 mmbpd in 2004.

AEO2005 forecast an increase to 14.16 mmbpd of imports in the year 2017. This meant that oil imports were expected to rise by 3% per year from 2002 to 2017. Since then, the actual data now reveals that the import requirement fell to 7.97 mmbpd in 2017, FMNMagazine

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A Reversal of Misfortune: Oil in the U.S.

Figure 3: Reversing the Downward Slide in Long-term U.S. Crude Production, kbpd

Moving forward to the AEO2018 report, its forecast now calls for a crude import requirement of only 6.0 mmbpd in 2025, nearly 10.12 mmbpd less than what was projected by AEO2005. As time moves forward, U.S. crude import requirements are projected to fall below 6 mmbpd and to remain in this neighborhood for over thirty years. Imports are projected to be 5.91 mmbpd in the year 2050—a far cry from where they might have been if the trend seen in AEO2005 had continued. Extrapolating the AEO2005 line would have placed U.S. crude import requirements at over 33 mmbpd in the year 2050. Presumably, this type of demand would have stimulated investment by other oil producing countries, and it would have supported a much higher oil price than is seen today. But it is worth noting that 33 mmbpd is more than the sum of all OPEC exports in 2017.

Figure 2: Major Reduction in Forecast of U.S. Crude Imports Source: Energy Information Administration (EIA), 2018 data are Q1 – 3 average

Figure 4 displays the tremendous variability in the number of active oil and gas drilling rigs in the U.S. from 2003 through 2018.

Oil prices were rising during the 2003 – 2008 period, and steady growth can be seen in the number of active rigs. But prices spiked in 2008, and the U.S., along with many other countries, slid into the Great Recession. The rig count was cut by more than half from over 2,000 in the summer of 2008 to less than 900 by mid-2009. The recession forced many companies to declare bankruptcy.

The second dramatic downturn in the U.S. active rig count can be seen after 2015. The turnaround in U.S. production began to erode the market share of OPEC exporters. Saudi Arabia had been cutting its production to keep the market balanced, but eventually this became a thankless task. Saudi Arabia began to ramp up production and launched a price war.

Source: Energy Information Administration (EIA), AEO 2005, AEO2018, and 2002-2018 (Q1 – 3) data

Reversing the Downward Slide in U.S. Oil Production

When the rig count began to recover in 2010, the growth was in horizontal drilling. In 2003, only around 6 – 7% of U.S. rigs were horizontal rigs. By 2010, horizontal rigs accounted for over half of the rig count. As of the first week of January 2019, 88% of the active rigs in the U.S. were horizontal rigs.

As the U.S. becomes more and more of a powerhouse in the global oil market, is there anyone still among the living that worked in the early years of the industry? Figure 3 presents the long-term trend in U.S. crude production, beginning in the year 1900—one hundred and nineteen years ago. The U.S. was indeed the world’s oil superpower back then. Oil production grew from 0.174 mmbpd in 1900 to 9.637 mmbpd in 1970, a growth rate of 5.9% per year. This was the peak year of output.

Production was sustained for a time as Alaskan crudes began to replace declining volumes from the lower 48 states, but by the mid-1980s, production began to decline steadily. Oil output dropped below 5 mmbpd in 2008.

Figure 4: Active Rigs and the Rise of Horizontal Drilling

For decades, our forecasts of oil production assumed that this downward trend would be permanent. The Shale Revolution turned this around. Oil production of 4.998 mmbpd in 2008 jumped to 10.761 mmbpd during the first ten months of 2018.

This astonishing growth equates to an increase averaging 8% per year. Year 2018 output has smashed the prior record of 1970, which had held for forty-eight years.

Reversing the downward trend was not a simple matter.

Drilling for oil and gas is sensitive to price, time and location.

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Source: Baker Hughes

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FUELS & SUPPLY

A Reversal of Misfortune: Oil in the U.S.

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A Reversal of Misfortune: Oil in the U.S.

One of the most prolific and famous oil-producing regions is the Permian Basin in Texas. Figure 5 shows the rise and fall in the active rig count between 2007 and 2018. The rig count dropped from 265 in 2008 to 137 in 2009, in response to the Great Recession. The count then climbed to a peak of 536 rigs in 2014.

It collapsed to 181 in 2016 in response to the Saudi-led oil price war. These were difficult years for the operators, but during this time, production efficiency soared. In 2007, each rig averaged 60 barrels per day of oil. When the rig count fell, the less-efficient rigs left the field first, and production per rig doubled to 123 bpd in 2010. Drilling efficiency rose to 588 bpd per rig in 2016 before leveling off. In 2018, the rig count had recovered to 463 active rigs, with an average production of 608 bpd each.

Figure 5: Permian Basin Rigs and Production per Rig

The export restrictions finally were eliminated at the end of 2015. As Figure 6 illustrates, U.S. crude exports were unleashed beginning in 2016. Crude exports skyrocketed to 591 kbpd in 2016, jumped to 1158 kbpd in 2017 and rose to an average of 1843 kbpd during the first three quarters of 2018.

The U.S. began shipping crude to far-flung destinations. During the 2000 – 2015 period, Canada usually was the destination for 95 – 100% of U.S. crude exports. In 2016, this share fell to 61%. It dropped to 31% in 2017, and it fell to just 19% during the first three quarters of 2018.

Although crude exports to Canada remain significant, during the first three quarters of 2018, the Asia-Pacific region has been the destination for nearly 45% of U.S. crude exports.

China, Taiwan, India, South Korea and Japan have become major customers. Europe and other destinations accounted for 32% of U.S. crude exports, with large volumes being shipped to the United Kingdom, Italy and the Netherlands.

Number of Rigs

Production per Rig (bpd)

Figure 6: Spread of U.S. Crude Exports, mmbpd

2007

2009

2011

2013

2015

2017 2018

Source: Energy Information Administration (EIA), and Baker Hughes

The U.S. Becomes a Major Oil Exporter During the 1970s, the U.S. placed restrictions on exports of domestic crude oil, the idea at the time being that this would provide some sort of supply security. Certain exports were permitted, including exports to Canada, exports of crude from Alaska state waters and a specified volume of California heavy crude. As U.S. production began to rise, the export restrictions placed artificial barriers to trade, and oil from key shale plays created localized surpluses, driving down prices and creating inefficiencies.

“ ”

1993 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018*

Source: Energy Information Administration (EIA), 2018 data are Q1 – 3 average

The U.S. also has an even larger role in exports of refined products, as shown in Figure 7. During the years when crude production was growing and restrictions were placed on its export, U.S. refineries with access to the inexpensive new crudes were running at very high rates of utilization to process the crude and export refined products instead.

Product exports more than quintupled from around 1 mmbpd in 2003 to 5.5 mmbpd during the first three quarters of 2018.

The destinations for these exports also are diverse. During the first three quarters of 2018, Canada was the destination for

Although crude exports to Canada remain significant, during the first three quarters of 2018, the Asia-Pacific region has been the destination for nearly 45% of U.S. crude exports.

FUELS & SUPPLY

“ ”

A Reversal of Misfortune: Oil in the U.S.

11% of U.S. refined product exports, while other Western Hemisphere countries accounted for 52% of U.S. exports.

Mexico imported nearly 1.2 mmbpd of U.S. refined fuel. Other key destinations included Brazil, Ecuador, Peru, Panama, Venezuela and Argentina. Asia-Pacific countries accounted for 19% of U.S. product exports, including Japan, China, India, Indonesia and Singapore. Europe and other countries accounted for 18% of exports, including the Netherlands, the United Kingdom, Turkey and France.

Figure 7: U.S. Refined Product Exports Are Growing, mmbpd

Hemisphere

It is just as difficult to believe that the U.S. is emerging once again as the world’s number one oil producer, with crude oil exports and refined product exports growing and reaching consumers around the world.

Source: Energy Information Administration (EIA), 2018 data are Q1 – 3 average

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A Reversal of Misfortune: Oil in the U.S.

Conclusion: A Reversal of (Mis)fortune

Fossil energy development and utilization place large tolls on the environment. Hydraulic fracturing is water-intensive, chemical-intensive and reinjection of fluids has caused seismic activity in some areas. Many believe that the fossil age is coming to a much-needed end at last. If U.S. oil production had continued to sink, and imports continued to soar, global oil prices would be higher today, and alternatives would be more competitive. The Shale Boom has delayed that. We can only reiterate that it is better to have it and not need it, than need it and not have it. If technological advancements make fossil energy obsolete, it can be left underground. n

The U.S. oil market has gone through some major cycles. It is difficult to believe that, a century or so ago, the U.S. was the world’s largest producer of oil. The public’s mind is more likely to recall the days of oil price spikes and perceived shortages. It is just as difficult to believe that the U.S. is emerging once again as the world’s number one oil producer (it most likely already occupies this spot), with crude oil exports and refined product exports growing and reaching consumers around the world.

Contrary to some sensationalist headlines, the U.S. is not a net exporter of crude oil. During the January – October period of 2018, the U.S. produced 10.76 mmbpd of crude, exported 1.89 mmbpd of crude and imported 7.85 mmbpd of crude. Nonetheless, this is a huge shift from where the country might have been. The AEO2005 forecasting exercise projected that crude imports would exceed 16 mmbpd in the year 2025. This projection was slashed to 6 mmbpd in the AEO2018 report. The impact on the global market is huge. Essentially, the U.S. as a customer was projected to buy 10 mmbpd of crude, and it has left the market, and the volume left behind is as much as the largest producers (the U.S., Russia and Saudi Arabia) can produce.

READ MORE at FuelsMarketNews.com

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

The resurgence of U.S. oil is a massive reversal of (mis)fortune, though in fairness, we cannot say that it is all good fortune.

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Association Leaders Look Back at 2018 and Ahead to 2019 As the new year was arriving Fuels Market News reached

by Keith Reid

out to association leaders throughout the industry to get some feedback on what their organizations accomplished in 2018 and what they anticipated for 2019. FMN would like to thank those who were able to respond in a timely manner during the busy holiday season.

National Association of Convenience Stores Henry Armour, NACS President & CEO

NACS advances the role of convenience stores as positive economic, social and philanthropic contributors to the communities they serve. The U.S. convenience store industry, with more than 154,000 stores nationwide selling fuel, food and merchandise, serves 160 million customers daily—half of the U.S. population— and has sales that are 10.8% of total U.S. retail and foodservice sales. NACS has 2,100 retailer and 1,750 supplier members from more than 50 countries.

FMN: What would you consider the association’s major accomplishments in 2018?

If there were a theme to 2018, it would be strength in numbers.

Despite all the disruption that is redefining the broader retail industry and all the issues—both legislative and regulatory—that threaten our industry, 2018 was another strong year for our industry.

And much of this strength can be attributed to how our industry works together, both through NACS and with other groups, to find common ground for issues and concerns related to the industry.

NACS’ biggest accomplishments in 2018 are not just about the end game of “winning” a vote or helping to define an issue but are about the process of working together as an industry—or with other industries—to define how we can accomplish more together.

Here are three examples: n To address payment card and technology standards, we, along with other retail trade groups and debit networks, created the Secure Payments Partnership (securepaymentspartnership.com), an advocacy group focused on promoting security across the U.S. payments system.

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n To address payment costs, we worked with Congress on the 2018 Farm Bill that includes a ban on processing fees on electronic benefits transfer (EBT) transactions and reiterates the ban on interchange fees. n In response to the U.S. Food and Drug Administration’s announcement to restrict the sale of flavored e-cigarettes to adult-only stores, we met with the White House Office of Public Liaison and the Domestic Policy Council, as well as the FDA and shared our concerns about the FDA’s action and offered policy proposals. And, our members responded when we asked them to make their voice heard: Convenience retailers sent more than 5,000 letters to Capitol Hill about the issue.

These are high-profile examples of the work we do every day, behind the scenes, to tell our industry’s story to legislators, the media and other key opinion-leaders. And it’s something we will continue in 2019, whether these issues or many others, including a litany of fueling issues.

FMN: What are the top

initiatives and issues NACS expects to address in 2019?

While we know that there are many issues that could be upon us in 2019, whether related to electric vehicles, new technologies that continue to redefine convenience or how legalized sports betting or marijuana sales could play a bigger role in our channel, there is one thing that we do know.

Disruptions to traditional business models are all around and that forces all businesses to continue to innovate and find new ways to stay ahead of the competition. The good news is that you don’t have to do it alone. We can serve as your voice and there is strength in numbers. We all do better when we are all engaged.

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FMN: Why should a convenience

FMN: What are the top

store operator consider NACS membership or become involved with NACS activities?

initiatives and issues NATSO expects to address in 2019?

As the association representing truckstops and travel plazas, we pay particular attention to infrastructure financing, truck fuels policies and other issues that uniquely affect our industry. Our members have a particular interest in the safe and efficient interstate movement of freight and people, since most NATSO locations operate at major highway interchanges and serve professional drivers and other interstate travelers. We’ve led efforts to support smart infrastructure investment and oppose poor financing schemes such as road tolling and commercial rest areas. As the association representing truckstops and travel plazas, we pay particular attention to infrastructure financing, truck fuels policies and other issues that uniquely affect our industry. Our members have a particular interest in the safe and efficient interstate movement of freight and people, since most NATSO locations operate at major highway interchanges and serve professional drivers and other interstate travelers. We’ve led efforts to support smart infrastructure investment and oppose poor financing schemes such as road tolling and commercial rest areas.

Most of all, the power of NACS is about how we as an industry come together to make each other better. A record 25,000-plus attendees were at the 2018 NACS Show to learn new ideas in sessions, see new products on the expo floor and connect with each other during networking opportunities. Those opportunities to deliver knowledge and connections, plus advocacy, is something that we do at other focused events throughout the year, whether our acclaimed Leadership Education Programs, our State of the Industry Summit or our Global Summits in Europe and Asia.

These are more than events; they are opportunities for members to learn about issues on a global scale. And, that’s important because issues around the world are in varying stages of their life cycle. In Asia, technology defines convenience to a much greater extent, while in Europe, fresh is the focus. Both broad trends will have a profound impact on how you go to market.

NATSO

In 2019, NATSO will continue to advocate for policies that will support a diverse array of fuel supply options. Such policies, which include the Renewable Fuel Standard and the Biodiesel Tax Credit, lower our members’ cost of goods sold. We are actively pushing Congress to extend the Biodiesel Tax Credit, which expired at the end of 2016. The expiration of that credit has created a lot of market uncertainty and makes it difficult for fuel retailers to invest and plan for the future.

Lisa Mullings, chief executive for both NATSO and the NATSO Foundation NATSO has been representing travel plaza and truckstop owners and operators for over 50 years and pursues a clear mission: to advance the success of truckstop and travel plaza members by delivering solutions to members’ challenges and achieving the public policy goals of the truckstop and travel plaza industry. It represents more than 1,700 travel plazas and truckstops nationwide, owned by over 200 corporate entities.

We will also continue urging the Environmental Protection Agency to halt its practice of granting waivers exempting small refineries from their obligations under the Renewable Fuel Standard. EPA has the authority to grant waivers exempting small refineries from their obligations under the RFS if they can prove that it would cause them a disproportionate economic hardship. But in 2018, EPA granted an unprecedented number of these hardship waivers, even to refineries that are owned and operated by some of the most profitable refining companies in the world. Without a transparent process to guide the assessment of these small refinery waiver requests, the exemptions will continue to undermine the law’s intent and decrease demand for biofuels.

FMN: What would you consider the association’s major accomplishments in 2018?

NATSO recently launched the Alternative Fuels Council to help fuel retailers leverage the resources necessary to learn about and incorporate alternative fuels into their supply offerings. The Council already has put a number of compelling products on the market, including a RIN Management Service that helps fuel retailers that blend and sell renewable fuels to more efficiently participate in the Renewable Fuel Standard (RFS) program and manage their Renewable Identification Numbers (RINs).

FMN: Why should a truckstop

or travel plaza operator consider NATSO membership or become involved with NATSO activities?

Bringing new fuels to market is a complex and time-consuming task and through the Alternative Fuels Council retailers have access to highly skilled professionals who can help them expedite the process while also accurately meeting their compliance needs.

On the policy side, early in 2018, Congress passed legislation providing for a retroactive biodiesel blenders’ tax credit for 2017, marking a victory for our industry and allowing fuel retailers to sell biodiesel at a price that is cost competitive with gasoline and diesel. NATSO also beat back plans by the Administration to increase interstate tolling and commercialize rest areas.

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NATSO serves truckstops, travel centers and other diesel fuel retailers exclusively through advocacy, information and collaboration.

The Alternative Fuels Council will certainly continue to be a priority focus for us this year as we seek to remove the hurdles that stand in the way of many fuel retailers from entering the 35

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Association Leaders Look Back at 2018 and Ahead to 2019

alternative fuels markets. One of the things of which I’m most proud is that whenever we engage with our members, we provide solutions that translate into real dollars without having to spend a lot of capital. All of our members, for example, have an opportunity to participate in our retail profitability program.

NATSO visits member locations to provide expert advice on site/store layout, merchandising and other aspects of their operations. We do the hard digging, and we leave them with actionable, executable ideas that help increase their profitability with little or no money. While this is something we’ve been doing for several years, we are planning to increase our resources to reach more of our members because it really does improve their bottom lines.

PMAA

Rob Underwood, PMAA President The Petroleum Marketers Association of America is a bit different from the traditional industry association. PMAA is a federation of 47 state and regional trade associations representing approximately 8,000 independent petroleum marketers nationwide. When a petroleum marketing company joins the state association, that automatically qualifies them as PMAA member companies.

FMN: What would you consider

the association’s major accomplishments in 2018?

Last year was a busy one for the association. Some quick accomplishments from 2018: n EPA approved PMAA’s low liquid level integrity test as an alternative method for containment sump testing that is required under the 2015 federal underground storage tank (UST) regulations. PMAA’s alternative test method will significantly reduce reoccurring sump testing compliance costs for tank owners. PMAA continues to work with ASTM and other groups to develop additional compliance cost saving tests that do not require introducing water into the sump and spill bucket. n PMAA continued to lead the way in disaster response efforts by reforming the waiver process, clearing regulatory hurdles, minimizing delays at weigh stations and speeding wait times at water-borne terminals. PMAA also established the PMAA Disaster Fuel Response Program, a critically necessary link between marketers available to provide fuel to disaster areas and those in need of such fuel. n PMAA protected marketers at ASTM by voting against efforts to place the point of compliance for fuel quality at the retailer, which potentially would require retailers to test fuel instead of terminal operators to avoid potential fuel related liability. n PMAA secured a 10-year reauthorization of the National Oilheat Research Alliance (NORA), which helps the heating fuels industry with professional education, improving energy efficiency and safety and research consumer education.

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n PMAA worked to keep the doubled estate tax exemption in place and making sure the step-up in basis (which provides that there is no capital gains tax due from a decedent) remains in place.

FMN: What are the top

initiatives and issues PMAA expects to address in 2019?

Many of the issues PMAA worked on in 2018 will be key issues for petroleum marketers in 2019: n PMAA filed a brief in the Visa and Mastercard swipe fee litigation now pending in U.S. District Court in New York. The purpose of the brief is to oppose any settlement of the case that shuts out branded marketers from filing claims against the $6.24 billion settlement fund. n PMAA filed comments in support of the Trump Administration’s efforts to pare back the Obama Administration’s costly corporate average fuel economy (CAFE) standard final rule that would likely require more electric vehicles (EVs) in the marketplace. PMAA highlighted multiple petroleum marketing concerns and the need to rewrite the rule to reflect marketplace reality. The Trump Administration has yet to issue a final rule. n PMAA continued to highlight concerns with the RFS and the need to reduce the corn ethanol mandate. While the Trump Administration has yet to reduce the mandate, it issued exemptions to refiners, which has indirectly reduced the mandate, providing for a level playing field in the marketplace and preventing an E15 mandate across the country. n PMAA submitted a proposal to the National Conference on Weights and Measures (NCWM) to require transparency in the marketing and branding of E15 fuels by requiring the term “E15” to be included in marketing of E15 such as “Unleaded 88 E15.” The proposal is on the agenda for the NCWM 2019 Interim Meeting. n PMAA participated in task groups addressing potential implementation issues regarding refiner efforts to move towards a 95 RON fuel which could potentially be required in new vehicles starting with the 2023 model year and ultimately replace today’s 87, 89 and 91 octane fuel slate. This will be an ongoing issue for the next few years.

FMN: Aside from advocacy

legislative and regulatory initiatives, what are some of the other benefits you provide your members and by extension, their members??

PMAA’s new credit card program with Worldpay will pay dividends to the petroleum marketing class of trade. Worldpay is offering petroleum marketers a very competitive card processing transaction fee of 0.029 cents with no hidden fees.

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Association Leaders Look Back at 2018 and Ahead to 2019 technical documents have been recognized by the EPA as sufficient to meet some of most important regulatory requirements: RP900: Recommended Practices for the Inspection and Maintenance of UST Systems, and RP1200: Recommended Practices for the Testing and Verification of Spill, Overfill, Leak Detection and Secondary Containment Equipment at UST Facilities.

PEI

Rick Long, Executive Vice President & General Counsel Like PMAA, the Petroleum Equipment Institute has some unique positioning as a trade association whose members manufacture, distribute and service petroleum marketing and liquid handling equipment. Founded in 1951, PEI represents more than 1,600 member companies in all 50 states and more than 80 countries. Members include manufacturers, sellers and installers of equipment used in service stations, terminals, bulk plants, fuel, oil and gasoline delivery, and similar petroleum marketing operations.

Our members also are monitoring EPA’s efforts to remove legal impediments to the year-round sale of E15. Currently, this higher-level ethanol blend cannot be sold in most of the country from June 1 to September 15 because the Clean Air Act places summertime restrictions on sales of highly volatile fuels.

EPA has said it intends to issue a waiver that would open up year-round E15 sales. But getting from here to there is no easy task. Even with full legal authorization to sell the fuel, interested owners and operators still will have to show that their UST systems are compatible with the fuel. PEI distributors and service contractors can help make these determinations and, when necessary, assist with equipment upgrades and replacements. The association’s website (www.pei.org) also has a Component Compatibility Library to help owners and operators check the suitability of various manufacturers’ products for use with E15.

However, PEI is actively involved with the range of state and federal agencies in studying recommended practices and procedures for how petroleum equipment is used, which has direct impact on the equipment customers including retailers, marketers and commercial fuel buyers.

FMN: What would you consider the association’s major accomplishments in 2018?

FMN: Why should a distributor,

Several years ago, PEI made a commitment to engage more deeply in Latin America. In 2018, the momentum for that initiative accelerated, thanks largely to a core group of Latin American PEI members who are helping us develop our goals and strategy for this important region. To take one important metric, an increase in Spanish-language programming at the 2018 PEI Convention led to our highest-ever Latin American convention attendance.

The PEI Board of Directors also authorized the hiring of a fulltime PEI staff person for Latin America—a move we believe will dramatically boost the services and expertise we can deliver to the region.

installer or equipment manufacturer consider PEI membership or become involved with PEI activities?

A shortage of service technicians continues to plague our industry. In the last couple of years, PEI has taken several steps to address this problem, including a series of recruitment videos, a skills assessment test and an entry-level service tech training course test. In 2019, we’ll release a more advanced, second-level service tech training course. The new course will include essentials on how a fueling station operates, with chapters on electrical basics, point of sale equipment, tanks, piping, hydraulics, dispensers, release detection, fuel quality and safety.

On the technical side, we released a new recommended practice destined to be one of the most consequential documents ever published by PEI—RP1700: Recommended Practices for the Closure of Underground Storage Tank and Shop-Fabricated Aboveground Storage Tank Systems. The timing of this publication couldn’t have been better. Thousands of USTs installed in response to the 1988 U.S. EPA UST regulations will soon reach the end of their 30-year warranty period and will need to be removed from service. Until now, owners, operators and contractors have faced a patchwork of often-inconsistent tank closure techniques across the country. RP1700 will foster coherent and sound closure practices that will help owners, operators and contractors remove and decommission USTs safely, appropriately and in an environmentally friendly manner.

We’ll also publish a new recommended practice on the design, construction, installation, operation and maintenance of liquid natural gas fueling (LNG) facilities. LNG is the fuel of choice for a growing number of heavy-duty commercial vehicle fleets.

PEI has no agenda other than to be of service to those involved in fuel- and fluid-handling equipment.

Whether your concern is safety, the environment, efficient operations or keeping current on the latest in innovation and technology, PEI provides the resources, experts and connections you need. We’ve been the leading source of information for the industry for 69 years, and we’ll continue to be so for many more decades to come. n

FMN: What are the top initiatives

and issues PEI expects to address in 2019?

READ MORE at FuelsMarketNews.com

On the regulatory front, PEI remains focused on the states’ efforts to comply with the EPA’s 2015 federal UST regulations. Two of our FMNMagazine

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The United States appears less exposed to geopolitical risks affecting its oil supply than at any time since the relatively stable period preceding the widespread oil sector nationalizations of the 1970s. Energy prosperity in the U.S. contrasts with a more fraught period for traditional energy exporting states where geopolitical challenges have been compounded by fiscal stress and rising domestic energy demand.

Source: Geopolitical Dimensions of U.S. Oil Security, Jim Krane and Kenneth B. Medlock III

Bottom Line:

The U.S. shale revolution has ramifications far beyond the general impact on U.S. fuel prices and other domestic issues. Internationally, it has dramatically reset paradigms in international relations that have been in place since the Nixon Administration.

READ MORE

at FuelsMarketNews.com

by Angela Wisdom

U

nderground (fuel) storage tank (UST) monitoring is a critical part of fueling operations for both commercial fueling and retail fuel operations. The creation and monitoring of tank and fuel sump alarms is critical to ensuring environmental safety and EPA regulation compliance.

As a leader in both tank gauge technology and alarm monitoring, InSite360 leverages both Veeder-Root ATG and FuelQuest experience to ensure fuel storage tank alarms are quickly resolved. The monitoring of gasoline, diesel and kerosene fuels helps fuel wholesalers and retailers improve their business.

In analyzing over 160,000 alarms from over 15,000 fueling sites across the U.S., we have developed this list of the top 10 causes of UST tank and automatic tank gauge (ATG) alarms. A proper alarm management program can ensure rapid response to fuel-related environmental risks while also avoiding unneeded service technician calls.

2018 Top 10

Convenience Store Fuel Tank UST Alarms

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Image courtesy Veeder-Root, ÂŽ2019

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RETAIL OPERATIONS

1 Sensor Fuel Alarm: A Sensor Fuel Alarm indicates that a fuel tank or line sensor located in a containment area is sensing a liquid, generally gas, diesel or water. Forty percent of these ATG alarms are remotely managed and resolved because investigations identify local events like water intrusion due to rain, which is a common trigger for this alarm.

If the alarm cannot be resolved remotely, an authorized service technician will be dispatched to investigate the cause of the alarm and the integrity of the fueling system.

Alarm Risk Areas: Environmental Compliance; Financial

2 UST Tank Overfill Alarm: A Tank Overfill Alarm alerts that the gasoline or diesel level in a storage tank has reached or exceeded a preprogrammed threshold of the tank’s capacity— usually ninety-five percent—and the tank is in immediate danger of overfilling.

Typically, this alarm also triggers a shutoff to prevent spillage; this alarm is very likely due to a delivery either in progress or recently received. Most of these alarms can be remotely resolved by stopping the delivery in progress and preventing the tank from being overfilled.

3 PLLD Gross Test Fail Alarm: A PLLD (Pressurized Line Leak Detection) Gross Test Fail Alarm indicates that the line leak detection system has detected a line 40 FuelsMarketNews.com leak in excess of three gallons per hour.

This alarm will also generate a SHUTDOWN ALARM if the system is programmed to shut down dispensers on a gross line fail. This is a critical condition that must be addressed immediately, and twenty-one percent require a dispatched technician, however, seventy-nine percent were remotely resolved by the Insite360 remote fuel management alarm team.

Alarm Risk Areas: Environmental Compliance; Financial

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RETAIL OPERATIONS

2018 Top 10 Convenience Store Fuel Tank UST Alarms

4 Tank High Water Alarm: A Tank High Water Alarm identifies that the water probe has risen and reached the “High Water Limit” preprogrammed threshold. Because the water level exceeds the limit, water must be removed from the tank.

Eighty-six percent of these alarms are resolved remotely once the level is assessed while fourteen percent require a truck roll.

Alarm Risk Areas: Financial

5 Sensor High Liquid Alarm A Sensor High Liquid Alarm indicates that the monitored parameter in a tank’s interstitial reservoir or containment area has exceeded the preset threshold. Sixty-five percent of these alarms are resolved remotely whereas thirty-five percent require a dispatch to evaluate the tanks at the c-store, hypermarket or commercial fueling site.

Alarm Risk Areas: Environmental Compliance; Financial

6 Tank Probe Out Alarm A Tank Probe Out Alarm displays that the probe has failed to provide a tank level reading (inventory) or the reading is unstable. Generally, this is flagged as a hardware failure caused by the probe itself and/or wiring into the console. Fifty-four percent of these alarms are resolved remotely with forty-six percent requiring an authorized service technician be dispatched to the gas station.

Alarm Risk Areas: Environmental Compliance; Financial

7 Tank Sudden Loss Alarm: A Tank Sudden Loss Alarm warns that the in-tank ATG probe has noticed a decrease in fuel level beyond the programmed threshold during an idle

period. This alarm can be indicative of a fuel leak or of fuel theft. Eighty-five percent of these alarms are handled without dispatching a technician, however, the cause of fuel loss should be investigated.

Alarm Risk Areas: Environmental Compliance; Financial

8 Sensor Open Alarm: A Sensor Open Alarm indicates that a probe sensor has stopped communicating to the ATG after being activated. The pressure sensor reading is less than -8 psi (55.16 kPa) and it can only be tested while the gas pump is running. When this alarm occurs, the gas pump stops dispensing if the site manager has programmed the Veeder Root TLS 450 or TLS350 ATGs to do so.

Alarm Risk Areas: Environmental Compliance; Financial

9 Tank Delivery Required: A Tank Delivery Required indicates that the fuel level in the fuel tank has reached a preprogrammed threshold level based on the gas station’s need for a gasoline or diesel delivery. This level is set based on the size of the underground storage tank and how many gallons the site sells.

10 Tank High Limit Alarm: A Tank High Limit Alarm is an environmental compliance setting that shows that the product density in the tank has reached a preprogrammed threshold, usually ninety to ninety-five percent of tank capacity and indicates a danger of overfilling tanks. This threshold should not be exceeded to ensure that there is not accidental spillage.n

Angela Wisdom Angela Wisdom, Senior Director, Sales at InSite360, a Veeder-Root company. Angela is recognized as a leading authority in downstream petroleum process automation and operational excellence. Her career spans over 20 years. Insite360 is a leading supplier of fuel management solutions in the retail and wholesale fueling industry. Its products enable global, national and regional retail and commercial fueling operations, fuel wholesalers and supply chain members to accurately monitor fuel inventory, optimize fuel logistics and pricing, manage environmental compliance and optimize equipment performance. For more information about Insite360 products and services, contact Andy Brett at 713-222-5774 or abrett@fuelquest.com or visit www.insite360suite.com. For questions, please contact Mary Jo Burt at mburt@fuelquest.com or 713-222-5700 x5338.

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by Ed Kammerer

How Do Dripless Nozzles Reduce Risk at the Fueling Island?

If you think about it, a great deal of faith and trust is put in the

drivers who refuel their vehicles at the country’s 150,000-plus self-service fueling stations. These fallible humans, who can be prone to distraction and carelessness, complete thousands of these operations involving highly flammable liquids every day, and yet there are an infinitesimally small number of catastrophic incidents that occur as a result.

While conscientious drivers deserve a great deal of the credit for this, an equally important portion goes to the companies that have made the commitment over the years to develop gasoline-dispensing systems and equipment that are designed to maximize the safety of the fueling process.

Still, there has been one piece of equipment—the actual fuel nozzle itself— that has awaited the full implementation of operational optimization. That’s because at the end of every refueling operation a precious few drops of gasoline or diesel fuel remain in the nozzle spout. Most of these drops are allowed to trickle out, with the bulk finding their way to the ground where there is the chance that an ignition source can ignite them and cause a fire or explosion. Or, at the very least, end up on the driver’s shoes or vehicle.

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Addressing the Concerns Over the years, nozzle manufacturers have made many significant advances in the design and operation of their products. The recent goal in these advances has been the elimination of fuel loss or retention (dripping nozzles) at the conclusion of the fueling process that can—at its most spectacular (in a bad way)—create a fire risk, but can also present various other more subtle concerns for drivers, retailers and the environment if allowed to escape to the atmosphere or remain inside the fuel spout.

In recent years, manufacturers have made progress in eliminating all risk during fueling operations by concentrating on the idea that fuel nozzles could be made “dripless.” In that time, all but one has settled on a specific nozzle-spout design that is capable of accomplishing this task. This design houses gutters, ripples and dams within the spout to create “liquidcatching” surfaces that ostensibly prevent the fuel from dripping out of the nozzle.

While this design is effective in keeping those fugitive drops of fuel from reaching the ground, vehicle and the driver’s hands or clothes, the fuel that is retained in the “liquid-catching” style of nozzle still poses an environmental hazard. The inherent problem with this design is that when the nozzle spout is returned to the dispenser cradle, it is filled with fuel (in most cases, more fuel than what would have traditionally dripped on the ground).

RETAIL OPERATIONS This captured fuel is now exposed to the atmosphere as the nozzle sits in the cradle, which creates emissions that are heavy in volatile organic compounds (VOCs) as the fuel evaporates and escapes into the environment.

How Do Dripless Nozzles Reduce Risk at The Fueling Island?

Dripless Nozzle Technology

Diesel Capture Technology

Knowing that there still had to be a better way to more reliably deal with those final drops, OPW created a different type of free-draining fuel nozzle that would not require any liquid-catching surfaces. The features of this new nozzle design and operation are: • A dripless technology that offers a free-draining spout with no dams, gutters or hidden reservoirs to capture fuel for later release into the atmosphere • A specially designed interlock system, available on some models, that prevents fuel from flowing unless the spout is fully inserted into the vehicle’s fill pipe • A shutoff system that halts fuel flow when the nozzle is tipped up or falls out of the vehicle • Advanced double-poppet, to-thepenny flow-control technology • Comfortable two-piece hand insulator • UL and cULus listing • California Air Resources Board (CARB) approval (for models that feature a special interlock system)

Checking All the Boxes A critical concern when developing this new nozzle was ensuring that it satisfied all of the various regulations that govern the release of VOCs at fueling sites. Since 1990, the use of Stage II gasoline vapor-recovery systems has been required by states to combat the release of excess fueling emissions. In addition, Onboard Refueling Vapor Recovery (ORVR) equipment was phased in for new vehicles and was first implemented in 2001 for light-duty vehicles. However, the addition of ORVR to the vehicles essentially allowed them to do

nothing more than reprocess their own vapors when they were being refueled.

In 2011, the U.S. Environmental Protection Agency (EPA) released a policy called the “Widespread Use for ORVR and Stage II Waiver.” In this action, the EPA essentially eliminated the largely redundant Stage II requirement in order to ensure that refueling vapor-control regulations were beneficial without being unnecessarily burdensome to retail petroleum marketers.

The main reason for the amended policy was that a large majority of vapor-recovery systems were not compatible.

In fact, they were not only incompatible, but also counterproductive. The operation of Stage II vapor-recovery systems is designed to suck the vapor out of a vehicle fill pipe while fueling, however, a vehicle outfitted with ORVR is simultaneously trying to collect the same vapors.

In effect, the Stage II system is working at cross-purposes to the ORVR canister and just collecting clean air. The ultimate result is that the vapor-recovery nozzle is introducing clean air into the underground storage tank (UST), which can lead to vapor growth and tank over-pressurization.

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When this phenomenon occurs, more fuel evaporates, and more harm is done to the environment.

The conventional (non-Stage II vaporrecovery) nozzle solves this conundrum because it is not collecting any vapors.

Now by adding the free-draining design, the nozzle also meets VOC-reduction requirements since it enables the draining of the residual fuel out of the spout and into the vehicle before the nozzle is removed and replaced in its cradle. Think of this technology as a waterfall where everything runs downhill with no resistance.

RETAIL OPERATIONS

How Do Dripless Nozzles Reduce Risk at The Fueling Island?

In addition to keeping flammable fuel off the ground, the vehicle and the driver, along with reducing VOC emissions, the free-draining nozzle design offers a variety of other benefits to all concerned parties:

The Driver

—Fugitive drops have been paid for, and those that dribble out of or are retained in the nozzle and not allowed to enter the fuel tank cannot be used to power the vehicle. Also, gasoline or diesel fuel could potentially get on the driver’s hands, clothes or shoes and would need to be washed off immediately, while fuels that run down the side of the vehicle can affect the vehicle’s finish.

The Retailer

—Spilled fuel will stain the concrete around the fuel island, creating an unattractive and unwelcoming fuel site and less-than-desirable brand image. Fugitive fuel will also gather on the nozzle trigger, hand insulator and fuel guard, making it dirty and unappealing for customers to handle. Longer term, excessive amounts of spilled fuel, or the accumulation of spilled fuel over time, will necessitate a cleanup program and, along with it, associated costs and pump-island downtime.

Conclusion Since the invention of the automobile, the loss of fuel at the completion of the vehicle-fueling process has been one of those inescapable facts of life, much like death or taxes. Today, though, new free-draining fuel-nozzle technology helps ensure that every drop of fuel will reach the vehicle’s fuel tank. This not only helps eliminate the risk of a catastrophic occurrence at the fueling island or the release of excessive levels of VOCs to the atmosphere, but also creates many ancillary benefits for the driver, the retailer and the environment. n

The Environment

—Every VOC that is allowed to escape into the atmosphere has the potential to compromise breathable air. Additionally, allowing the escape of excessive fugitive VOCs runs counter to the growing corporate missions that are designed to make the fueling process “greener,” cleaner, safer and more environmentally friendly.

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Ed Kammerer Ed is the Director of Global Product Management for OPW, based in Cincinnati, OH, USA. He can be reached at ed.kammerer@opwglobal.com. OPW is leading the way in fueling solutions and innovations worldwide. OPW delivers product excellence and the most comprehensive line of fueling equipment and services to retail and commercial fueling operations around the globe. For more information on OPW, please go to OPWGlobal.com.

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Making Lists,

Checking Them Twice Car Wash Maintenance

by Todd Klitzke

To quote the eminent author George R.R. Martin: “Winter’s coming.” Or, in many North American locales in late November 2018, it had already arrived. For the vehicle-wash operator, the arrival of winter’s blustery winds, flying snowflakes and plummeting temperatures is enough to send a chill up the spine.

In preparing your wash for the cold, dark winter days, however, this old saying is especially appropriate: An ounce of prevention is worth a pound of cure. In other words, smart vehicle-wash operators are the ones that begin considering how to winter-proof their wash systems when the hazy, lazy days of summer are still in full force.

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“

RETAIL OPERATIONS

It is also important for each individual wash operator, regardless of the size of the facility, to tailor each maintenance checklist to the specific needs of the business or location. Even washes that feature the same equipment and are under the same ownership can have different needs based on location, customer base, average daily vehicle throughput or workforce size and experience.

”

under the same ownership can have different needs based on location, customer base, average daily vehicle throughput or workforce size and experience.

A great reference point is the manufacturer’s equipment manual. This document can provide specific information and “best practices” that will help facilitate the timely and correct completion of all maintenance activities. Do remember, though, that there is no such thing as a one-size-fits-all solution, and specific tasks should be added or modified as needed.

Maintaining A Sense of Control It’s a basic fact of vehicle-wash life— equipment that is not running does not wash cars, which does not put money into the cash register. On the contrary, broken or ill-performing equipment siphons funds from the bottom line and makes the wash a drain on the entire operation, whether it’s located at a convenience store or, more pointedly, the centerpiece of a standalone wash facility.

Therefore, the foundation of a wash that operates reliably and successfully in the winter is a preventativemaintenance schedule that ensures that the wash system and all of its various components are functioning in tip-top condition at all times. Creating maintenance checklists for various timelines is key in this area. Developing daily, weekly, monthly and semiannual checklists will help guarantee that both everyday tasks and more critical maintenance needs are met.

It is also important for each individual wash operator, regardless of the size of the facility, to tailor each maintenance checklist to the specific needs of the business or location. Even washes that feature the same equipment and are FMNMagazine

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4Daily

Making Lists, Checking Them Twice

Checklist

Here is a list of things to consider when doing daily maintenance checks:

n Running a test wash before the site opens will provide a first impression of operational standing each day and indicate if all equipment is functioning properly.

n Ensure that bay floors are free of debris and drains are not clogged, especially by the dirt and grime that can accumulate after a number of washes have been performed. Also, know that loose debris can fall out of truck beds or cars during the wash cycle. This debris can get caught in the equipment, causing damage and potential failures.

n Check for liquid leaks throughout system, including in the chemical pumps, hydraulics and the equipment room. n Make sure the equipment and building are clean since drivers find a wash that is tidy and clean much more approachable than one that is dirty. n Check that all blowers on the dryer assembly are working and pointed in the proper direction.

4Weekly

Checklist

Weekly checklists generally take a closer look at the electronic system that facilitates carwash operation: n Inspect all lines—air, water and electrical—for wear and secure connections.

n Inspect the Motor Control Center box for loose connections or ground shorts, as well as moisture leaks.

n Check the operations of the rollover arches, and bleed down and reset all air regulators that are used on the rollover.

n Inspect all fittings for wear, including brush-arm bearings and mountings, as well as check that all moving components are in proper alignment, which will lessen the chances that vehicle damage will occur. n Check any operational or customervisible signage, replace any burnt-out bulbs and clean the signage.

n Check for compliance with OSHA regulations, and check that all safety equipment, such as fire extinguishers, is in working order.

4Monthly Checklist

Monthly checks are the time to begin noting when any seasonal measures may need to be taken to keep the wash system in proper working order:

n Check all hardware for tightness, including items such as gearbox crank arms and the repetitive-motion components of the high-pressure pump in the equipment room. n Check oil and fluid levels throughout the system and refill if low.

n Do a run-through of hydraulic systems at a full-speed range by adjusting the flow control valve, which enables checking for any operational issues.

4Semi-Annual Checklist

Semi-annual checklists offer a look at the condition of heavy-wear items, such as hydraulic pumps, crankshafts, drive trains and chains:

n Drain, flush and refill fluids as needed. This includes all hydraulic power packs, as well as high-pressure pumps and gearbox oil for mitters. n Grease all electric motor bearings in air dryers and pumps.

n Review OSHA regulations. These regulations are updated with regularity (even as often as weekly) and can lead to compliance issues if they are not followed properly.

This is also a good time to check all safety features again, such as fire extinguishers.

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Making the Most of Winter

While creating and adhering to daily, weekly, monthly and semiannual checklists will keep the wash operating, there are some winterspecific items that must be considered if the wash is to survive until the birds start chirping and the flowers start blooming again. As bad as any winter can be, there are always those welcome bright, sunny 40°F days that coax people out of hibernation and prompt them to wash away the salt, dirt and grime that have been accumulating on their vehicles.

When winterizing your wash, the most basic task is making sure that all equipment in the wash—boilers, floor heaters, radiant heaters, etc.— is operating properly. While the equipment is the obvious top priority, a complete inventory of the wash site and its surrounding area should be taken. Are all of the metal snow stops in place on the roof of the wash? In the event of a large snowfall, is there an area where the snow can be moved that does not interfere with the wash entrance? Have you contracted with someone to remove the snow? Or, do you have an in-house solution to snow removal? Do you have an appropriate amount of snow and ice melter on hand so the slip-andslide risk to vehicles, customers and employees is reduced?

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RETAIL OPERATIONS

Making Lists, Checking Them Twice

”

When winterizing your wash, the most basic task is making sure that all equipment in the wash—boilers, floor heaters, radiant heaters, etc.—is operating properly. While the equipment is the obvious top priority, a complete inventory of the wash site and its surrounding area should be taken.

Loyalty programs can also be enhanced with winter-specific offerings. If someone washes their vehicle when it’s 40°F or lower, give them a coupon for a free wash next June. Offer a coupon for a free cup of coffee or hot chocolate if the driver upgrades to a premium wash. Create a “Beat Old Man Winter Club” that rewards drivers with a free wash if a certain number of washes are bought between the months of November and February.

There is an unlimited number of ways that drivers can be rewarded for venturing into the wash bay when they’d rather be at home in front of a roaring fire.

There are also some subtle tricks the operator can use to enhance the winter wash experience. Though it may seem counterintuitive, it’s true that in colder climates winter can be a much easier time to clean cars. Enabling a faster wash process to push more cars an hour through the bay will maximize the entire cost of a wash. In conjunction, a more efficient wash will translate to lower operating costs as water, power and chemical usage are streamlined when daily throughputs might not be as high.

Too often, however, operators do not make the simple adjustments in wash operation as the seasons change, leading to the cost-inefficient equation of lower volumes with higher costs per vehicle.

In many cases, the best tool a wash operator can have as winter approaches is a good distributor. A solid, reliable distributor can aid the operator as preparations are made for a change in seasons. Distributors who are on top of their game are familiar with the weather conditions that are coming and have the expertise to ensure that the operator is getting the most value out of the wash equipment, as well as operating it under the most ideal efficiencies and conditions.

Conclusion

Winter’s here, so it does no good to bury your head in the sand (or snow, as the case may be). While the arrival of Old Man Winter may bring trepidation, if the proper preventative-maintenance measures are taken and proper attention is paid to the needs of drivers and the wash system itself, winter can be a profitable time for vehicle-wash operators. In the end, those that do prepare are bound to be singing a happy tune when spring finally does arrive. n

READ MORE at FuelsMarketNews.com

Todd Klitzke Todd is the Technical Support Manager for the PDQ Manufacturing, Inc., De Pere, Wisconsin. He can be reached at todd.klitze@pdqinc.com. PDQ, a Dover company, is recognized as a technological leader in vehicle-wash systems, providing superior quality, outstanding support and products that contribute to its customers’ profitability. Brands include LaserWash® and ProTouch® In-Bay Automatic Vehicle Wash Systems, SwingAir® and MaxAir® Dryers, Access® Wash Activation Systems, Cortex and WALS. Products are sold and supported worldwide through an authorized distribution network. For more information, please visit pdqinc.com or call 800-227-3373.

Wholesale Energy Parts & Equipment

800-772-2300 | shieldsharper.com FMNMagazine

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Keep rolling in winter weather with MCC’s cold ow additives!

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IMPROVING YOUR PERFORMANCE

SPONSORED CONTENT

Not Your Grandpa’s Gasoline Detergent Early gasoline engines: mechanical marvels with their own set of challenges. These engines—with non-adjustable cam timing and simple carbureted fueling—were less efficient than modern engines and had much less stringent emissions requirements than today. Deposits (carburetor, early generation fuel injectors and intake valves) have always been an issue, robbing engines of power, fuel efficiency and creating increased emissions.

To combat deposits, gasoline detergents were introduced in 1954. These detergents were simply low molecular-weight surfactants whose function was to prevent and remove carburetor deposits1.

As engine designs evolved with the introduction of positive crankcase ventilation (PCV) and exhaust gas recirculation (EGR) in the 1960s and 1970s3, these gasoline detergents were no longer able to maintain engine cleanliness. The next generation detergent, a polybutene succinimide, was used at higher concentrations than the carbureted engine detergent1. However, this secondgeneration detergent provided only keepclean detergency and couldn’t maintain control of intake valve and fuel injector deposits. Gasoline engine detergent chemistry continues to evolve as engine designs change. Today’s engines still require detergents to maintain features like gasoline direct injection, turbocharging and high compressions ratings—resulting in greater power output, fuel efficiency and reduced emissions.

Engine Deposits and Deposit Control Additives Deposits on fuel injectors (both port and direct injectors) can alter the spray pattern of the fuel—impacting power, drivability and fuel economy.

Due to the high temperatures and environment of a running engine, intake valves and ports are also prone to deposit formation. Deposit formation adversely affects cold-start and warm-up drivability and can increase exhaust emissions.

Engine power can falter due to restricted air flow and altered air flow patterns.

Deposits on valves can even cause valve sticking and burned valves based on the location of the deposit.

Combustion chamber deposits (CCD) result in a higher-octane number requirement by increasing the combustion temperature and increasing the compression ratio3. In modern engines, two problems associated with CCD have occurred: combustion chamber deposit interference (CCDI) and combustion chamber deposit flaking (CCDF) can happen due to the contact of deposits either with moving engine parts or by causing improper valve seating.

Deposit control additives, polybutene amine in a carrier fluid, were introduced in 19701. These additives were used at higher concentrations than the previous polybutene succinimide and provided substantial detergency throughout an engine’s intake system. However, with the passage of the Clean Air Act (effective January 1, 1996), the first generation of deposit control additives resulted in excessive combustion chamber deposits in unleaded fuel2. A second generation of deposit control additive was required that could clean and keep-clean the modern engine of the time.

This next generation of deposit control additives was formulated using polyether amine chemistry (PEA) in 19801. This chemistry provided deposit control throughout the intake system without causing combustion chamber deposits, as well as removing deposits, ensuring engine cleanliness. Due to the cost of PEA deposit control additives, these detergents are generally limited to aftermarket additive products.

Gasoline Fuel Evolution and Ethanol With implementation of the Clean Air Act, detergency is regulated for gasoline fuel.

In 1995, the EPA mandated a lower limit for deposit control additive in gasoline, known as the Lowest Additive Concentration (LAC)3.

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TOP TIER™ Detergent Gasoline: A Higher Standard A group of top automakers (Audi, BMW, Fiat Chrysler, GM, Honda, Mercedes-Benz, Navistar, Toyota, Volkswagen) recognized that the current detergency regulations do not provide the necessary protection to ensure engine cleanliness and top performance. This OEM group established TOP TIER™ Detergent Gasoline in 2004 to set a higher standard for detergent concentration.

The Future

While detergent chemistry may not have changed much since debuting, the lifetime cleanliness of an engine has significantly improved.

Engine technology has changed significantly since the introduction and the testing protocols used for TOP TIER™ approval. The next big change expected is a change in the testing used to qualify TOP TIER™ treat rates. With the right gasoline detergent additive package, customers can expect to reap tangible benefits and save money through decreased maintenance costs and downtime by preventing deposit issues before they become a major problem. n

Katie Dennig is the Laboratory Supervisor at MidContinental Chemical Company, Inc. (MCC). Katie can be reached at katied@mcchemical.com.

1. Gibbs, L.M., “Gasoline Additives-When and Why,” Paper No. 902104, Society of Automotive Engineers, Warrendale, PA., 1990.

2. “EPA Takes Final Step in Phaseout of Leaded Gasoline,” EPA, 29 January 1996. <https://archive.epa.gov/epa/aboutepa/epa-takes-finalstep-phaseout-leaded-gasoline.html>.

3. “Motor Gasolines Technical Review,” Chevron Products Company, 01 June 2009. <www.academia.edu/4857002/Motor_Gasolines_Technica l_Review_Chevron_Products_Company_Motor_Gasolines_ Technical_Review_Recycled_Recyclable_paper>.

by Brian Reynolds

“”

Lots of people take credit for controlling the price of fuel and for sure everybody does want to know who or what is behind the price.

Supply and Demand.

A standard answer to a question for people who don’t really want to know!

Being an industry expert and all,

I am frequently asked by the rank and file such things as why fuel is so high or why fuel is so low. Or how come gas prices are lower three blocks away from where we are. When it comes to pricing, my generic answer is “Supply and Demand.” I noticed some time ago that nobody really cares what the answer is nor will they be willing to stick around for any length of time for a lucid and factual explanation.

For the most part “Supply and Demand” usually turns out to be the correct answer without the need for in-depth analysis.

Lots of people take credit for controlling the price of fuel and for sure everybody does want to know who or what is behind the price. The term speculator just about wore everybody out a few years ago when oil was pushing $150.00 a barrel. For some crazy reason, taxes don’t get blamed as much as they should.

The weather can for sure have something to do with it from time to time. Crude Oil production absolutely has something to do with it. A crazy dictator can have an itchy finger from time to time and drive everybody to the brink. But what is the true easy way to figure out an answer for the price of fuel?

Of course, there are many variables to the answer, but after a full analysis, “Supply and Demand” usually is the final answer.

Unless of course, a particular retailer is trying to make a point with prices, be it a grand opening or some other territorial anomaly. If it is a local event, with retailers going at it toe to toe, then I call that “sign language.”

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RETAIL OPERATIONS

I provide this standard answer as a public service to our industry that will most likely be correct under any and all fuel price scenarios. The reason for the current pricing situation (high or low) is: “Supply and Demand.”

Wal-Mart gets credited for being the melting pot of society—after all, everybody goes to Wal-Mart. If Wal-Mart is the melting pot, then a typical Convenience Store is the petri dish of society, because just about every demographic contributor buys fuel. Where else can you find a doctor filling up a brand-new Lexus on one side of a pump and a trash truck on the other side? The next pump over a good ole boy filling up his Ford F-250 on one side and a grandfather filling up a grey minivan on the other. Often, it’s not the gravitational pull of the planet that attracts customers to a location, it is price.

and Demand. The cause may be a complicated supply chain series of events, but supply and demand will usually be the ultimate conclusion.

and Demand! On Memorial Day weekend we raise prices. Because it’s Memorial Day weekend and that’s what we do!

When Hurricane Harvey hit the Gulf Coast Houston area in 2017 and 2018’s Florence hit the Carolinas, it did not require a PhD in Economics to understand that a major supply chain disruption had just happened and that the price of fuel just went up along with it for who knows for how long. The answer to give out when asked about prices: Supply and Demand.

So, without having to be totally on top of current events regarding the state of oil and fuel prices, the quick answer of “Supply and Demand” as the universal catch-all answer for pricing actually does work! n

Fuel suppliers at terminals know how to discourage marketers when they have some kind of a shortage, be it a turnaround or a pipeline issue: they raise the price to stretch out their inventory. Hence Supply and Demand.

It’s January, everybody is broke from Christmas and it’s 22 degrees outside and the price just went down. Nobody is driving, we have more supply than demand, so the answer is: Supply and Demand! It’s Memorial Day weekend; it’s beautiful outside. Everybody wants to go somewhere —the price just shot up: the answer is Supply

People are strange critters who can temporarily lose all sense of mathematics when it comes to doing the analysis for fuel street prices. People will drive five miles out of their way to save 17 cents for a fill-up!

One of my all-time favorites is when a customer comes into the store and starts complaining to the clerk about high gas prices. So, here’s the picture: the clerk is 19-years-old, wearing a store uniform and a name tag that says “Kip.” Why would anybody think that a 19-year-old would know anything about world fuel prices and then give the poor kid a bunch of grief for not knowing the answer?

So, I provide this standard answer as a public service to our industry that will most likely be correct under any and all fuel price scenarios. The reason for the current pricing situation (high or low) is: “Supply and Demand.” Don’t try to explain it, just say it without blinking an eye and you too can come across like an expert!

There can be a hurricane or a war.

Speculators or a spectacular refinery explosion, but at the end of the day, the effect for the current price will be Supply FMNMagazine

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at FuelsMarketNews.com

Brian Reynolds Brian began his career working as a teenager in his family-owned jobbership in Cisco, Texas, and was at the forefront of many significant industry milestones.

Reynolds was an early adopter of cardlock systems in the 1980s, a pioneer of high-volume supermarket fueling centers in the 1990s and one of the key architects of inventing reward-based fueling loyalty in the 2000s. His entire professional career has been an experienced-based building block succession of leading-edge game changer concepts. He currently works for Dover Fueling Solutions in ClearView, wet stock management sales. Contact Brian at Brian.Reynolds@DoverFS.com or cell 325-733-6490.

RETAIL OPERATIONS

Digital Signage Can Change Shopper Perception and Boost Sales at C-Stores

Digital Signs Guide Shoppers Inside the Store

by David Warns

After the National Association of Convenience Stores (NACS) Show took place in Las Vegas, it was clear that the industry made a giant pivot to fresh food, including prepared meals as well as produce, cheese, meat and grocery items.

The show floor was packed with vendors that enable c-stores to offer items that 10 years ago were unthinkable, including fresh pizza, tacos, salad bars, deli sandwiches, vegan/vegetarian items and gourmet drinks.

According to the recent NACS State of the Industry report, c-store foodservice provided 22.5 percent of in-store sales and 33.9 percent of gross-profit dollars in 2017, up 4 percent for the year.

Yet when customers drive up to a c-store, they often aren’t expecting fresh fruits and vegetables, ready-to-go meals and more health-conscious fare. That’s where outdoor and indoor digital signage can play a huge role in changing shopper perceptions and boosting sales.

Digital Signage Pulls Shoppers into the Store While most customers still frequent a cstore for fuel, outdoor digital signage can highlight what’s inside the store without cluttering up windows with a lot of signs.

Digital signage gives c-store owners the ability to advertise meals-to-go, fresh produce and other items, introducing fuel customers to the inside of the store before

they even step foot in it. The flexibility of digital displays also allows owners to highlight items based on time of day: specialty coffee in the morning, ready-toeat meals at noon, healthy snacks mid-day, and take-and-bake items in the evening.

Digital displays also help draw customers away from competitors, including nearby fast food restaurants. According to the NACS report, quick serve restaurants gained trips in 2017, while c-stores’ trips fell, mainly due to heavy value meal advertising. Showing consumers that c-stores carry healthy alternatives to fast food will help capture sales that otherwise would take place down the road.

In addition, as electric cars become more mainstream, c-stores will become convenient locations to power up. Since charging takes 20 – 30 minutes, digital signage will be key to drawing motorists inside the store to shop or eat while waiting.

The Family Express chain of convenience stores installed digital message centers at nearly every one of their Midwest locations to advertise their made-to-order food service and to better promote their proprietary brands. By delivering dayparted communications to customers, advertising messages were immediately actionable.

Likewise, MotoMart convenience stores in Illinois credit their digital signs with increased sales of high-margin products and services. Changeable messages on their outdoor signs improved sales, drawing customers from the gas pumps into the store to take advantage of special deals that featured the store’s most profitable products.

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Once inside, digital displays can be used to guide shoppers to high-profit centers, including fresh food, restaurants, coffee bars and beer caves.

Since c-stores are carrying more perishable food items, advertising perishables on indoor and outdoor digital signs can lead to increased sales of these items. In addition, the flexibility of digital signs means that managers can quickly promote items and boost sales of perishables that otherwise would be thrown out.

Finally, digital signage is one of the most cost-effective and flexible forms of advertising available, allowing store managers to easily change messages to respond to things like weather (hot/cold drinks, umbrellas), area sporting events (tailgate and party supplies), life events (fresh flowers, gift cards) and even high lottery jackpots (lottery tickets).

As c-stores continue to disrupt the retail environment, it’s more important than ever to be able to effectively grab the attention of customers and influence their perception of c-stores. Digital signage meets this need better than any other form of messaging. n READ MORE at FuelsMarketNews.com

David Warns

David is vice president of sales at Watchfire Signs.

He can be reached at 800-637-2645.

Major Oil, after spending the last decade shedding retail convenience assets, is now regretting those divestitures and looking to reenter the downstream distribution with a slightly different twist. This has been exemplified by the recent Thorntons Inc. acquisition by a joint venture created between affiliates of ArcLight Capital Partners and BP to grow in the downstream refined products segment. Thorntons operates 191 stores in 6 states and has a distribution operation.

Source: Major Oil, Private Equity and Convenience Retail, Joe Petrowski

Bottom Line:

Not all that long ago when the Majors were exiting retail, old heads in the industry would wryly note: “This has all happened before; they’ll be back some day.”

READ MORE

at FuelsMarketNews.com

by Chris Posey

Streamlining Dispatch Functions:

The Benefits of Centralized Dispatch When it comes to fleet

dispatch, two basic competencies are key to customer satisfaction: the ability to provide your customers an accurate, planned arrival time ahead of deliveries and then following through on that commitment with an accurate, on-time delivery. At one time, connecting the two was relatively simple. Doing so was merely a function of inventory status and truck and driver availability.

Modern dispatch is much more complicated. Considerations such as driver logs, vendor management, warehousing, fuel cost and routing/ mapping through a dynamic network of roadways call for proactive fleet management utilizing algorithms that consider historical driving conditions as well as realtime visibility into trucks on the road.

This decentralized dispatch model may be considered by some to be more agile, as a dispatcher is able to work with a limited number of trucks in a localized area. Communication and technology were limiting factors, requiring that some fleets allocate dispatch responsibilities to numerous smaller locations in this decentralized fashion. But as is often the case, the challenges and limitations of yesterday are often nullified with improved resources. In the case of fleet dispatch, issues of locale, network knowledge and asset utilization are minimized with a capable, intuitive, centralized, cloud-based dispatching solution.

Many companies practice site-based dispatch, where individual locations provide guidance to their fleet within a relatively immediate vicinity.

A centralized dispatch model offers numerous benefits. One study performed at Vancouverâ&#x20AC;&#x2122;s Segal Graduate School of Business, Simon Fraser University, uncovered five benefits of such a dispatch model.

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When dispatch functions are brought into a common location, natural communication synergies take place. Distributed across multiple locations, dispatchers lose the valuable ad hoc exchanges that sometimes inform dynamic routing decisions.

A Centralized Dispatch Model Enhances Knowledge Transfer

When dispatch functions are brought into a common location, natural communication synergies take place. Distributed across multiple locations, dispatchers lose the valuable ad hoc exchanges that sometimes inform dynamic routing decisions. More formally, when dispatch is centralized, there is no longer a question as to the location of a particular record, map or resource. Knowledge transfer, both formal and informal, both electronic and analog, takes place in a single environment. It is easy to establish streamlined protocols and to follow up once established.

Adding to the streamlining of single-site knowledge transfer is that of a cloud-based dispatch solution. With such a solution, knowledge transfer is performed electronically, and the streamlined information is available immediately, even beyond the dispatch site. Managing an entire fleet from a single, cloud-based, dispatch software interface allows dispatchers to compare driver schedules and make changes to maximize the overall efficiencies of a fleet.

A Centralized Dispatch Model Generates Reliable Backups The safe, reliable archival of dispatch records is essential to future fleet dispatch improvements. “It is critical that competent backups [provide] an appropriate level of dispatch service that optimizes fleet control.” The adage that history informs the future is particularly true in a dispatch environment, where real-life experiences on the road determine the best decisions for future drivers. Backups containing experiential data that is stored as part of a cloud-based dispatch solution make insights garnered over days, weeks and years readily available to all company stakeholders as they maintain the integrity of essential data.

A Centralized Dispatch Model Expands Recruitment and Retention Capabilities Dispatch functions may be centralized around areas in which the talent pool is deep, allowing companies to hire strong candidates for their dispatch roles. In addition, companies can enjoy more meaningful employee tenures when the dispatching function is situated in a single location that eliminates the need for relocation. Considerations such as available technologies, infrastructure and the presence of strong educational/training institutions may be important considerations in landing on a dispatch site. When dispatch duties are centralized, managers can make the decision on location once and be done, rather than having to “make it happen” at numerous, potentially subpar, locations. n

A Centralized Dispatch Model Improves Training Functions When dispatch duties are scattered across multiple locations, it can become challenging to consolidate training processes.

Differences in focus, deliverables and behaviors can arise as a result of varied emphases that are somewhat unavoidable when training occurs across varied locations. Centralized dispatch consolidates the training process, allowing for the communication of a focused message across all trainings.

In addition, when training using a centralized dispatch model, companies can save money, needing only to invest in a single trainer. Training resources are also minimized and common across all training sessions, and deviation from the standard training is curtailed significantly. Ultimately, standardized dispatch training that occurs at a centralized location decreases the complexity of the training function while eliminating superfluous activities.

READ MORE

at FuelsMarketNews.com

A Centralized Dispatch Model Standardizes Roles, Procedures, Processes and Systems

Chris Posey Chris is a Group Marketing Manager at PDI, a leading global provider of enterprise software solutions to the convenience retail, wholesale petroleum and logistics industries. PDI is headquartered in Atlanta, Georgia, and Chris contributes from PDI’s office in Tulsa, Oklahoma. PDI logistics solutions are cloud-based fleet management applications that provide real-time location tracking of a fleet on a vehicle-by-vehicle basis, using a customized, web-based portal. Customers can standardize processes, improve human resources from the talent pool to the training room and retain and transfer knowledge and data safely, securely and seamlessly.

The primary benefit of centralized dispatch is simple standardization. This is particularly important as fleet management companies grow in size and functional ability.

When dispatch duties are distributed across various locations, disparate influences can arise in isolation, impacting key dispatch processes at individual dispatch sites.

FMNMagazine

By centralizing dispatch duties, fleet management companies can determine and implement best practices from a single site with no concern that local, untested behaviors will negatively impact research-based practices. Standardized dispatch metrics mean the same thing across the company and are not subject to error-prone, local interpretation. The pursuit of standardization becomes even more beneficial when using a cloud-based dispatch platform. Dispatch practices can be easily integrated into a larger battery of organizational procedures when dispatch information is saved to the cloud.

Processes may be archived and utilized to inform decisions in other departments and other sections of the larger supply chain. These archives may be stored safely and securely while remaining readily accessible to all stakeholders across the fleet.

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IN CASE You Missed It

WEBINAR SERIES

The Reconciliation Reflux Webinar

Oil’s inventory at proprietary and third-party terminals along with settlement responsibilities associated with U.S. Oil’s purchase and sale of bulk petroleum products.

Smith started by outlining the data challenges most companies face: “Currently, most of this reconciliation is done manually. We have people that have a lot of spreadsheets. They have PDFs that are sent from vendors that they have to enter in manually. And, of course, this takes a lot of time and it is also prone to error as you’re looking at an invoice and you’re typing, at the same time, into the system. You could transpose some numbers, you could forget to align. So, it’s just been shown that trying to keep up with great volumes of data that the companies work with now on a manual basis is very, very difficult.”

Fuel marketers/distributors, terminal and pipeline operators,

refiners and trading companies all deal with a staggering amount of non-stop data. Inventory positions and movements, bills of lading, product invoices and transactional tax records generate a vast amount of data that must be reconciled to maintain accuracy for financial as well as regulatory and compliance purposes.

He went on to describe these challenges in detail, and how businesses from fuel suppliers to terminal operators (among others) are using new data tools to streamline such mundane and difficult tasks as:

This webinar, which ran October 18, 2018, covers a unique solution by the company IGEN designed to manage the data avalanche from a single solution or for a range of processes. It showcases how tax analysts, inventory and exchange managers, accounting professionals and others are able to set themselves up for reconciliation success. It walks through the tools available to streamline a necessary and vital business task.

• Inventory with third parties • Tax paid to a vendor vs. tax collected from a customer • General ledger matching to numerous other data sources Henning noted the savings in time allows U.S. Oil to find a better use of staffing: “We were spending roughly 300 hours a month and we’ve cut that in half. We’ve been able to eliminate one FTE (full-time employee) associated with the reconciliation process.

The most difficult reconciliation that we do used to take us 40 hours—a week—to work on that reconciliation and get that finished off due to the truckload and BOL activity and the pipeline activity on that contract. And we’ve gotten that down to less than half a day. And, you know, we are now able to match up every single receipt BOL, disbursement BOL, pipeline ticket, inventory adjustment, and gains and losses, and to be able to take those, that transactional activity from our various systems that we use and compare that with third-party data.”

The presenters included an IGEN company representative and the experiences of a customer/co-developer, U.S. Oil. Steve Smith is the Chief Architect and one of the co-founders of IGEN, a motor fuels tax compliance software firm located in Green Bay, Wisconsin.

Steve has worked in the oil and gas software industry since 1997 with many of the major oil and gas companies such as Shell, BP, Chevron and others.

Steve has over 40 years in the IT industry and has worked at many major corporations in the utilities, banking, manufacturing and oil and gas industries and was also at Microsoft in the early 1990s.

He went on to describe in detail how they employed the system, the challenges and opportunities, and the specific results on the business operations.

The webinar video is available for easy online viewing at: http://bit.ly/IGENreflux. n

Brad Henning is the Manager of Inventory Accounting for U.S. Oil, a leading energy and transportation products distributor and marketer. Brad’s 30-plus year career has been entirely in the oil and gas industry. Brad has worked in variety of financial roles over his career, first with BP and now with U.S. Oil. Brad’s current responsibilities include oversight and control over U.S. FMNMagazine

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Do All Fleet Fueling Companies Need Petroleum Logistics Solutions?

Many variables that help determine profit for fuel distributors who

provide fleet fueling service are out of their controlâ&#x20AC;&#x201D;from volatile oil prices to fluctuating marginsâ&#x20AC;&#x201D;but the key to maintaining strong margins is for fleet fuelers to nail down what they can control.

Fuel distributors can lower their overhead costs while increasing deliveries per shift using an end-to-end petroleum logistics solution.

These features allow petroleum distributors to eliminate paper tickets and automate business processes and data capture for dispatchers, drivers, back office staff and the customer. They also enable petroleum distributors to create detailed, accurate cost-to-serve reports.

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by Todd Ward

WHOLESALE & FLEET OPERATIONS

The components of a full-service solution should include:

1

Barcode scanning to accurately identify vehicles and prevent cross contamination

2

Digital totalizer capture to accurately record gallons

3

Locked vehicle list to prevent unauthorized fueling

4

Unfueled vehicle reason codes to communicate missing or inaccessible vehicles

5 6

Wireless vehicle odometer capture

Use Transportation Logistics Software to Track Your Most Important Asset Using an end-to-end petroleum logistics solution, you can also track mileage, maintain paperless delivery records, manage driver and overtime hours, and keep tabs on equipment maintenance needs. With complete visibility into, and control over, your business assets in transitâ&#x20AC;&#x201D;and access to this data from your mobile deviceâ&#x20AC;&#x201D;you can stay compliant with industry regulations (like hours of service requirements) while finding ways to reduce inefficiencies.

7

Emailed sequential fueling tickets with totalizer values, latitude/longitude and signatures

Also useful is data-driven load and dispatch planning, order management, and route and schedule planning features. Fleet fueling companies can also track real-time vehicle locations, alarms, deliveries, shift statistics, inventory and other businesscritical data from one centralized solution. They can then use this data to optimize their processes, better anticipate customer needs and improve quality of service.

8

Customer portals for real-time and historical access to fueling transactions

9

Yes, All Fleet Fueling Companies Need Petroleum Logistics Solutions

Automated emailed fleet fueling reports and file feeds to fuel clearinghouses

Support for multiple companies on the same site and mobile vehicles

The petroleum distribution and fleet fueling market grows more competitive by the day. With more competition from large wholesalers, small-to-medium fleet fueling companies must leverage high-touch service and efficient operations to win more business. Maintaining an outdated status quo by relying on manual processes is a recipe for failure, as more efficient businesses with sophisticated technology can move in on your territory.

By preventing cross contamination of fuel products, unauthorized fueling and manual data entry, petroleum distributors can keep their budgets lean while ensuring all inventory and asset management data is accurate and up-to-date. By eliminating manual paperwork, drivers can save time and enjoy more productive shifts.

The workforce automation that petroleum logistics solutions enable doesnâ&#x20AC;&#x2122;t just save time and cost. It also empowers distributors with standard daytime commercial tank fueling to increase their capacity by running the same truck on a second or third shift to take on more contracts, improving business scalability and fueling growth. n

READ MORE at FuelsMarketNews.com

Todd Ward Todd is Vice President, Business Development at SkyBitz Petroleum Logistics. SkyBitz helps petroleum distributors overcome fleet fueling challenges. SMARTLynx and SMARTruck allow fuel distributors to decrease costs by providing transaction integrity, totalizer reconciliations, GPS geofencing capabilities and patented odometer capture technology. Fleet fueling companies can use these solutions to automate processes, go paperless and increase profitable deliveries. Visit SkyBitz at https://info.skybitz.com/.

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Over 5.6 Million Page Views* and Climbing!

100,000 Unique Visitors 270,000 Monthly Readers 950,000+ Monthly Page Views 5.6 Million Total Page Views and Counting!

Thank you for making us the Number One Ranked Fuels & Convenience News Website!

Contact Bill Kaprelian at 262.729.2629 / BKaprelian@FMNweb.com Or visit www.FuelsMarketNews.com

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The California Air Resources Board (CARB) decided to require all newly-purchased transit buses to be carbon-free by 2029, committing the state to phasing out all fossil fuel models from its 12,000 transit bus fleet by 2040. Electric and hydrogen fuel cell-powered buses are among those expected to replace diesel and natural gas models. A number of cities in California have already committed themselves to the phase-out, with Los Angeles and San Francisco setting target dates of 2030 and 2035, respectively.

Bottom Line:

Marketers doing commercial business in California should be waryâ&#x20AC;Śbut you already know that. A lot can change between now and 2040 when idealism makes contact with reality.

READ MORE

at FuelsMarketNews.com

“”

by Mark Murrell

The Internet—in this case, online training— means that training is available anywhere, anytime, with no associated business disruption.

The Long Tail and Training Scarcity A few years back, Chris Anderson published The Long Tail, a book discussing how the Internet was fundamentally changing the economics of distribution and retail.

The book talks about “the tyranny of shelf space” and how it forces retailers to only stock the products that sell in the largest volume. As a result, vendors get a distorted view of what the market really wants. The author points to the evolution of online music purchases as an example. iTunes and Rhapsody brought in scores of songs and artists—virtual song files—at a much lower cost to “stock” than a physical CD. With the Internet, physical barriers are removed so variety is the name of the game. Not surprisingly, people have a huge appetite for choice, and thousands of items in every category are sold in small quantities. And, those small quantities, multiplied by the large selection, equal massive sales numbers. No physical retailer could ever stock that many items, but in the virtual world there’s no direct cost to having them available.

In the general retail world, long tail economics has been at work for a decade or more, and people have come to expect massive variety.

However, in many other places people are just starting to realize that the scarcity is no longer an issue.

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COMMERCIAL FUELS available for people who missed the live session, but that it opens up an entirely new world of options that couldn’t even be considered in a classroom environment.

More is Better If training can be delivered without disrupting the business or infringing on the driver’s home time, why not do it more often?

With the impediments removed, you can do more training than ever before, without having to limit yourself to just the highest priority items.

While you may still have a prioritized list of possible training subjects, the cut-off for what can be delivered reasonably is much further down the list than it was before. As a result, different subject matter can be covered, and it can be refreshed more regularly, improving the overall absorption rate.

The Long Tail in Transportation Within the transportation industry, driver training is one of those places.

Progressive fleets are recognizing this and changing their entire training delivery model. Instead of killing themselves to schedule only the most critical sessions, they’re doing new training every quarter (or every month) online and shifting their in-person activities to more specialized work. The results are invariably positive in terms of fleet safety and overall driver quality, but it takes a big shift in mindset to consider it.

For some, “training drivers” still means pulling drivers off the road and into classroom settings. That’s a pain point. In trucking, you’re only making money when drivers are delivering goods, so if drivers are sitting in class, then the business is taking a big hit. Much like the huge cost of shelf space forcing retailers to be picky about what they stock, the huge cost of delivering classroom training has forced fleets to be very picky about what training they deliver. Orientation makes the cut, because you have to get people started the right way. Post-incident remedial work also makes the cut because insurance and enforcement people demand it.

Required courses (hazmat, fire safety) could be justified as well. Beyond that, it’s pretty tough to justify much else.

“”

?

As a starting point, it’s worth asking yourself a few questions:

In the general retail world, long tail economics has been at work for a decade or more, and people have come to expect massive variety. However, in many other places people are just starting to realize that the scarcity is no longer an issue.

If there were no impediments, how much training would you like your fleet to have, and what things would you like to see covered?

If you actually delivered all that training, how much safer, more compliant, more effective and more cohesive would your driving team be?

In the retail world, more products, multiplied by even tiny sales volume in each, lead to huge profits. In the training world, the equation looks similar: more training, multiplied by several subject areas, leads to huge quality and efficiency improvements (and increased profitability as a result). n

However, just like in the retail world, the old days for fleet training are gone and scarcity is no longer an issue. The Internet—in this case, online training—means that training is available anywhere, anytime, with no associated business disruption. Most people I talk to understand that the Internet makes training delivery more convenient and helps to catch the people who couldn’t attend a live session, but that’s just scratching the surface. Amazon gives me the ability to buy a TV online for the same price as Best Buy and have it shipped to my house, but that’s not the real value of Amazon. The real value is the thousands of other products I can get from Amazon that I can’t get at Best Buy. Similarly, the real value of online training is not that it makes classroom content FMNMagazine

READ MORE at FuelsMarketNews.com

Mark Murrell Mark Murrell is co-founder of CarriersEdge, a leading provider of online driver training for the trucking industry and co-creator of Best Fleets to Drive For, an annual evaluation of the best workplaces in the North American trucking industry produced in partnership with Truckload Carriers Association. He can be reached at www.carriersedge.com.

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Propane Autogas Refueling

A

by Michael Taylor

sk any commercial vehicle fleet operator and there’s a good chance he or she will tell you their fleet is constantly faced with increasing pressure at every turn to meet or exceed ever-lowering emissions standards. It’s a growing issue for commercial fleets and many of the solutions can be expensive. Fortunately, propane autogas helps fleets reduce emissions at a cost that is affordable to them, unlike other alternative fuels like natural gas and electric.

In fact, propane autogas offers the lowest total cost-of-ownership of any fuel—traditional or alternative. That’s because in addition to lower fuel costs and reduced maintenance, propane autogas fleets have a variety of refueling options from which to choose. This allows fleets to choose a refueling strategy that is custom tailored to meet their budget and operational needs.

The following are the five most common refueling strategies for propane autogas fleets.

Standard Private Station

A standard private station can meet the needs of fleets operating with fewer than 50 vehicles and who want the convenience of an on-site refueling option. Propane retailers can assist fleet owners in choosing the centralized fueling location.

The station includes a 1,000- to 3,000-gallon tank and a single autogas fuel dispenser with a quick-connect nozzle that securely locks into place during refueling to eliminate spills and evaporative emissions. These lightweight nozzles allow users to refuel with one hand and do not require any extra protective equipment.

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When talking with fleet operators about this refueling option, propane retailers should discuss the different ownership options: purchasing or leasing. If the fleet owner decides to lease the infrastructure, the propane or infrastructure provider will work with the fleet on building the proper setup. The fleet owner will cover the cost of the site preparation, which includes installing crash protection and an electrical supply. Depending on the site and size of the fleet, the cost for a leased setup is $1,500 – $15,000. If the fleet owner chooses to purchase the infrastructure, they will own the fuel storage tanks, pump, motor and dispenser. The average cost of ownership is $20,000 – $60,000 for infrastructure, as well as the $1,500 – $15,000 cost for site preparation.

“

Options to Fit Any Fleet

“

COMMERCIAL FUELS

Many fleets may want to take advantage of propane autogas, but are uncertain about investing in infrastructure, don’t have the space to build infrastructure, or state or local laws, regulations or codes prohibit installation of infrastructure. When talking to those fleets, propane retailers can suggest mobile refueling as a convenient solution.

Advanced Private Station

While similar to a standard private station, the advanced private station offers a larger capacity and fully customizable infrastructure for fleets operating with more than 50 vehicles.

The advanced private station allows for owners to choose a convenient, centralized location for all of their refueling needs.

The site includes one or more high-capacity fuel storage tanks and multiple dispensers with quick-connect nozzles. It may also include an optional canopy for protection from inclement weather. As the fleet grows, the infrastructure can add more dispensers and propane autogas fuel storage tanks, making this option fully customizable for any fleet.

Just like standard private stations, fleet owners can choose to purchase or lease the infrastructure of an advanced private station. Fleet owners who choose to lease are responsible for the site preparation, which would cost an average of $5,000 – $75,000. Fleet owners who choose to purchase their infrastructure pay for the propane fuel storage tanks, pump, motor and dispensers equipped with a fuel data management system, which may include cardlock and vehicle tracking capabilities. This setup costs $5,000 – $75,000 for site preparations and $60,000 – $225,000 for infrastructure.

Mobile Refueling

Temporary Refueling Network

Some fleets may be in the process of installing permanent infrastructure and need to deploy vehicles prior to completion of the installation. Propane autogas has a solution for this fleet also. Some propane retailers can provide a temporary refueling solution complete with a fuel storage tank and dispenser mounted on a trailer. This scenario works for both short-term or extended use. Filling the tank is scheduled with the propane retailer, but like mobile refueling, costs and situations will vary. This is also a viable solution for fleets such as construction vehicles that require refueling while working for long periods on sites located away from the centralized refueling station.

Public Refueling Networks

For fleets that service a wide area or have limited space for refueling, investing in infrastructure may not be feasible. In this case, utilizing a public refueling network can keep fleets on the go no matter where they are in their service area. Public refueling networks provide 24/7 security and convenience. Using a cardlock system, the network tracks fuel use and costs per vehicle along a fleet’s route. This option works for fleets of any size. A complete list of public refueling stations is available from the U.S. Alternative Fuels Data Center at afdc.energy.gov/stations.

With these talking points, a propane retailer can easily help a fleet find success with propane autogas. Be sure to take into account the fleet size, potential growth, available space, routes and refueling requirements in order to develop the right refueling solution. Propane retailers can also talk with fleets about establishing a fuel contract and securing a fleet’s business year-round. To learn more about propane autogas refueling strategies and for more talking points, visit www.propane.com/on-road-fleets/refueling/. n

Many fleets may want to take advantage of propane autogas, but are uncertain about investing in infrastructure, don’t have the space to build infrastructure, or state or local laws, regulations or codes prohibit installation of infrastructure.

When talking to those fleets, propane retailers can suggest mobile refueling as a convenient solution.

READ MORE at FuelsMarketNews.com

Michael Taylor Michael is the director of autogas business development for the Propane Education & Research Council. He can be reached at michael.taylor@propane.com.

The propane retailer will refuel a fleet’s vehicles on-site using a propane autogas bobtail truck. Propane marketers can work with fleet owners to develop a scheduled time for refueling that works around their demanding schedules.

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What Does That Mean?

Test Your FMN Acumen

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

ACE

American Coalition for Ethanol

LDV

AFCS

U.S. Alternative Fuels Data Center

MMBPD Million Barrels Per Day

AEO

U.S. EIA Annual Energy Outlook

API

ASTM ATG

Barrels Per Day

B10

COMPANY

10% Biodiesel, 90% Petroleum Diesel

BEV

Battery Electric Vehicles

bpd

PAGE

ADD Systems......................................... 18

Barrels Per Day

CAFE

CARB CCD

Biobor Fuel Additives............................ 39

CCDF

Eastern Energy Expo ............................. 45

cULus

Cummins & White..................................17 Ecogreen Tank Monitor.......................... 53

FuelConnect 360............ Inside Back Cover Fuels Market News................................ 62 iGen...................................................... 23 Infineum UK..........................................11 MidContinental Chemical Company, Inc................................. 50 – 51 North American Bancard........................58 OPW Retail Fueling................................13 PDQ Manufacturing, Inc........................ 31 Petroclear.............................................. 29

RDM Industrial Electronics........Back Cover Shields, Harper & Company................... 49

SkyBitz.......................... Inside Front Cover Source North America.............................27 Southeast Petro-Food Marketing Expo... 33 TMC.......................................................32 ValvTect Petroleum Products...............4 – 5

CCDI

DOE

Combustion Chamber Deposits

Combustion Chamber Deposit Flaking Combustion Chamber Deposit Interference

Canadian and U.S. Underwriters’ Laboratories

15% Ethanol, 85% Gasoline

EBT

Electronic Benefits Transfer

EGR

Exhaust Gas Recirculation

EIA

U.S. Energy Information Administration

EISA

Energy Independence and Security Act

EPA

U.S. Environmental Protection Agency

EV

Electric Vehicle

FDA

U.S. Food and Drug Administration

FTC

U.S. Federal Trade Commission

FTE

Full-Time Employee

GHG

Greenhouse Gas

GPS

Global Positioning System

IEA

International Energy Agency

ISA

Illinois Soybean Association

kbpd LAE

California Air Resources Board

Exploration and Production

E15

LAC

Corporate Average Fuel Economy

U.S. Department of Energy

E&P

IT

American Society for Testing and Materials Automatic Tank Gauge

b/d

Our Advertisers

American Petroleum Institute

Information Technology

Thousand Barrels Per Day

Lowest Additive Concentration Loss Adjustment Expense

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LNG

Light-Duty Vehicles

Liquefied Natural Gas

MTBE

Methyl Tertiary Butyl Ether

NACS

National Association of Convenience Stores

NBB

National Biodiesel Board

NAAQS National Ambient Air Quality Standards

NATSO National Association of Truck Stop Operators NCWM National Conference on Weights and Measures NHTSA National Highway Traffic Safety Administration NORA

National Oilheat Research Alliance

OEM

Original Equipment Manufacturer

NZEV

OPEC

National Zero-Emissions Vehicles Program Organization of Petroleum Exporting Countries

ORVR

Onboard Refueling Vapor Recovery

PCV

Positive Crankcase Ventilation

OSHA

PEA PEI

PERC

PHEV PLLD

U.S. Occupational Safety and Health Administration Polyether Amine

Petroleum Equipment Institute

Propane Education and Research Council Plug-in Hybrid Electric Vehicles

Pressurized Line Leak Detection

PMAA

Petroleum Marketers of America

RFG

Reformulated Gasoline

RFA RFS RIN

RON RVP

Renewable Fuels Association Renewable Fuel Standard

Renewable Identification Number Research Octane Number Reid Vapor Pressure

SIGMA Society of Independent Gasoline Marketers of America UL

Underwriters’ Laboratories

UST

Underground Storage Tank

WTI

West Texas Intermediate

VOC ZEV

Volatile Organic Compounds

Zero Emission Vehicle

On the Horizon...

The Industryâ&#x20AC;&#x2122;s First Collaborative Fuel Procurement Network

Tr a n s p a r e n t

Scalable

E ff i c i e n t

Optimized

Automated

Digital

Connecting Fuel Buyers and Sellers Through a Digital eMarketPlace

Sharon Schneider 888-575-FUEL (3835) 803-490-7809 sschneider@fuelconnect360.com www.FuelConnect360.com

1.800.282.5183 | www.rdm.net | sales@rdm.net

RDM Intercoms

Performance Series

D15 Classic Series

D20 Classic Series

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

Petro Vend Schlumberger TMS Tokheim Veeder-Root Verifone Wayne

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

**Part numbers and manufacturerâ&#x20AC;&#x2122;s names are listed for reference purposes only. RDM remanufactures, rebuilds, and resells electronic equipment by various equipment manufacturers but is not af liated with or certi ed by these companies.**