Fuels Market News Magazine Fall 2020

FALL 2020

TANK TIME Operators face a reckoning over expiring warranties on underground storage tanks.

In the Lead:

Fuels Institute Chairman Ron Sabia

The Future of the Fuel Additives Market 5 Critical Focus Areas for Fuel Retailers

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FALL 2020

34 Times Up for Your Tanks COVER STORY

A 30-year life cycle means many USTs soon will be—or already are—out of warranty, jeopardizing insurance coverage.

By Keith Reid

38 In the Lead

Fuels Institute Chairman Rob Sabia talks COVID-19 recovery, consolidation and demand shock.

By Keith Reid

44

The Future of the Fuel Additives Market Regulations and advancements in engine technology will fuel a longterm increase in demand.

By Dr. Raj Shah, David Forester and Stanley Zhang

52 World of Opportunities A Q&A with Invenco.

FuelsMarketNews.com

FMN Magazine FALL 2020 | 1

04 From the Editor 06 NACS News 08 Fuels Institute 10 Fueled for Thought RETAILER OPERATIONS 12 M ind Your Gas Business

The five key focus areas operators should consider at their fuel sites.

12

COMMERCIAL FUELS 16 B100 Pilot Project Strives for Better Air Quality in

Chicago Parks A life-cycle analysis found the biodiesel program achieved significant particulate reductions

FUEL MARKETERS 20 T he Evolution of Fuel-Handling

Innovations in equipment and systems amp up the safety of petroleum distribution and retail operations.

16

24

liminating the Evils of Fuel Retain E A digital tank-monitoring system can thwart fuel drop mishaps.

28

ispatching into the Future D Couple automation and standardization with product knowledge and relationship-building.

54 Industry News 56 Remember This?

20 2 | FMN Magazine FALL 2020

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FROM THE EDITOR

Has It Been That Long?

T

ime can pass by so effortlessly that it is easy to wake up one day and wonder where the last decade went. Or two decades for that matter.

This month’s cover story provided a reminder of how quickly time has passed for me. Tanks replaced because of the significant underground storage tank (UST) regulation formally implemented between 1988 and 1998 have reached their 30-year warranty date.

This has a range of ramifications, particularly for tank operators who require private insurance.

The first notable article I wrote in 1999 as a fresh editor at NPN magazine was a review of the impact and ramifications of the then, just fully implemented regulation. You can read some the highlights in this month’s “Remember This” column, where I review a range of NPN articles from the ’80s and ’90s on the development of the UST reg. My inaugural article served the same purpose today as it did 21 years ago, providing a bookend on how that regulation implementation period played out.

I could say everything has now come full circle, but where regulation and legislation are concerned it seems as if that circle is a wheel that just keeps on spinning down the road. Regulating underground storage tanks has not stayed static since 1998; that same regulation has been tweaked and massaged, with a major revision taking place in 2015. I have no doubt that if I’m still covering the industry another two decades from now, a revised form of that UST reg will still be in place for whatever fuels remain stored underground.

I would also like to announce a change within our FMN team. Ted

4 | FMN Magazine FALL 2020

EDITORIAL Keith Reid Editor-in-Chief (847) 630-4760 kreid@fmnweb.com

Regulating underground storage tanks has not stayed static since 1998.

Asprooth, NACS national sales manager, has assumed the role of sales lead for our range of editorial products. Ted has more than 30 years of experience in the convenience retailing industry and extensive experience in launching new products and implementing ideas to drive new revenue opportunities.

He previously served as publisher/vice president of sales for CSP Media and as publisher and vice president of sales for Donohue/Meehan Publishing, which published Convenience Store Decisions. Most recently, Asprooth served as new business development director for Antunes, which provides foodservice equipment and water filtration systems.

I have no doubt Ted will be in touch with you shortly if you are one of our advertising partners. If you want to drop him a note, he can be reached at (847) 222-3006 or tasprooth@convenience.org.

Kim Stewart Editorial Director (703) 518-4279 kstewart@convenience.org Sara Counihan Managing Editor (703) 518-4278 scounihan@convenience.org CONTRIBUTORS David Forester, Mike Levin, Keith Moye, Joe O’Brien, Brian Reynolds, Randy Robinson, Dr. Raj Shah, Roy Strasburger, Stanley Zhang DESIGN Beyond Definition www.beyond-definition.com

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

PUBLISHING Erin Pressley Publisher (703) 518-4208 epressley@convenience.org Rose Johnson Audience Development and Production Manager (703) 518-4218 rjohnson@convenience.org Fuels Market News Magazine is published quarterly by the National Association of Convenience Stores (NACS), Alexandria, Virginia, USA. Subscription Requests: circulation@fmnweb.com POSTMASTER: Send address changes to Fuels Market News Magazine, 1600 Duke Street, Alexandria, VA, 22314-2792 USA. Contents © 2020 by the National Association of Convenience Stores. Periodicals postage paid at Alexandria VA and additional mailing offices.

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

He can be reached at kreid@fmnweb.com.

1600 Duke Street, Alexandria, VA, 22314-2792

PUBLISHED BY

FuelsMarketNews.com

Crack the Code Experience

See what NACS has in store for you…

“Given all the disruption we have faced in 2020, it’s essential to keep our industry moving forward,” said NACS President and CEO Henry Crack the Code Experience Armour in August, when November 2 – December 4, 2020 he announced a new virwww.convenience.org/ tual experience in place of crackthecode the in-person NACS Show this fall.

That virtual experience became the Crack the Code Experience—available November 2 through December 4— and will include on-demand education with real-time interactions, a virtual product showcase and direct appointment settings—all designed to fit a busy schedule. The five-week digital experience and curated marketplace connects convenience retail buyers and sellers from around the globe with 24/7 access to forward-looking ideas and insights, innovative new-to-channel products and strategic connections.

REGISTRATION INCLUDES: Access to 45+ on-demand education sessions.

Education sessions will debut over the five weeks of the Crack the Code Experience, eventually available for on-demand viewing—and reviewing—to capture all the learnings. Interactive Q&As with speakers, live polls and small group sessions ensure that a community of learners not only benefits from speaker insights but also uncovers the insights and input from their peers.

Some sessions you can look forward to viewing include: • Automaker Predictions for the EV Market • Diesel Fuel Quality and Tank Maintenance • Leveraging EMV Upgrades on your Forecourt • Motivating and Protecting Your Frontline • Reimagining Loyalty • How to Succeed in the EV Market 6 | FMN Magazine FALL 2020

Spotlight sessions presenting big-picture themes.

More than a dozen Spotlight Sessions will explore challenges and opportunities related to pressing industry issues and topics and will connect with myriad elements of the Crack the Code Experience that week. Spotlight Sessions “spotlight” focus on five weekly themes: •D isruption/navigating change, featuring Corinne Hancock, How to Thrive in Chaos • World-class ideas •E ssential strategies for essential businesses, featuring Kevin Brown, The Hero Effect • Cultivating a community hub • The future of the industry An interactive Cool New Products Showcase. If you’re looking for trends and new products, visit the Cool New Products Showcase, organized by Facility Operations; Foodservice; Fuel Equipment & Services; Merchandise, Candy and Snacks; and Technology. Attendees can search showrooms and categories, save products to a favorites list and get a daily glimpse of the top 10 most popular products in the showcase.

Entry to hundreds of showrooms from big-name brands and new exhibitors, enabled with in-app appointment setting, team collaboration and wish-list creation, product photos, chat functions, RFQs (request for quotes), virtual demos and sample requests.

Fun, engaging activities. Treasure hunts, trivia contests, hangouts and meet-ups allow for interaction and networking with peers from around the globe, either in small group connections or larger community digital gatherings.

The world is changing. What people are buying is changing, but the convenience industry has never been more essential. Thankfully, everything you’re looking for to build your bottom line is at the Crack the Code Experience. Keep up. Stay relevant. And join NACS online in November.

FuelsMarketNews.com

Convenience Matters Podcast

Consumers typically decide to buy gas …

Hosted by the Fuels Institute and NACS, Convenience Matters brings you weekly podcasts talking all things convenience and fuels related. About half of the U.S. population stops at a convenience store every day. Hear what we’re seeing at convenience stores and what the future may hold for fuels. Check out these fuels-focused episodes: •# 245 Remember This? Fueling Through the Years with Keith Reid, editor-in-chief, Fuels Market News Magazine • #229 Utilities and Transportation Sector Work to Lower GHGs with Brittany Syz, director of clean transportation, San Diego Gas & Electric • #219 The Pandemic’s Impact on Fuel Supply and Demand with Denton Cinquegrana, chief oil analyst, OPIS •# 215 Are Consumers Really Interested in Electric and Hybrid Vehicles? with Shannon Baker-Branstetter, manager, cars & energy policy, Consumer Reports

NACS and FMN Calendar of Events

OCTOBER 27 NOVEMBER 5

NACS Women’s Leadership Program Yale University, Live Virtual www.convenience.org/ execed/yale

FuelsMarketNews.com

NOVEMBER 2 DECEMBER 4

NOVEMBER 1 - 20

NOVEMBER 18 DECEMBER 17

NACS Marketing Leadership Program Kellogg School of Business, Northwestern University, Live Virtual www.convenience.org/ execed/kellogg

11% 9% 4% 1%

when the gas indicator light comes on

often because they keep the tank as full as possible

when they see a cheap gas price always buy on a specific day/time when they go inside the store to buy something

For the most up-to-date information on event cancellations, please visit www.convenience.org.

OCTOBER 27 NOVEMBER 12

NACS Executive Leadership Program Cornell University, Live Virtual www.convenience.org/ execed/cornell

when they are running low and it’s convenient to stop

SOURCE: 9 HABITS OF GAS-BUYING CUSTOMERS (NACS), WWW.CONVENIENCE.ORG

Visit www.conveniencematters.com today.

2020

58% 17%

NACS Crack the Code Experience www.convenience.org/ crackthecode

For more information about these NACS and FMN events, visit www.convenience.org/ events.

NACS Innovation Leadership Program Massachusetts Institute of Technology, Live Virtual www.convenience.org/ execed/MIT

FMN Magazine FALL 2020 | 7

White Paper Explores the State of EVs

E

lectric vehicles (EVs) are entering the market at a rapid pace, but it could take decades for these vehicles to become more ubiquitous across the entire U.S. vehicle fleet, according to an August report released by the Fuels Institute: “State of Transportation Energy and Vehicle Electrification.”

“Even if the U.S. government were to mandate that 100% of new vehicles sold must be equipped with a new technology, and all other market dynamics remained the same, it would take nine years for that technology to be present in 50% of the vehicles on the road,” explained John Eichberger, executive director of the Fuels Institute. “This is primarily due to the sheer size of the existing fleet and the length of time vehicles remain in service.”

8 | FMN Magazine FALL 2020

Despite slow fleet turnover, new technologies are capturing a significant share of new vehicles sold, which has improved efficiency and reduced emissions. “Through 2018, there was little reliance on electrified powertrains to achieve these improved efficiencies.

Instead, engineers focused on boosting fuel economy and reducing emissions by improving technologies within FuelsMarketNews.com

Projected Light-Duty Vehicle Fuel Economy

PASSENGER CARS

LIGHT TRUCKS

CAR FLEET

TRUCKS FLEET

60

MPG

50 42

40

30

20

30

28 20

10 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 SOURCE: U.S. ENERGY INFORMATION ADMINISTRATION AEO2020

New Vehicles as Share of Fleet on the Road 70% 60% 50%

Data and Assumptions: - U .S. EIA LDV Fleet Size 243.8 million in 2018 - U .S. EIA LDV Sales Forcast 16.1 million/year average

At least 9 years for new vehicles to amass 50%

40% 30% 20% 10%

2018

2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035

PHOTO©ISTOCK/ONURDONGEL

SOURCE: U.S. EIA ANNUAL ENERGY OUTLOOK 2018

the internal combustion engine,” said Eichberger. “Today, most of the focus is on electrified powertrains, but that is only one tool vehicle manufacturers have available to meet fuel economy and performance standards, and there is still a lot of progress to be made on ICEs.” The U.S. Energy Information Administration’s Annual Energy Outlook 2020 forecasts that light-duty fleet fuel economy will improve by 47% by 2040, with total passenger cars on the road delivering 42 mpg and light trucks delivering 30 mpg. If these FuelsMarketNews.com

forecasts transpire in the market, these efficiency gains could reduce gasoline consumption by 13% to 26% and diesel fuel consumption by 3% to 15%.

The continued reliance on ICEs for the foreseeable future to meet global environmental demands will result in additional technological improvements to engines, as well as expand the use of alternative and renewable fuels.

“Drivers will continue to consume liquid fuels for the foreseeable future, but the composition of those fuels could evolve to deliver greater performance and lower emissions,” Eichberger said.

The “State of Transportation Energy and Vehicle Electrification” report is available at www.fuelsinstitute.org/ research, and the introduction video is available at https://youtu.be/ eafQjbi0Vzk. The Fuels Institute, founded by NACS in 2013, is a non-profit research-oriented think tank that evaluates market issues related to vehicles and the fuels that power them, incorporating the perspective of diverse stakeholders to develop and publish peer-reviewed, comprehensive, fact-based research projects.

FMN Magazine FALL 2020 | 9

FUELED FOR THOUGHT

Pressure Test

BY JOE O’BRIEN

M

any in the world of underground fueling system equipment are familiar with the idea of a pressure test—a procedure that reveals weaknesses in the system. It is a valuable step in the installation of an underground storage tank and piping because it affords technicians the opportunity to correct problems before the equipment is completely covered by backfill. Demonstrating the integrity of the equipment helps operators safeguard against a preventable hazardous environmental incident before a proverbial “point of no return.”

The entire fueling industry underwent a pressure test of a different sort in 2020. The pandemic caused severe and sudden disruptions, which tested the dynamics of the entire supply line from refinement to distribution. And, while it was the economic principle of supply and demand that was tested instead of physical equipment, areas that require adjustment were identified just the same.

Here is a look at a few of those areas for improvement: 1. Road funding needs to be revamped.

COVID-19 had a tremendous impact on fuel consumption in the U.S. Gallons of fuel purchased on its worst day in April were down 62% compared with 2019. The year-over-year drop in fuel demand equated to an average purchase of 50 gallons per driver in April 2019 and 39 gallons per driver in April 2020. While demand started ticking up as states re-opened, the steep drop in consumption should serve to remind us that the volume of fuel in the supply chain is not static, and that these dynamic conditions result in broader implications.

Both state and federal gasoline tax revenues have suffered steep declines due to reduced fuel consumption resulting from stay-at-home orders. With an estimated 10 | FMN Magazine FALL 2020

50% fewer people driving this spring, states saw significant drops in fuel tax revenue even after receiving millions of dollars in federal relief funds.

The American Association of State Highway and Transportation Officials reports that the U.S. Department of Transportation expects a 30% average decline in forecasted revenues until about November 2021.

As fuel consumption dropped, refiners struggled with an almost instantaneous surplus of inventory.

Recognizing that the surplus occurred at a time when refineries were about to switch from winter to summer formulations, the U.S. Environmental Protection Agency (EPA) issued a waiver on March 27 that permitted winter fuel to be sold until supplies were depleted.

While this move did help to facilitate the turnover of storage tanks from winter to summer gasoline and contributed to low gas prices, it also signaled a missed opportunity to simultaneously address the more public-facing predicament: infrastructure revenue.

With motorists enjoying a median gas price of under $2 during April and May, perhaps a temporary 30-day fuel tax increase could have helped reduce some of the fuel tax shortfall? While a temporary tax would have required tact and agility to introduce to the public, at least it would come at time when motorists were benefiting from the lowest fuel prices in recent memory.

The steep drop in demand and subsequent fuel funding shortages are a reminder that fuel taxes are an elastic source of revenue. If the U.S. wants to provide a consistent source of funding for road repairs, then overhauling the funding structure is necessary. The Committee for Economic Development of The Conference Board outlined FuelsMarketNews.com

five options for increasing transportation funding in 2017, as well as the potential benefits and challenges.

Learn more at www.ced.org/reports/ fixing-americas-roads-bridges.

PHOTO©ISTOCK/ORBETTO

2. Fuel producers are not equipped to adapt to abrupt changes in production needs.

Both oil refineries and ethanol plants were strained by the market conditions in which oil prices plunged and inventories ballooned this spring. The Energy Information Administration’s Weekly Petroleum Status Report showed that only about 69% of refinery capacity was being utilized at the beginning of May. American Fuel & Petrochemical Manufacturers (AFPM) stated in a blog post that, while it varies by refinery, facilities need to shut down when they reach 60-65% utilization “because it becomes infeasible to keep the complex systems of units running.”

During the same time, only 49 of 204 U.S. ethanol plants were running at full capacity, according to the Renewable Fuels Association (RFA).

Growth Energy reports that the plants that were able to operate did so at a steep loss. In an April 20 report, the RFA projected that ethanol sales could plummet by 46%, or $10.6 billion.

3. Light production scenarios escalate the discord over renewable fuels.

With both the petroleum and ethanol production industries suffering, critical feedback about—or in support of— the Renewable Fuels Standard (RFS) surfaced proportionately.

Refiners requested that the EPA grant them RFS waivers, which the ethanol industry has generally viewed as a copout. Ethanol advocates suggested the FuelsMarketNews.com

drop in fuel demand effectively waived blending volumes, and the Renewable Identification Number credit system is designed to help refiners weather instabilities, such as those predicated

by COVID-19.

But the AFPM said physical blending of ethanol into the fuel supply is not the issue, but rather the cost of compliance with refiners operating on tight margins unable to recover their RIN costs. “Although some companies have said that they are able to recover their RIN costs in a typical market, other refiners report they cannot,” wrote Geoff Moody, vice president of government relations for AFPM in a blog post. “These market dynamics vary at the local level, but what doesn’t change is that the refining industry is highly competitive, and it is often difficult to recoup costs.”

LOOKING AHEAD In the short term, U.S. fuel marketers need to be poised for continued adaptation as customers shift their behaviors in response to the pandemic. Fuel sites that have not yet completed EMV updates or that did not pursue a contactless payment option during EMV upgrades may want to revisit incorporating contactless payment in the interim.

As for the distant future, COVID-19’s impact on fuel production and distribution in 2020 simulated what the petroleum industry could face if global demand shrinks indefinitely. Rather than hoping that this year was just a fluke, every person with a role in the management of the U.S. fuel supply— from our leaders in office to every point in the supply chain—needs to pause to learn from this moment and make preparations for future adjustments.

While demand started ticking up as states reopened, the steep drop in consumption should serve to remind us that the volume of fuel in the supply chain is not static, and that these dynamic conditions result in broader implications beyond supply and distribution.

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

FMN Magazine FALL 2020 | 11

RETAIL OPERATIONS

Mind Your Gas Business The five key focus areas operators should consider at their fuel sites.

BY ROY STRASBURGER

O

ne of the most important aspects of the convenience store business is often overlooked when discussing store operations: gasoline. This is interesting because we all know that fuel sales have a huge impact on the profitability, if not the financial viability, of a retail site.

We often talk about the correct pricing for a candy bar, the need to expand foodservice or what the latest trendy gadget is that we should be selling in the store. However, for those independent retailers that sell gasoline, arguably the most important financial part of the business sits out in front of the store: the fuel pumps.

12 | FMN Magazine FALL 2020

I would argue that your fuel offer should be given as much consideration as your leading in-store product. We use category management techniques for the products inside the store—why not do the same for the products outside the store? The same fundamentals apply: cost, retail price, presentation and competition. However, unless you are a jobber or a refiner, most operators don’t really give fuel a second thought except for pricing. It is just “there.”

Unless you live in New Jersey or Oregon, selling gasoline has become a low labor, low touch proposition. We no longer have contact with customers until they come into the store. But the success of the business, on several

different levels, depends on how the store operator interacts with the forecourt. Let’s look at the different ways that you, as an operator, should be involved in fuel business at your site.

Environmental. The first line of defense in protecting the earth from gasoline spills is you, the operator.

Avoiding contamination and pollution incidents is about paying attention to the details. Keep an eye on customers to make sure they are using the fuel equipment properly and filling their vehicles correctly. A customer leaving an engaged nozzle in the fuel tank and then walking away (into the store, for example) is a recipe for an overfill spill if the nozzle is not inserted correctly or doesn’t automatically shut off. Also, making sure that the gasoline delivery truck is parked in the appropriate place above the fill tubes can help prevent overfills and excessive hose draining while doing a delivery.

Paying attention to the automatic tank gauge (ATG) when an alarm sounds can be hard to do with FuelsMarketNews.com

PHOTO©ISTOCK/CASARSAGURU

RETAIL OPERATIONS

everything else going on in store, but it needs to be addressed immediately (it’s called an “alarm” for a reason). And, if you, the operator, have access to the information, confirming that gallons sold plus gallons still in the tank equal the gallons delivered will help make sure that fuel is not disappearing from a tank or a pipe into the ground.

These simple steps can help prevent your site from being the cause of hydrocarbon contamination in the soil or the groundwater—an expensive and time-consuming issue to remediate.

Safety. Something that many people don’t know is that gasoline is flammable (I know, you thought it was inflammable, didn’t you?).

Seriously, though, buying gasoline has become so simple that it is easy to forget how dangerous the product is.

Post clear signage about safety precautions, and always pay attention to what is going on at the pumps. Big no-nos when someone is refueling: smoking, leaving the car running, talking on the phone and even sitting in the car (the static electricity from getting in and out of the car can, though rarely, spark a fire). Always make sure that when a customer is filling a portable gas can that the can is on the ground (not in the back of a pickup truck, for example). Speaking of gas cans, gasoline should only be put in approved containers. Make sure that the delivery truck is parked in the proper spot to avoid accidents with other cars or creating a tripping hazard for pedestrians with the delivery hoses.

Safety first!

Fuel quality. You are the person that the customer and the fuel supplier are relying on to make sure that the fuel you sell meets expectations.

FuelsMarketNews.com

To do this, check the tanks for water (either manually or through the ATG, if you have one), empty the spill buckets by dipping the water out and disposing of it properly, verifying that the delivery truck is dropping the fuel in the right tank so that you don’t cross contaminate the fuel, and regularly check the filters on the pumps to make sure they are clean of debris.

Doing this will not only make your customer happy but also may keep you from getting a bill for a car engine that has stopped working because of water in the gas.

Equipment. The operator is often responsible for making sure that the fuel equipment is in good working order. The following things should be checked every day: Is the card reader operating, and does it have receipt paper? Have the card readers been tampered with, or have skimmers been added? Are the hoses and nozzles in good shape? Is there a problem with the safety breaks on the hoses? Do you see any spills or stains indicating a release of product? When you check inside the dispenser do you see or smell gasoline indicating that there might be a leak? Are all of the canopy lights working? Is the concrete around the pumps stained or covered in gum?

As soon as you notice an equipment problem, notify the appropriate person and have it fixed as quickly as possible.

Customers expect the fuel equipment to be like a cellphone—it should work all the time, and when it doesn’t it is really annoying.

Customer service. The person who comes to your store to buy fuel is often looking for the solution for minor issues. Make sure that the water bucket is full of clean water, that the squeegee

Your fuel offer should be given as much consideration as your leading in-store product.

FMN Magazine FALL 2020 | 13

EXPO FEBRUARY 16-18, 2021 Savethe Date!

www.wpmaexpo.com

at The Mirage in Las Vegas, NV

KEYNOTE

TREY GOWDY Four-term Congressman from South Carolina and Fox News contributor

Trey Gowdy served eight years in the US Congress, participating in some of our country’s most significant and high-profile investigations. While in Congress he served on the Judiciary, Oversight and Government Reform, Intelligence, Ethics and Education and Workforce Committees. He ended his political career in 2018, returning to his home state to practice law and speak on legal issues he considers important to our country. He is currently serving as a FOX News contributor.

Come and join us at The Mirage to hear Keynote Trey Gowdy speak on the issues of the day!

WPMA

NACS-FMN20 Fall-Full0820-KeyWX21.indd 2

8/20/20 1:35 PM

RETAIL OPERATIONS

is in good shape with both the sponge and the blade functional, and check that paper towels are in the dispensers.

Many stores have started offering hand sanitizer and/or gloves at the pump island to protect their customers and to help them keep their hands clean.

A good customer service experience will bring your customer back. More importantly, it will keep you top of mind when the customer needs to buy something other than fuel. We use a good gasoline experience to help us build our customers’ shopping

Half Horz.indd 1 FuelsMarketNews.com

habits. We want them instinctively turning into our stores without thinking about it.

All of these things will help make your business successful and sustainable. Working with your fuel provider to ensure that the customer is having the best experience possible is a win for both of you. The fuel supplier sells more fuel, and you get more customer traffic. More traffic means more sales, which leads to more profits—just because you paid attention to the fuel pumps.

Roy Strasburger is the president of StrasGlobal. For 35 years StrasGlobal has been the choice of global oil brands, distressed assets managers, real estate lenders and private investors seeking a complete, turnkey retail management solution.

11:21:31 AM FMN Magazine 6/25/2020 FALL 2020 | 15

COMMERCIAL FUELS

B100 Pilot Project Strives for Better Air Quality in Chicago Parks A life-cycle analysis found the biodiesel program achieved significant particulate reductions.

BY MIKE LEVIN

T

he Chicago Park District (CPD) uses biodiesel blends of up to B50 (50%) to fuel its park equipment and has taken another step forward by successfully testing the use of B100 (100%) with two of its refuse haulers.

The B100 test is part of a pilot program in partnership with the Illinois Soybean Association (ISA) checkoff program and the American Lung Association (ALA) aimed at improving air quality, reducing vehicle carbon emissions and supporting more sustainable operations. The B100 pilot program, now in its second year, demonstrates the potential for biodiesel to help fleets meet carbon 16 | FMN Magazine FALL 2020

emission reduction goals with dieselpowered vehicles.

The B100 project began in early 2019, when CPD fitted two refuse haulers with fuel systems from Optimus Technologies that allow the vehicles to start on petroleum diesel fuel and then switch to B100 after warming up. The refuse vehicles collect trash on Chicago’s lakefront and in nearby city parks.

They operate at high idle and low speed and require frequent stops for refuse collection. These conditions create a significant potential for increased soot and emissions.

“Through this B100 project, we are seeing unprecedented reductions in carbon emissions, supporting a healthier

and more sustainable environment for the people of Chicago,” said Mike Dimitroff with the Chicago Park District Department of Natural Resources.

84% GHG REDUCTION The Park District’s B100 program reduces greenhouse gas emissions and particulates by 84% compared to standard, low sulfur diesel fuel.

This reduction is based on a life-cycle analysis by the biodiesel manufacturer Renewable Energy Group (REG).

REG conducted the life-cycle analysis using the CA-GREET model, which accounts for the process of recycling cooking oil from Chicago restaurants to make B100, as well as transporting the finished fuel back to Chicago from the REG plant in Seneca, Illinois.

Darling Ingredients partners with CPD to provide the reclaimed cooking oil as feedstock for processing into biodiesel at REG. SMOOTH OPERATIONS In the B100 pilot project’s first year, participating refuse trucks logged 12,000 miles in 2,690 hours of operation. Telematics generated significant data on engine performance as well as carbon emissions.

FuelsMarketNews.com

COMMERCIAL FUELS

PHOTO©ISTOCK/KIRKIKIS

The program ran year-round in both cold and warm weather, and B100 performed as well as petroleum diesel, including during the 2019 polar vortex when temperatures dipped as low as 15 degrees below zero.

The bi-fuel Optimus system installed in the refuse haulers addresses cold weather issues found with 100% biodiesel where the fuel can gel and solidify. Waste heat from the engine running on petroleum diesel is recirculated to warm the B100 to a usable temperature. At that point, the system automatically switches to a separate fuel tank containing B100. The refuse haulers continue to run on B100 until the operator turns off the vehicle. Before full shutdown, the system recirculates regular diesel fuel through the engine to ensure smooth starting the next day.

MEETING CARBON TARGETS The positive outcomes of the B100 pilot program have CPD looking at ways to use B100 in other park vehicles in the future.

“Many municipalities have set goals to reduce their carbon footprints by 50% or more by 2050,” said Dimitroff. “This pilot program demonstrates how biodiesel can be a pathway to meeting carbon reduction targets and sets the stage for other park equipment to run on either higher biodiesel blends or B100.

“You would be hard pressed to find a more sustainable option for our refuse trucks than B100 biodiesel.

Our B100 is made from recycled cooking oil, which comes from soybeans grown by Midwestern farmers. Since the fuel is produced in-state, we are really closing the loop on local renewable energy and boosting the local economy,” said Dimitroff.

FuelsMarketNews.com

BIODIESEL INNOVATION CPD is not new to biodiesel innovation. The fleet started using biodiesel in 2013, with an average blend of 16% annually, and gradually increased to a 35% average blend by 2019. The district uses biodiesel blends as high as 50% in a variety of equipment, ranging from lawnmowers to log loader trucks. A total of 200 park vehicles run on 10–20% biodiesel, and an additional 56 vehicles run on biodiesel blends of 10–50%. In total, the CPD operates more than 550 vehicles, including those using E85, hybrid electric and compressed natural gas.

CPD controls its own biodiesel blending at the fueling site for vehicle use. Technology incorporated into the fueling station allows for customized blends based on weather and vehicle specifications. A card swipe system tracks the fuel consumed by each vehicle and collects data for sustainability reporting.

The Park District’s B100 program reduces greenhouse gas emissions and particulates by 84% compared to standard, low sulfur diesel fuel.

QUALITY IS CRITICAL Indigenous Energy, a Chicago fuel consulting firm, oversees the CPD biodiesel program and has helped the fleet accelerate blend levels by managing fuel quality. Water, microbes and sediment in tanks will cause problems in any fueling operation, not just biodiesel. Pete Probst, president of Indigenous Energy, pays close attention to CPD tanks and fueling equipment and continuously monitors the fuel quality to prevent any abnormal vehicle operation.

“Starting with high-quality biodiesel from REG gives us the confidence to go to higher blends than many fleets use.

However, it is critical to maintain that fuel quality by making sure our tanks and equipment stay clean and dry,” said Probst. “Chicago Park District is a progressive fleet that is willing to push FMN Magazine FALL 2020 | 17

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the envelope and really make a positive environmental impact by using higher blends of biodiesel. This wouldn’t be possible without all the efforts of our partners working together toward the common goal of making this the greenest fleet possible.”

PARTNERS IN SUSTAINABILITY As a biodiesel leader, CPD is a member of the B20 Club, a partnership between ISA and ALA that recognizes Illinoisbased fleets committed to operating with biodiesel blends of 20% or higher.

The ISA checkoff program supports the B100 pilot program and other

biodiesel projects in Chicago and elsewhere in Illinois. Beyond improving air quality and reducing harmful emissions, biodiesel provides additional market opportunities for soybean farmers in Illinois.

“Partnering with the American Lung Association and the Chicago Park District to pilot the use of B100 yearround is a huge step forward for the environment and Illinois,” said Doug Schroeder, ISA board chairman. “Our investment in this program and biodiesel research bolsters Illinois soybean production and contributes to sustainability in communities where biodiesel is used.”

Mike Levin is the director of public policy and regulatory affairs for the Illinois Soybean Association (ISA). ISA is a statewide organization that strives to enable Illinois soybean producers to be the most knowledgeable and profitable soybean producers around the world. ISA represents more than 43,000 soybean farmers in Illinois.

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FuelsMarketNews.com FMN_Half Horz.indd 1

FMN Magazine FALL3:34:09 2020 10/6/2020 PM | 19

FUEL MARKETERS

The Evolution of Fuel-Handling Innovations in equipment and systems amp up the safety of petroleum distribution and retail operations.

BY KEITH MOYE

S

afety is one of those areas where, while significant advancements have been made in petroleum distribution and retail, from the terminal to the retail site the job is never done. Many thousands of gallons of hazardous motor fuels are handled every day, and unsafe fuel-handling operations can put lives, communities and the environment at risk.

The companies that design and develop equipment and systems for fuel-handling operations recognize the importance of creating a safe fuel-handling environment. There has been a flurry of activity recently, with a number of innovations entering the market throughout the distribution channel. Here are five of the most significant: 20 | FMN Magazine FALL 2020

1. “SMART” TANK-TRUCK MONITORING SYSTEMS Historically, fueling systems have relied on drivers to take actions necessary to prevent the wrong fuel from being dropped into the wrong storage tank at the terminal or retail fueling site.

Experience, however, has shown that hurried or distracted drivers might forget to unload diesel first, and PGIs can be imperfect with respect to indicating the correct grade of fuel.

The industry has recently begun to adopt the “smart” tank-monitoring system. This digital solution consolidates driver access to the different control systems on the tank trailer—including cross-drop prevention, on-board overfill prevention monitoring, pneumatic (air pressure) control, security,

electronic PGIs, troubleshooting and usage history—operated by an easyto-use digital touchscreen display.

2. TOTAL TERMINAL FLUID-HANDLING SOLUTIONS A storage terminal features a series of critical fuel-handling operations and pressure points, all of which must work harmoniously in order to maximize operating safety.

Manufacturers of fuel terminal components must remain mindful that every link in the fluid-handling chain be capable of performing its specific duties every time lest the entire system fail. The following components have advanced in recent years, all with the end goal of an optimized fuel-handling experience: •L oading Arms: A variety of loading-arm styles—short-range hose, balanced mechanism, counterweighted hose, A-frame hose and compact torsion spring (CTS), among others—have been developed to meet the unique design and operational needs of different loading terminals. From pre-engineered standard models to the most highly customized system, all are designed to deliver a safer loading experience FuelsMarketNews.com

PHOTO©ISTOCK/WENDELLANDCAROLYN

FUEL MARKETERS

to minimize or even eliminate strain on the operator and threats of product leaks.

•A PI Bottom-Loading Couplers: These have been designed to combine ease of loading with installation and maintenance that can be performed in seconds, with no special tools required. They are also clean and safe, with a goal of making product leaks and spills at disconnection or through accidents a thing of the past.

•E lectronic Equipment: Thanks to the advances in everything from digital ground-verification and optic rack monitors to overfill prevention devices, it has never been safer to load or unload a tank truck at a storage terminal. These devices are designed to prevent delivery commencement until it is safe to do so and allow the disconnection of all hoses and equipment only when fluid flow has ceased.

•S wivel Joints: These are used in a broad range of fluid-handling applications in chemical, petroleum, petrochemical and refinery industries. Swivel joints are used with flexible piping systems, loading arms and hose reels where they provide durable, reliable and safe operation in critical connection points along the fluid-handling chain.

•S afety Breakaways: Available in direct-pull and cable-release iterations, safety breakaways provide an added layer of protection for people, equipment and the environment from unintended tank-truck pull-away incidents that can result in a catastrophic spill of hazardous materials. The breakaways shut at both ends during a pull-away incident, which enables them to simultaneously prevent a spill and protect the loading station from damage.

FuelsMarketNews.com

3. LEAK-FREE DRY DISCONNECTS These hose-connection devices feature an automatic sealing mechanism at both the hose and fixed-pipe ends when a delivery hose is disconnected.

They are ideal for use in any fluidtransfer application where loss of fluid upon disconnection cannot be tolerated because of environmental regulations, worker safety considerations, the high value of the fluid or where cleanliness is a concern.

The flow shut-off mechanism within dry disconnect couplings also allows for very low flow restrictions. This design enhances flow while simultaneously reducing the risk of internal blockages, which can lead to connection malfunctions. Dry disconnect couplers also include a safety interlock to prevent accidental opening and a sealing arrangement that results in a drip-free dry disconnect.

Some dry disconnect coupling designs can automatically shut off in the event of an accidental disconnection of the coupler and adaptor. Should this occur, the poppet in the adaptor will automatically close, and the seal cylinder will immediately stop flow through the coupler.

Manufacturers of fuel terminal components must remain mindful that every link in the fluid-handling chain be capable of performing its specific duties every time lest the entire system fail.

4. WATERTIGHT FUEL-STORAGE SYSTEMS Knowing the challenges associated with the monitoring and maintenance of underground fueling equipment at retail and commercial fueling sites, the designers and manufacturers of tank and dispenser sumps, manhole covers, spill containers and multiports have worked to create state-of-the-art solutions, especially where water intrusion is a constant concern.

The advanced abilities of the new age of “watertight” fuel-storage systems and components lower the chance that they may fail, whether through water intrusion or any of a host of seismic events.

FMN Magazine FALL 2020 | 21

FUEL MARKETERS

The advanced abilities of the new age of “watertight” fuel-storage systems and components lower the chance that they may fail, whether through water intrusion or any of a host of seismic events.

Keith Moye is the vice president of global marketing for OPW, based in Cincinnati, Ohio. He can be reached at keith.moye@opwglobal.com. To learn more about OPW, visit opwglobal.com.

22 | FMN Magazine FALL 2020

•N o-Drill Tank Sumps: These components feature factoryinstalled conduit ports and electrical wiring junction boxes that require no drilling, which allows them to be installed as-is at the fueling site. This mitigates the risk that unintended leak points are created while drilling holes for the placement of entry fittings or that leaking conduit lines may allow water migration into the sump.

•W atertight Tank Sumps: These sumps function as liquid-tight isolation containers that provide secondary containment for tank and pipe fittings, valves and pumps.

They are manufactured via a resin transfer molding (RTM) process that creates consistent wall thickness, proper glass-to-resin ratios and ultra-smooth wall surfaces inside and out for ultra-tight waterproof sealing capability. These sumps are outfitted with a stainless steel ring and watertight sealing gasket for additional water-intrusion prevention capability.

•L ow-Profile Dispenser Sumps: These sumps offer a completely integrated, environmentally secure underground fuel-delivery system that employs pre-fabricated, factory-assembled sumps and components that support watertight operation, while also eliminating many operator errors that can occur during installation. Factory-installed dual-sided, rigid entry fittings (REF) provide double protection by sealing the pipe inside and outside the sump. Construction featuring a rigid composite material eliminates entry-fitting degradation that can result in water intrusion.

•C omposite Multiports: Lightweight fiberglass construction resists corrosion and reduces handling strain while improving safety

for the operator. They are installed over the top of tank sumps to provide spill containment for fill pipes and vapor-recovery risers, while also allowing easy access to the tank top.

•D ouble-Wall Sealable Spill Containers: These feature an integral “plumber’s plug” and doublewall sealable design aimed at preventing water and debris from penetrating the spill container at the surface. These also limit corrosion and damage to the fill and vapor-return riser connections and components, while an integrated vacuum test port allows for easy testing with no need for hydrostatic testing.

•C omposite Manhole Covers: Designed to be lightweight, corrosion-resistant and durable, the covers feature a non-bolted design with a flat gasket creating a watertight seal and are ideal for use in tank-sump access, multiport, single-port fill sump and interstitial-sump applications.

5. CLEANER FUEL-NOZZLE TECHNOLOGY The search for true “dripless” fueling nozzle technology has proceeded for years. As an example, OPW’s new series of nozzles feature a patented, freedraining spout that drains the residual fuel into the vehicle when the dispensing process is halted. For diesel, OPW’s capture technology allows any retained fuel in the spout to migrate back to the diesel-capture device, which secures the fuel in a diesel-capture chamber until the next fueling cycle begins.

The pursuit of optimized fuel-handling safety for storage terminals, tank trucks and forecourts will never end, but the level of safety available to the operators in these industries has never been higher than it is today—with many more innovations promised to come.

FuelsMarketNews.com

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FUEL MARKETERS

Eliminating the Evils of Fuel Retain A digital tank-monitoring system can thwart fuel drop mishaps.

BY RANDY ROBINSON

N

o one wants to return home from a trip to the grocery store to discover that instead of 128 ounces, the gallon of milk that was purchased contained only 125 ounces, or that the box of toaster pastries had only four instead of the customary six. In other words, everyone who buys something—from 24 | FMN Magazine FALL 2020

the most insignificant pack of chewing gum to the largest house—wants to get what he or she paid for.

The same theory holds true when considering fuel deliveries to retail or commercial fueling sites. If the fuel-site operator needs 7,000 gallons dropped into an underground storage tank (UST), the operator wants

7,000 gallons dropped. Unfortunately, traditional analog delivery-monitoring systems could not always guarantee that the proper amount of fuel was dropped into the UST or that the trailer tank was empty when it actually wasn’t. When such cases arise, a fuel “retain” condition has occurred.

There are three likely retain scenarios: 1. Disputed Delivery Amount If the fuel-delivery company is using an analog tank-monitoring system on its fleet, a number of conditions can prevent the amount of fuel on the bill of lading from actually being dropped, including: •A fuel compartment that closes too early • S ystem air pressure interrupted or lost during unloading, resulting in premature valve closure FuelsMarketNews.com

FUEL MARKETERS

•A trailer that is parked on an uneven surface, signaling a “false positive” that the fuel compartment has been completely drained into the UST

PHOTO©ISTOCK/IMAGEEGAMI

No site operator will stomach errors in fuel-drop amounts, and if they occur consistently, the operator would be well within his or her rights to seek out a different fuel supplier.

2. Retain Results in Mixed Product The causes of this retain condition are the same as the three listed above, along with a driver forgetting to unload a compartment on the trailer. A retain of this sort creates a cross-contamination risk where different types of fuel are mixed together in a delivery compartment.

The worst-case effect of a crosscontamination loading error is the shutdown of fueling services for several hours at the retail site, since the fouled fuel will need to be removed from the UST, the storage tanks cleaned and a clean batch of fuel delivered. Anytime tanks need to be emptied, cleaned and refilled the site operator incurs unplanned purchase and maintenance costs, as well as lost revenue due to the site being shut down. Additionally, before the retaincaused error is discovered, some of the bad fuel may make its way into the vehicles of customers, which can lead to fuel system damage and extensive repair costs.

FuelsMarketNews.com

3. An Overfill Condition Occurs This error occurs when a compartment on the delivery vehicle is not completely emptied due to an unlevel delivery surface, premature closing of the fuel compartment or loss of air pressure during the unloading process. Product overfills are dangerous and costly for both the driver and the fueling site as they can create a fire hazard. Additionally, spilled fuel is not saleable, which affects the bottom line of the supplier and site operator.

Finally, some of the lost fuel—in extreme cases—can make its way into the environment, where it can affect groundwater supplies.

A common safeguard against a retain condition that can lead to an overfill is the use of retain probes in the delivery vehicle’s fuel compartments, but industry analysis and use patterns indicate that these probes are utilized on just 20% of the fuel trailers in the United States.

No site operator will stomach errors in fuel-drop amounts, and if they occur consistently, the operator would be well within his or her rights to seek out a different fuel supplier.

ELIMINATING THE WRATH OF RETAIN With the need to deliver and receive the proper fuel amount a paramount concern for both the fuel-delivery company and the fuel-site operator, every effort must be made to ensure that fuel-retain conditions do not manifest themselves at the conclusion of a fuel drop. While analog delivery-vehicle tank-monitoring systems have been the industry standard for years, there are enough blind spots in their capabilities that they cannot be trusted to entirely prevent fuel-retain.

FMN Magazine FALL 2020 | 25

FUEL MARKETERS

Every effort must be made to ensure that fuel-retain conditions do not manifest themselves at the conclusion of a fuel drop.

Randy Robinson of Civacon has 15 years of experience in the fueltransportation industry, including involvement in advancing fueldelivery technology. He can be reached at randy.robinson@opwglobal.com or (800) 560-6601. Civacon is part of OPW and makes products and systems to safely load and unload petroleum, dry-bulk and petrochemical cargo tanks.

26 | FMN Magazine FALL 2020

With that in mind, digital tankmonitoring technology promises to be the next solution in this area. Through the use of a graphic touchscreen display, digital technology can wirelessly consolidate the driver’s access to the many different control systems on a fuel trailer, including fuel retain, overfill control, on-board monitoring, pneumatic (air pressure) control, product-crossover prevention, system troubleshooting and usage history.

The digital system can also predict or prevent non-permissive readings, which lets the driver confidently know that the loading process will proceed uninterrupted. This will also help cut down on wait times, which is a huge added benefit for the fuel supplier and the site operator.

With our system, once the digital system’s touchscreen is securely activated by the driver via a unique user ID and PIN, it will only allow a delivery when the proper connection between the trailer and UST is identified. Loading will only begin if the driver has full permit status, meaning that all vapor connections, overfill components and grounding devices are safe and operational. The driver simply refers to RFID technology to know which product will be loaded into each compartment, with the system knowing, through its

wireless-communication capabilities, if the correct fuel is going into the correct tank. This allows the correct compartment valve to open automatically, initiating the unloading process.

On the other hand, if an incorrect truck-to-UST connection is attempted, the digital system will prevent the trailer’s valves from opening, and the delivery will be unable to commence.

At the conclusion of the delivery process, which only ceases when each compartment is empty, the touchscreen will notify the driver that all hoses, elbows and adaptors can be safely disconnected and that all compartments are empty, making them ready to be refilled at the loading rack.

In addition to getting what they paid for, fuel-site operators also want their fuel deliveries to be safe and efficient.

The retain conditions that can develop with the use of analog tank-monitoring systems can, at the least, put the safety and efficiency of the fuel-delivery process in jeopardy. However, fuel retains can now be well on their way to becoming extinct through an innovative new tank-monitoring system that prevents the conditions that can lead to fuel retain from occurring. This will lead to safer, more efficient delivery processes that will leave both the supplier and end user confident that they have, indeed, gotten what they paid for.

FuelsMarketNews.com

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FUEL MARKETERS

Dispatching into the Future Couple automation and standardization with product knowledge and relationship-building.

BY BRIAN REYNOLDS

T

he future is automation to the highest degree possible.

The problem with a total reliance on automation, as it applies to the petroleum industry, is that petroleum is a commodity, and 28 | FMN Magazine FALL 2020

supply disruptions happen constantly with little to no notice. Automation often can’t cover every supply nuance during a disaster—weather related or otherwise. So, having an in-depth knowledge of the product and

important one-on-one relationships is equally essential. You had better be good at talking on the phone and know how to make friends!

Another thing about information technology is that frequently there are dissimilar systems and databases that create the need for customization. NACS and Connexus for the past 20 years have been working hard to promote a common standard for data transfer called the NACS XML (NAXML).

Unfortunately, major oil companies have been reluctant to fully embrace standardized technology. To this day FuelsMarketNews.com

PHOTO©ISTOCK/VLADWEL

FUEL MARKETERS

there are 100s of different formats that should be standardized into a simple CSV or Excel file.

One of the most sought-after pieces of information is a bill of lading (BOL), which is the basis for invoicing. A BOL is not an invoice, but a document that simply states how many gallons (net and gross) are on board a delivery truck.

BOLs are still printed on paper and handed to the delivery driver, then further mailed to the company bookkeeper. This one document can hold up invoicing for days and is problematic when actual payment terms to the oil company are usually around 10 days.

Frequently, a driver loses the BOL or hands it to a store clerk who may misplace it.

There are some electronic BOL offerings in the industry, but they tend to be limited to specific terminals, involve scanning solutions (which require a motivated and reliable driver) or involve sophisticated algorithms to try and match numbers and fields from different data formats. Some of the latter work fairly well, but they are still subject to mistakes and take time.

There are services, for a fee, at many loading terminals in the U.S. where an eBOL can be made available.

Standardizing a file format whereby an oil company supply terminal emails or FTPs a simple document would be revolutionary to the petroleum industry.

So, what are the next big developments (hopefully) that are going to take place in the next 5–10 years to impact the petroleum supply chain?

Here are a few: FuelsMarketNews.com

• Standardizing an eBOL file format by the major oil companies.

• Standardizing and conversions of current database formats with Connexus NACS XML (NAXML).

• Standardizing delivery truck electronic data communications with onboard GPS tracking and the integration of Geocode (electronic GPS address).

• Converting existing back office technologies to true web apps and full capabilities using handheld devices.

• Bluetooth and cloud-based technologies within a convenience store.

• Better embracing of KPI metrics for truly understanding not only profits but losses. Losses are not always clearly understood with petroleum due to temperature and other forms of loss. The cost for accurately determining losses can be more expensive than the loss itself. Fuel losses typically can be 100 to 200 gallons before an investigation occurs. This is also why the BOL is critical to understand how much product was delivered.

• B2C is starting to advance quickly.

For example, Dover Fueling Solutions’s Wayne provides a touchscreen fuel dispenser that connects the customer to the store and utilizes advanced technology, such as facial recognition, to better connect with consumers. The result of these efforts is better service, such as support for food/beverage sales inside the store.

Unfortunately, major oil companies have been reluctant to fully embrace standardized technology. To this day there are 100s of different formats that should be standardized into a simple CSV or Excel file.

What are the capabilities that future supply chain employees will need as these advances move into FMN Magazine FALL 2020 | 29

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FUEL MARKETERS

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The skill set required is not that of a programmer but a good systems operator that can utilize systems completely. An investment in employee user group attendance and constant training is paramount to success. Also, dispatchers typically aren’t buyers or negotiators, but sometimes that is unavoidable. Having a real-time working knowledge of a company’s needs for credit and allocation is extremely important. In today’s environment, successful marketers rely on high volume, and it isn’t uncommon for marketers to have credit needs in the billions of dollars per year.

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FMN_quarter.indd 1

10/14/2020 11:56:07 AM

COME TOGETHER. DO MORE. Brian Reynolds began his career working as a teenager in his familyowned 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 rewardbased fueling loyalty in the 2000s.

He currently works for Dover Fueling Solutions in ClearView, wet stock management sales.

FuelsMarketNews.com

Together, let’s amplify the good work of convenience stores.

Join us at conveniencecares.org

foundation_quartervertical.indd 1 FMN_quarter.indd 1

8/18/20 9:59 AM 4:22:35 PM FMN Magazine 10/15/2020 FALL 2020 | 31

Build Your Brand & Inspire Customer Loyalty with Fuel Additives Your customers’ engines need to run at peak performance yearround. Provide enhanced performance in diesel engines throughout the year while adding value to your business with fuel additives.

Fuel Additives Can Help Your Customers: Provide clean up and keep-clean detergency and clean up internal diesel injector deposits (IDID)

Improve low temperature operability and reduce the cold filter plugging point (CFPP)

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Fuel Additives: Building Your Brand and Inspiring Customer Loyalty

BY DR. KHALED RASHWAN & ERIN F. SMITH As engine technology continues to evolve and vehicle outputs reach new heights, maintaining engine performance as designed is critical to owner success and satisfaction. While the focus in this article will be on diesel additives, multifunctional additive packages are available that fuel marketers can use to provide gasoline, diesel and renewable fuels that have been optimized to meet your customers’ performance requirements, differentiate your fuel, build your brand, grow your business, and develop a loyal customer following.

Additive packages are customizable to meet the performance needs of varying fuel blends, customer segments, geographies and seasons: DETERGENCY ADDITIVES Year-round diesel detergency is of the utmost importance, as dirty fuel systems will operate less efficiently due to deposit build-up from lower quality fuels. With lower quality diesel, the fuel will fail to combust completely, leading to reduced fuel economy and power output, as well as increased emissions.

Including detergent additives in the fuel blend can help control deposit formation on and in fuel injectors that cause lost efficiency and poor performance.

These additives can clean and maintain fuel systems, helping to reduce costly downtime, maintenance, repairs and part replacements for your customers.

Marketers that utilize robust detergent additives in their fuels can provide claims, such as: •P rovides clean up and keep-clean detergency •C leans up internal diesel injector deposits (IDID) • Helps restore lost power and fuel economy •R educes emissions COLD FLOW IMPROVERS Winter will be here soon, and different regions will struggle with combating lower temperatures and keeping engines up and running. One risk customers

face is wax settling; if a vehicle is idle for too long, wax fallout can occur and plug filters. WASA (wax anti-settling agents) in cold flow additives can disperse the wax in fuel blends, reducing the risk of this occurring. Cold flow additives are a great way to enhance the low temperature operation of fuels in a range of low temperatures.

Marketers that add cold flow improvers to their fuel blends can tout many benefits, including: • Improves low temperature operability • Lowers Cold Filter Plugging Point (CFPP) • Improves fuel handling and flow characteristics • Minimizes effects of water contamination by inhibiting ice crystal formation • Reduces risk of frozen fuel lines and filters • Minimizes need for kerosene dilution • Reduces risk of wax fallout and plugged filters CETANE IMPROVERS The cetane number is a measure of the ignition delay of diesel. With cetane-improving additives, marketers can provide solutions to their customers like: • Facilitates cold weather starts • Maintains smoother engine idle • Emits less smoke and odor • Reduces engine noise STABILIZERS & ANTIOXIDANTS Over time, fuel can break down and develop gums, varnish and acids (especially in biodiesel blended fuels). These elements can plug fuel filters and harm sensitive engine components, causing poor engine performance. The right combination of antioxidant and stabilizing fuel additives can protect against fuel degradation, reducing the risk of residues and plugged filters, as well as extending the storage life of fuel for both marketers and their customers.

LUBRICITY IMPROVERS Lubricity is necessary to protect fuel pumping and injection systems.

Hydrotreating diesel to remove sulfur also removes naturally occurring lubricity-containing components from diesel fuel. While there is a minimum lubricity specification (ASTM D975), engine manufacturers have long had concerns that this minimum is not low enough to meet their recommendations for optimal engine performance. Additizing fuel with lubricity improvers can bring this important property back to match the engine manufacturer specification, potentially providing a longer serviceable life for various engine components.

CORROSION INHIBITORS Water contamination is an unfortunate and inherent issue in fuel distribution systems, and low sulfur fuel may not always provide protection against rusting. Where there is water and metals, there is corrosion. Choosing the right additives can provide a protective barrier to the fuel storage and transfer systems, as well as to the vehicle engine components to guard against corrosion.

WHAT IS THE NEXT STEP FOR MARKETERS? MCC can tailor fuel additive packages to your specifications to provide the necessary solutions to your diesel, renewable and gasoline fuel blends that will resonate most with your customer base and build your brand. MCC is ready to be your fuel additive partner.

Contact us today at fueladditives@ mcchemical.com to discuss customized fuel additives and to provide your customer with the best solutions.

Dr. Khaled Rashwan is the Technical Manager at MidContinental Chemical Company, Inc. (MCC) has extensive experience in the specialty chemical industry. Dr. Rashwan can be reached at khaledr@mcchemical.com.

Erin Smith is the Marketing Specialist at MidContinental Chemical Company, Inc. (MCC) and has 10+ years of experience in industrial and chemical marketing. Ms. Smith can be reached at erins@mcchemical.com.

TIME’S UP FOR YOUR

TANKS? A 30-year life cycle means many USTs soon will be—or already are—out of warranty, jeopardizing insurance coverage.

BY KEITH REID

MONTHS

years

C

hanges from the 1980s can still be felt. The digital age moved beyond the hobbyist era into general business operations and personal computing.

The handheld “brick” form factor did not last long, but the cellphone is here to stay. Fortunately, most of the fashion trends—legwarmers, shoulder pads and parachute pants—have not stayed with us (though they were an improvement over some of the horrors of the 1970s).

In addition, petroleum retailing and marketing continued to move from the service bay to the convenience store format in the 1980s. Card readers, both in stores and at the dispenser, were making the manual imprinter a thing of the past. And on the environmental front, a sweeping set of new underground storage tank (UST) regulations launched in 1988.

The goal was to address leaking USTs through a combination of replacements, updates and mandated monitoring requirements with a 10-year window to get on board. That resulted in a massive replacement of old underground storage tanks throughout the industry.

Which brings us to today. The typical warranty on an underground storage tank was for 30 years. The math is not hard to calculate, so a great many tanks are approaching or surpassing their warranty periods. What does that mean for tank operators?

Unfortunately, there is no “one size fits all” answer. Some 36 states offer a state environmental remediation program to address releases. The state programs tend to take a broader approach, but some focus on tank age. And with the current economic circumstances (building on budgets that were strained before COVID-19 hit), there is no guarantee that state programs will continue as they have in the past.

The remaining 14 states require a similar level of financial support for releases, typically through private insurance. Private insurers commonly (though not exclusively) focus on the tank warranty period with their policies.

SCOPE OF THE PROBLEM Just how many tanks are we talking about?

That is a critical question, and also one that has no solid answer.

34 | FMN Magazine FALL 2020

FuelsMarketNews.com

In late 2015, the Association of State and Territorial Solid Waste Management Officials (ASTSWMO) released the report “Analysis of UST System Infrastructure in Select States,” which provided at least a thumbnail picture of the UST population and some of the attitudes among insurers and regulators regarding tank type and age. The report involved—to varying degrees—27 states and a range of interested parties.

The report found 59% of the tanks averaged more than 20 years in age, and 39% of the tanks were between 20 and 29 years old. Obviously, five years have passed, and those numbers have certainly increased (offset to some extent by tank replacements and decommissioning).

Eight of the states were able to provide more detailed information on tank materials and construction.

There was a relatively even split between fiberglass and steel, along with a surprising number of fiberglass single-walled tanks (25.4%). The presence of various biofuels was covered but not down to specific concentrations, such as E10 (10% ethanol) versus E85 (85% ethanol).

While something is better than nothing, many sources in the ASTSWMO report (and everyone interviewed for this article), noted that there is a crucial lack of granular data on the source of tank releases.

FuelsMarketNews.com

Bob Renkes, executive director of the Fiberglass Tanks & Pipe Institute, outlined the scope of the problem.

“How many out-of-warranty tanks remain? How many have encountered problems? When do they encounter the problems? Does that change by single wall, double wall and manufacturer? Is there a difference between steel and fiberglass? What is the correlation between the tank’s age and its useful life? We just don’t know,” he said.

At what point should tank age become an issue? Most failures are identified within days to a few years after a tank goes in the ground and are typically related to specific manufacturing errors or improper installation.

“There’s no change in the properties of steel, like strength. It doesn’t crack—the welds don’t change,” said Wayne Geyer, executive vice president at the Steel Tank Institute (STI/SPFA). “We’ve seen tanks that are 45 years old that you can still see the stencil on the steel from the mill. And you can see tanks coming out of the ground with our decals on the outside of the tank that looked like they were new. People were pulling tanks left and right in the nineties that were in really good shape on the outside.”

On the plus side, USEPA is reportedly finalizing an aggressive survey and database of the existing tank population. Hopefully, this will begin to add some clarity.

FMN Magazine FALL 2020 | 35

THE 30-YEAR WARRANTY There is a suggestion that the common 30-year tank warranty was created as a marketing proposition during the heyday of tank replacements. There does not appear to be any specific rationale for choosing 30 years over, say, 20 or 40 years.

It is not clearly established that there is a specific age at which tank performance begins to significantly degrade. As the ASTSWMO report noted: “Anecdotal information and opinions expressed by insurance companies and other risk management experts are quite diverse as to whether the age of the tank is a significant or decisive factor in assessing the risk of leaks.”

“I’d argue that the life of the tank is probably more than 30 years,” said Colin Donovan, president of STICO Mutual Insurance Company, which insures steel tank manufacturers and provides the foundation for their warranties. “The 30 years, for whatever reason, was chosen and that’s stuck. There are certainly tanks that are still operable after 40 or 50 years.”

PRIVATE INSURANCE Lacking a clear view of the underlying dynamics of tank failure, the insurance industry must have some metric for risk assessment. While each insurance company has its own actuarial models for insuring underground storage tanks (or more specifically the ramifications of a leak from an underground storage tank), the 30-year warranty appears to be a milestone event for many in how they structure the coverage.

“The underwriter mindset is not if but when is it going to happen,” said Marshall Yacoe, vice president, environmental services lead energy and environmental, for Lockton Insurance Brokers LLC. “So, as tanks get older, underwriters began to add additional scrutiny, particularly as they pass 25 years.”

The ramifications for the retailer can be significant in terms of both premiums and deductibles.

“If you have a tank that’s 24 years old and you have a release, you might pay $10,000 before insurance kicks in,” said Yacom. “If that tank is 27 to 28 years old, that deductible can be anywhere from $50,000 to $250,000.

And once it hits 35 years, those deductibles can reach $500,000 or some carriers not wanting to write it anymore. Unless you have a big portfolio to balance out the risk, it becomes very difficult to get coverage.” He did note that it would not necessarily be the only factor under consideration. An underwriter can go to bat with the carrier for a retailer with a strong record of maintenance and successful compliance.

36 | FMN Magazine FALL 2020

In fact, maintenance is likely the biggest factor in the reliability and soundness of a fueling infrastructure. “Any tank that is properly maintained really has an indefinite life,” Donovan said. “I speak mostly for steel because that’s our focus. If you can keep the water out and keep the food sources [for microbial growth] out they can last indefinitely. If you don’t have proper maintenance, you are going to have corrosion from the inside. We’re starting to get the word out and think that’s one of the reasons why we’re seeing a lower failure rate in the last five to 10 years.”

Some private insurance companies focus their approach almost entirely on the operator and maintenance aspect. “We’re not a big carrier, but this is all we do,” said Brian Wiegert, vice president of underwriting for PMMIC. “We approach this through loss control and inspections. We go out and confirm the equipment, make sure it’s installed the way the manufacturer wanted it installed and operating the way the manufacturer wants it to operate. Tank age is a concern, but we don’t have an age limit or non-renew or cancel currently because of age. It doesn’t scare us because we have [our] data to analyze it.”

While the company does not have arbitrary metrics for tanks, it does make sure the operators are on the ball. “We work with regulators to try to keep people in compliance because our policy requires them to be in compliance, and without the owneroperator we wouldn’t be in business,” said Wiegert.

“And we will cancel people who fail to take care of their equipment or don’t respond to the things that require fixes.”

Anonymous insurers provided their perspectives (both for and against) on using tank age as a metric in the ASTSWMO report. Supporting the idea that age should not be a primary factor, one noted: “Arbitrary age limits are a bad idea. We have not seen an age [at which] tanks are likely to fail…Data indicates fiberglass tanks should last over 100 years…Steel tanks may have a similar lifespan, although anodes need to be replaced periodically…tanks [should be replaced] not because of their age, but because of the fuels to which they are exposed. If fiberglass tanks [contain] diesel there is no need to replace them. If they are going to see 15% or greater alcohol, they should be removed or replaced.”

Another anonymous insurer raised an interesting perspective on tank age beyond material performance: “We have been limiting our exposure…on older tanks for the past six or seven years…[Most of our claims] come from piping related incidents, but some…from FuelsMarketNews.com

tank failures where there is a slow leak that gets bigger over time, or a total failure…The problem with many older tanks from an underwriting perspective is that they are usually undesirable risks [in other ways]…run down, not profitable…they change hands every year or two…where we have good owners taking care of their tank systems, [we] will continue to insure.”

THE TYPICAL WARRANTY ON AN UNDERGROUND STORAGE TANK WAS FOR 30 YEARS. … AND A GREAT MANY TANKS ARE APPROACHING OR SURPASSING THEIR WARRANTY PERIODS. STATE TANK PROGRAMS Most retailers likely fall under one of the state tank programs. These programs vary greatly in how they look at an aging tank population. It is strongly advised that all retailers make themselves fully aware of not just their state(s) compliance program but also how it views aging underground storage tanks in general relative to financial assurance funds.

However, a few trends stand out. In the states surveyed in the ASTSWMO report, the majority did not have a legal requirement or statute requiring the replacement of old USTs or UST equipment. Those that did tended to focus on the replacement of single-walled systems. That appears to be the case more broadly.

Several states that have focused more on tank age have also specifically modified how they regulate UST life span.

FuelsMarketNews.com

For example, in 2016 Connecticut increased and improved life expectancy from 30 years to 40 years. And Maine similarly offers an extension beyond the 30-year warranty requirement as long as the tank, its associated piping and other facility components pass integrity testing.

On a positive note, a number of states offer financial incentives and other supports to facilitate UST upgrades or replacements.

WHAT TO DO? Upgrading aging storage tanks requires a significant amount of capital that is balanced against the likelihood of significantly increased premiums and deductibles. Piping and other components can require replacement as well. And retailers will not have the ability to “roll the dice” on the chance of not having insurance versus paying out-of-pocket for a spill.

Retailers that are not part of a state program must, according to federal regulation 40 CFR Part 280, have sufficient coverage or an approved capability to cover $1 million for any potential spill. Inability to provide proof of this financial coverage will most likely see a tank red flagged and put out of operation.

For those with tanks nearing but not quite at the warranty point (if that is the crucial insurer metric), there is time to plan for a replacement strategy. For those where time is running out, the consideration comes down to making the upgrade or potentially shutting down or selling the site to another operator.

The situation generally is not as dire for those retailers who happen to be taking part in a state program and have been diligent about maintenance and compliance, at least not yet. While the state programs seem to take a more holistic approach versus a specific age deadline (with notable exceptions), it is uncertain how long that will continue as the aging tanks move further and further past the 30-year mark.

Similarly, a significant event involving an older tank or an aggressive regulatory move by an influential state could easily change the balance. State budget problems, most certainly impacted negatively by the current COVID-19 crisis, could very well bring significant changes to state UST programs, enforcement and financial assurance funds.

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

FMN Magazine FALL 2020 | 37

IN THE

FUELS INSTITUTE CHAIRMAN RON SABIA TALKS COVID RECOVERY, CONSOLIDATION AND DEMAND SHOCK.

BY KEITH REID

38 | FMN Magazine FALL 2020

FuelsMarketNews.com

RON SABIA

CHAIR FUELS INSTITUTE

W

e participate in a dynamic industry, driven by many smart and innovative people. To help spread their insightful voices we are launching a quarterly series where we interview these thought leaders.

What better way to kick things off than to interview strategic adviser Ron Sabia?

Sabia chairs the Fuels Institute, a non-profit think tank launched by NACS to evaluate transportation market issues and publish peerreviewed, unbiased research to guide and inform industry stakeholders—from those trying to make strategic business decisions to policymakers considering legislation and regulations affecting the fuels and vehicles markets.

He has an extensive executive leadership background in the energy, midstream, distribution and multi-unit retail sectors, with a strong focus on refined products and renewables supply, trading and marketing.

While president of Gulf Oil, Sabia presided over the greatest period of growth and profitability in the company’s history. Concurrently, he served as executive vice president of Cumberland Farms, and prior to joining Gulf, Sabia was senior vice president of marketing for TransMontaigne Product Services, where he led business development around its terminal assets. Sabia also held leadership positions at Louis Dreyfus Energy and BP Oil. Sabia currently provides strategic advisory services to market participants, infrastructure funds and energy investors by leveraging his extensive background. With that in mind, we asked Sabia about the Fuels Institute and his perceptions on a range of industry issues and sectors.

FuelsMarketNews.com

FMN: What is the value of the Fuels Institute to the industry?

Sabia: Tremendous. I was fortunate to be involved [with the organization] from the beginning, and then lucky enough to eventually become the chairman. We are a very diverse organization with diverse points of view, which I think is unique. The diversity helps us all develop positions that are credible. When we provide input to Congress it’s not just from marketers and retailers and refiners.

We have auto companies, biofuels manufacturers, consumer advocates and regulators on our board.

Legislators pay more attention.

Our objective is unbiased research, and we do not take a position on the issues. However, we try to take on topics that will help shape the future of the market and fill in gaps in the research. For example, our Electric Vehicle Council started out looking at the charging infrastructure, and a lot of stakeholders became involved in that and are working to decide how to build things out in a way that makes the most sense. We also launched our Diesel Fuel Quality Council to look at fuel quality issues across the industry and to try and develop best practices in handling. That is just a small sampling of what the Institute has worked on and has planned.

FMN: How congenial and open-minded are Fuels Institute stakeholders who have traditionally butted heads over policy?

Sabia: It has been very congenial. Do folks disagree given their different points of view? Absolutely.

And many have their own agendas. But that isn’t a bad thing. I don’t necessarily think the same way as someone else, and being able to listen to their reasoning is incredibly helpful. You need to understand what they’re dealing with when you’re looking at potential solutions.

Obviously, there have there been times where folks on our Board have been unhappy with something we published. If it doesn’t match their agenda, they’re less than thrilled. That is to be expected when you have close to 40 people on your FMN Magazine FALL 2020 | 39

Board of Advisers—you can’t get 40 people to agree on what to have for lunch! But we do have a process where all points of view are considered and where the research is honest.

FMN: Since you mentioned the Electric Vehicle Council, how do you see the EV market developing?

Sabia: I believe it takes about 12 years to turn over the fleet. Even if EVs were 100% of sales—and it’s not close to that—it would take more than a decade. EV sales are only about 4% today. So, I just do not see that happening soon. Obviously, batteries are going to get more effective, and the cost parity will get closer. But the vast majority of vehicles will be powered by liquid fuel for some time to come, though EVs will increasingly compete for gallons.

The vast majority of vehicles will be powered by liquid fuel for some time to come, though EVs will increasingly compete for gallons.

FMN: How has retail responded to the COVID-19 crisis?

Sabia: They have done a phenomenal job with the tremendous challenge of completely revamping operations, housekeeping—everything—to keep their associates and their customers safe. The associates on the front lines at the convenience stores had this thrust upon them, and they did a tremendous job in a very difficult time.

40 | FMN Magazine FALL 2020

FMN: What do you see from COVID-19 lasting beyond the crisis?

Sabia: I think the effects of this will be with us for a while. Whatever recovery we have will be slow and long and arduous from a demand standpoint. I don’t see a change in the kind of housekeeping we have now adopted for quite a while. Is foodservice in for a very long recovery? We’re probably living in more of a commissary world for the foreseeable future.

What is going to be interesting are the societal COVID changes. Now that everybody’s telecommuted, how much does that trend into the future?

Even if folks stay home for one day a week, that’s going to greatly change the demand structure. I could then make the opposite argument that no one’s going to want to ride on a train or a subway because they don’t want to be in that confined space. And then they all hop in their car and drive to work because that is their own personal pod.

FMN: What general trends do you see for the retail segment?

Sabia: I believe we will have further consolidation in the space. The smaller operations with a handful of sites and without good real estate, without good access to product, without financial strength, might get consolidated away. Then you have the chains that are, say, 20 to 100 stores but that don’t have a successor or a family member who wants to be involved. They may have wonderful assets and good people, and folks are looking for good sites to add to their network.

Transactions have slowed a bit during COVID, obviously, but we’ve had a very active acquisition market over the last couple of years. And the multiples were very, very good. With COVID it’ll be hard for [acquirers] to pay as high of a multiple, but there’s plenty out there looking for good assets.

FMN: What about consolidation on the distributor side?

Sabia: There are folks out there, but it depends on your markets and your assets. Given how thin distributor margins are now, it’s harder to pay a big number.

FuelsMarketNews.com

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The associates on the front lines at the convenience stores had this thrust upon them, and they did a tremendous job in a very difficult time.

FMN: How did demand shock play out with retail fuel?

Sabia: It was interesting because you have this demand shock with the shutdowns. And we’re more used to dealing with a supply shock—one way or another. And we did get a supply shock at the same time as the demand shock. And that was really the unusual piece of this, and in some ways a saving grace for retailers. The OPEC+ non-agreement between Saudi Arabia and Russia, where they started putting barrels into the market and crude oil collapsed, that cratered the replacement costs for retailers, and their margins went up to remarkable levels.

FMN: And how is that cycle playing out as the crisis progresses?

Sabia: Depending on the market you’re in, that’s largely continued at the retail level. I have said from the beginning, it was going to be a race against time [until] volume and margins return to normal.

For the most part, at least anecdotally from the folks I’ve spoken with, their margins have still been sufficient to more than offset volume loss. But as we know, over time those get competed away.

42 | FMN Magazine FALL 2020

FMN: How has that impacted “inside the box.”

Sabia: If you are someone who has a foodservice offering—prepared food drinks and the like—you certainly suffered during COVID. Most everything was sold as pre-packaged. Some folks told me they were down 50 to 60% with coffee and certainly fountain drinks. Those are high-margin items to give up. I think those folks who usually would be on the front of the curve with higher margin service offerings probably took more of a hit than the traditional retailer.

FMN: How did COVID-19 play out for the wholesalers?

Sabia: During the early stages of the quarantine shutdown, branded wholesale margins expanded to offset the loss in branded volume, leaving gross margins relatively flat. On the other hand, unbranded wholesalers lost volume without the commensurate expansion in unit wholesale margin reducing overall gross margin. Over time, branded unit margins reverted to normal, and overall gross margin suffered as volume has not recovered.

As we touched on earlier, companies that also had retail margin exposure did better as extraordinary retail margins more than offset volume loss and continue to do so.

Companies that supplied their own barrels and had access to storage had a great opportunity to take advantage of the historic contango in the market, the widest I have witnessed in my career.

FMN: If you had one word of advice to give to a retailer today, what would that be?

Sabia: I would say, flexibility. You’ve got to be nimble, think forward and adjust to changes in the market.

FMN: If you had one word of advice to give to a distributor?

Sabia: Efficiency. They’re in a very tough market, and for them it’s lots of small margin transactions, and being able to grow your business without adding cost is critical.

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THE

FUTURE OF FUEL ADDITIVES

TRANSITIONING INTO 2021 Regulations and advancements in engine technology will fuel a long-term increase in demand.

BY DR. RAJ SHAH, DAVID FORESTER AND STANLEY ZHANG

44 | FMN Magazine FALL 2020

FuelsMarketNews.com

M

any automakers have turned to fuel additives to satisfy growing consumer demands for improved engine performance and fuel economy in the modern automotive industry. Fuel additives provide a wide range of benefits, including boosting engine performance, preventing distribution-related complications and maintaining long-term fuel quality. Currently, the most utilized fuel additives are for deposit control and octane boosters.

Other frequently used additives include corrosion inhibitors, lubricity agents, cetane improvers and low-temperature operability additives. Consequently, fuel additives have been staple additions to present-day, commercial gasoline and diesel fuels sold at retailers around the world.

Based on market research, the fuels additives market is expected to experience significant growth heading into 2021. The increasingly stringent environmental regulations imposed by organizations, such as the U.S. Environmental Protection Agency (EPA) and the European Union, are likely to be the primary driving force behind the future developments in the fuel additives market. They will be fulfilling an integral role in ensuring that commercial fuels reach the standards set by environmentally conscious countries. The expanding usage of ultra-low sulfur diesel (ULSD) and the implementation of advanced engine technologies in modern vehicles will likely further increase fuel additive consumption.

Fuel additives are often necessary additions to address apparent new vulnerabilities associated with recently developed advancements. Although the fuels additive market is expected to grow, several factors, such as the COVID-19 pandemic and the emerging popularity of alternative fuel vehicles (AFVs), may slow the overall growth of the market. Still, strong driving factors should propel the overall fuel additives market toward substantial success in 2021.

THE DRIVING FORCE OF ENVIRONMENTAL REGULATIONS AND RESTRICTIONS According to the EPA and the Intergovernmental Panel on Climate Change (IPCC), the transportation sector is responsible for 14% of global greenhouse gas emissions. Petroleum-based fuels, like gasoline and diesel,

FuelsMarketNews.com

are responsible for 95% of these emissions, so the reduction of vehicular emissions has become a major factor to consider for oil and gas companies. In 2019, global energy-related CO2 emissions were reported at around 3.3 metric gigatons, with trend lines suggesting that environmental regulations implemented in recent years have been successful in curbing emissions moving forward.

In March 2020, the EPA and the National Highway Traffic Safety Administration (NHTSA) issued the Safer Affordable Fuel-Efficient (SAFE) Vehicles Rule.

The SAFE Vehicles Rule sets strict standards for fuel economy and carbon emissions that increase 1.5% each year in stringency from model years 2021 through 2026. For 2021, passenger vehicle fuel economy would need to reach at least 44.2 gallons per mile, while carbon dioxide emissions would need to be limited to under 178 grams per mile.

Global Greenhouse Gas Emissions by Economic Sector

10% 25% 21%

14%

24% 6%

Electricity and Heat Production

Buildings

Agriculture, Forestry and Other Land Use

Industry

Transportation Other Energy

SOURCE: IPCC (2014)

FMN Magazine FALL 2020 | 45

THE FUTURE OF FUEL ADDITIVES

TRANSITIONING INTO 2021

MTU Series 900 Sulfur Tolerance Solution engine. (Photo: Business Wire)

Petroleum companies will need to increase their usage of fuel additives in their fuel blends to meet the increasingly strict requirements for fuel economy and carbon emissions for each passing year. In particular, performance additives, like deposit control/cleanliness agents and octane boosters, will likely experience the largest increase in usage. Deposit control additives play a crucial role in mitigating carbon deposit accumulation and maintaining engine cleanliness, which prevents reductions in engine performance and fuel efficiency. Octane boosters protect against engine knock and reduce undesirable tailpipe emissions.

Although both of these additives are already prevalently used in current fuel blends, deposit control additives and octane booster consumption will continue to rise in response to tightening regulations.

46 | FMN Magazine FALL 2020

THE IMPACT OF ULSD AND ADVANCED ENGINE TECHNOLOGIES The increasing demand for ULSD for modern diesel engines is projected to stimulate growth for diesel fuel additives. ULSD has a maximum sulfur content of 15 ppm, allowing for its use with aftertreatment technologies, like diesel oxidation catalysts (DOC), diesel particulate filters (DPF) and selective catalytic reductions (SCR). This results in substantial reductions in gaseous and particulate emissions, which are the harmful byproducts of diesel combustion.

However, ULSD tends to suffer from lower fuel economy and lubricity as a consequence of the extremely low sulfur content. Compared to traditional diesel, water has even lower solubility in ULSD, causing greater susceptibility to water separation, accelerated tank corrosion and microbial contamination, especially when combined with biodiesel. This necessitates the addition of diesel additives, such as corrosion inhibitors and lubricity improvers, to bring ULSD to comparable performance levels of diesels with higher sulfur content without sacrificing the emissions benefits. Countries like China have sulfur limits as low as 10 ppm, as required by China VI standards, and increasingly low sulfur requirements should boost the diesel additives market.

For gasoline, the prevalence of gasoline direct injection (GDI) engines in modern high-performance automobiles will promote the use of additives. GDI engines have the advantage of improving mileage, performance and combustion efficiency, while reducing emissions. However, due to the close proximity of the injectors to the combustion chamber, GDI engines are susceptible to carbon deposit accumulation and increased risk of engine damage. Consequently, gasoline deposit control additives will become an essential component of the fuels utilized by these high-performance vehicles in order to maintain engine integrity.

IMPACT OF COVID-19 AND AFVS The onset of the COVID-19 pandemic has led to market pullbacks and a general decline in all economic sectors.

Oil and gas companies have been impacted by the decrease in vehicle traffic and temporary closure of oil refineries. Consumer spending and fuel consumption FuelsMarketNews.com

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THE FUTURE OF FUEL ADDITIVES

TRANSITIONING INTO 2021

has also been at an all-time low, as lockdown protocol has been keeping people inside their homes. The economic impact of the pandemic on the fuels industry is likely to slow the growth of the additives industry as well, since their markets are closely associated with each other. As the total number of cases falls and the severity of the situation lessens, the petroleum industry is expected to make a recovery and bring the fuel additives market back to an upward trend.

AFVs have gained recent popularity among consumers who value lowering their carbon footprint through the reduction of greenhouse gas emissions. Plug-hybrid electric vehicles (PHEVs) and fully electric vehicles (EVs) have the advantage of producing minimal to zero tailpipe emissions and boasting superior fuel efficiency over traditional gasoline and diesel vehicles.

Liquified petroleum gas (LPG) vehicles and compressed natural gas (CNG) vehicles also have shown 60-90% reduction in emissions over conventional automobiles as well. According to the EIA, AFVs are estimated to total 11.05 million units compared to the 122.31 million units for traditional gasoline vehicles by 2021.

Although AFVs are providing competition in the automotive industry, the current dominance of oil and gas is expected to continue into 2021, as gasoline and diesel are still the primary fuel sources for energy in the transportation sector.

CONCLUSION The future of the fuel additives market is expected to undergo significant growth based upon current additives usage in the automotive industry and the demand for cleaner and more efficient fuels. Environmental regulations, like the SAFE Vehicle Rule, are one of the main driving factors for oil and gas companies to improve upon their current fuel compositions. Strict emissions limits and gas mileage requirements necessitate the inclusion of a variety of performance additives to meet standards. The development and widespread usage of Top Tier gasoline is a strong indicator of the need for higher quality and performance fuels, which will likely drive fuel additives further into the spotlight when considering the future of the automotive industry. With each passing year, environmental regulations will continue to become increasingly restrictive and 48 | FMN Magazine FALL 2020

require that developments occur in the fuel additives industry to keep up with demands.

Because of more stringent environmental restrictions, ULSD has found mainstream use in countries such as the United States and China in an effort to minimize particulate matter and greenhouse gas emissions. Although the lower sulfur content of ULSD is effective at decreasing emissions, fuel additives are necessary additions to ULSD in order to address the side effects of accelerating corrosion and reducing lubricity. Fuel additives usage in diesel is expected to increase with the widespread use of ULSD and future goals to decrease sulfur content in diesel fuels. In addition, the development of advanced engine technologies, such as high-pressure common rail (HPCR) fuel injection and gasoline direct injection (GDI) systems, requires high performance fuels with deposit control additives to compensate for their vulnerability to carbon deposit accumulation. With many OEMs equipping their modern vehicles with

New automobiles, such as this eighth-generation Sonata, increasingly use gasoline direct injection engines that provide improved mileage and performance but can be less tolerant to deposits. (Photo: Hyundai)

FuelsMarketNews.com

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THE FUTURE OF FUEL ADDITIVES

TRANSITIONING INTO 2021

these fuel injection systems, fuel additive consumption will likely increase to keep these engines in optimal performing conditions.

The COVID-19 pandemic has negatively impacted the automotive industry and overall fuel consumption, resulting in slowing the fuel additives market as well. However, as countries continue to recover from the pandemic and normalcy begins to make a return, the petroleum industry is expected to make a comeback and continue on an upward trajectory.

Similarly, AFVs will adversely affect the market for conventional vehicles but will ultimately fail to significantly slow the upward momentum of oil and gas companies. The automobile consumer market still favors conventional vehicles for their lower upfront costs and greater accessibility.

Despite some setbacks, 2020 has presented strong indications that the fuels additives market will continue to considerably develop alongside consumer demands for higher performance and a lower carbon footprint. In 2021, fuel additives should experience substantial amounts of growth and become major contributors to the advancement of modern-day fuels.

Dr. Raj Shah is a director at Koehler Instrument Company. He has been an active ASTM member for the past 25 years and held numerous leadership positions within various ASTM committees. Shah is a three-time recipient of the ASTM Award of Excellence and the ASTM Eagle Award. He holds a Ph.D in chemical engineering from Penn State University, is a distinguished alumnus from the Institute of Chemical Technology, Mumbai, and is a Fellow from The Chartered Management Institute, London. Dr. Shah recently co-edited a reference bestseller titled “Fuels and lubricants handbook,” published by ASTM. He can be reached at rshah@koehlerinstrument.com.

David Forester has over 35 years’ experience in the fuel industry and specializes in fuel additives. He has worked for several multinational companies, holds numerous patents on fuels handling and fuel additives and is currently retired, living in Pennsylvania. He is also a current instructor for various fuel courses with ASTM and chairs several ASTM fuel-related committees.

Stanley Zhang is a chemical engineering student from Stony Brook University, where Dr. Shah is the chair of the external

50 | FMN Magazine FALL 2020

advisory board of directors. He is also a part of a thriving internship program at Koehler Instrument Company.

References 1. “Annual Energy Outlook 2020.” EIA, U.S. Energy Information Administration.

2. Bartlett, Jeff S. “Study Shows Top Tier Gasoline Worth the Extra Price.” CR, Consumer Reports. 3 Apr. 2019.

3. Carley, Larry. “Deposit Control Additives and Bad Gas.” Underhood Service. 1 Oct. 2016.

4. Courville, Caleb. “Ultra Low Sulfur Diesel (ULSD): the Good, the Bad, and the Rusty.” Axi International. 18 Jul. 2018.

5. “Electric Vehicle Benefits and Considerations.” EERE, Energy Efficiency & Renewable Energy.

6. “Federal Vehicle Standards.” Center for Climate and Energy Solutions.

7. “Fuel Additives Market by Type, Application - Global Forecast to 2025.” Markets and Markets. Jun. 2020.

8. “Global Greenhouse Gas Emissions Data.” EPA, United States Environmental Protection Agency.

9. “Proprietary Research into the Effectiveness of Fuel Additive Packages in Commercially-Available Gasoline.”

AAA, American Automobile Association. 2016.

10. S. Rizvi. ed. MNL59-EB. “A Comprehensive Review of Lubricant Chemistry, Technology, Selection, and Design.”

West Conshohocken, PA: ASTM International, 2009. <https://doi.org/10.1520/MNL59-EB> 11. Yang, Liuhanzi. “Motor Vehicle Diesel Fuel Quality Compliance and Enforcement in China: A Look at the Status Quo and International Best Practices.” International Council on Clean Transportation. Mar. 2020.

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WORLD OF OPPORTUNITIES Standards and an open system provide new avenues for payments, EMV and other key initiatives.

Dan Harrell Chief Innovation Officer Invenco www.invenco.com

52 | FMN Magazine FALL 2020

You describe Invenco as a “payments company” vs. an equipment company. What do you mean by that?

Although they may appear as one integrated unit, a dispenser’s fuel pump and pay-at-pump systems are completely separate equipment. The variation between complexity of function, integrations, communications, regulation update intervals, security requirements, product life cycle, innovation pace and customer engagement opportunities all highlight the differences between these seemingly cohesive devices.

Invenco prides itself on being a payments company because, although a segment of our solutions focuses on the retail fuel market, the root of our product development process is payments technology and services.

We build our products to align with the payment industries’ latest standards, consumer trends and regulatory requirements to ensure that the systems’ main function—payment transactions—is enabled to the highest possible standard. Then, once we have addressed the foundation of security, PCI, EMV, contactless, mobile, extensibility and customer UX, we develop the integrations with supporting forecourt technology. The result is a product that successfully addresses the nuances of forecourt payments, while

staying ahead of providers whose focus is manufacturing fuel equipment.

What are some aspects of the payments industry that have impacted or will impact the retail fuel market?

Payments industry initiatives generally address consumer security, consumer preference or merchant opportunity, while the major retail fuel initiatives are outdoor EMV and contactless payments. EMV can be categorized as consumer security and has retailers wondering how to extract value from related hardware investments. Consumer preference has driven contactless payments, with the COVID-19 pandemic triggering significant change in interactions on the forecourt and within the c-store.

In the merchant opportunity category, open platform systems and a standard communication protocol have made their way from the payments to the retail fuel market conversation. Both an open platform and communication standard (between all associated retail systems) will be important factors as the industry drives the evolution of digital solutions to differentiate offerings.

Can you dive deeper into how a universal standard for pay-at-pump FuelsMarketNews.com

This article is brought to you by Invenco, a NACS supplier member.

to POS system communications would impact the industry?

The universal standard refers to implementing a set protocol for communications between the in-store and pay-at-pump system. In our current state, protocols differ by pay-at-pump provider and are generally not shared except under closed agreements. This closed approach limits innovation and the ability to extend customer engagement for EMV pay-at-pump solutions. For new or third-party providers, there are often seemingly endless hurdles or excessive fees to cross when working toward approval from POS providers to integrate with their systems.

For retail fuel, this means that innovative, cost-effective systems are blocked from entering the market.

Ultimately, the retailers are hurt the most, as proprietary solutions can dictate high pricing while discouraging innovation and competition between providers.

Retailers should encourage their technology providers to ensure that they advocate for them by adopting the recently enacted Conexxus Standard for Forecourt Payment Terminal communication. The standard ensures that all pay-at-pump solution providers have the necessary information to deliver equipment to the marketplace.

FuelsMarketNews.com

You mentioned the importance of an open platform in the payments industry. Can you expand on what this looks like on the forecourt?

An open platform enables retailers to leverage their pay-at-pump terminals to engage customers in ways previously not possible. Food ordering, loyalty and media programs are examples of revenue-generating capabilities that mark the beginning of customer engagement potential on the forecourt. An open platform will enable seamless integrations to the siteâ&#x20AC;&#x2122;s existing system via third-party plugins and applications they or their representatives can develop on their own designated timelines. Retailers whose forecourt systems are not open platform may find themselves unable to keep up with the latest forecourt offerings because they are burdened with driving the priority with their technology provider.

Additionally, with so much recent consolidation, open platform payat-pump systems allow retailers to manage their assets from one central location, no matter the dispenser or POS type. For businesses looking to expand, this is a crucial step in moving forward as things like asset information, software/compliance upgrades, media playlists and device status become difficult to manage across several systems.

new providers to enter the forecourt payments market. This means higher prices and less motivation for current providers to innovate their products.

To remove these barriers, retailers should encourage their technology providers to enact the Conexxus Standard for Forecourt Payment Terminal communication between in-store and pay-at-pump systems.

When exploring pay-at-pump systems, retailers should make sure they run on an open-platform architecture and support the Conexxus standards. For retailers looking to drive revenue with their EMV equipment upgrades, an open system terminal with media capabilities is a great way to open this world of opportunities.

By taking these steps, retailers can be confident that their payment system investments will drive value at their sites today, while enabling the future innovations of tomorrow.

What steps should retailers take today to ensure their technology will align with these concepts?

Be aware that there are long-standing barriers that make it difficult for FMN Magazine FALL 2020 | 53

INDUSTRY NEWS PRICEADVANTAGE RELEASES NEW API

PriceAdvantage, a provider of software that helps retailers optimize and manage fuel prices and automatically executes price changes to the POS, pumps and price signs, announced the release of a new API. Customers can use the PriceAdvantage API as an alternative route for exporting critical pricing data, such as commodity and competitor prices, replacement and actual costs and volumes, for use in third-party analytical tools, such as Tableau and Power BI. The scalable API integrates with Excel Power Query and allows customers to easily import data from third-party tools and export data into Excel or connect to advanced business intelligence software.

DOVER FUELING SOLUTIONS LAUNCHES DMP PROBE

Dover Fueling Solutions, a part of Dover Corporation that delivers advanced fuel dispensing equipment, electronic systems and payment, fleet systems, automatic tank gauging and wetstock management, has added the DFS DMP Probe to its family of fuel management products. Using magnetostrictive technology, the DMP probe provides continuous and accurate readings of liquids inside of the tank and is currently available as a wired model with the release of the wireless model following later in the year. The DMP has the ability to monitor all fuel types and additives, including biofuels and AdBlue, while also supporting density, phase separation, leak detection and inventory management through the purchase of optional density float kits and aqueous ethanol floats.

REG TO EXPAND GEISMAR RENEWABLE DIESEL PLANT

Renewable Energy Group Inc. plans to expand its Geismar, Louisiana, biorefinery by 250 million gallons annually to 340 million gallons per year. Construction is slated to begin in mid to late 2021, with a target mechanical completion date in late 2023. REG expects the expansion will require about $825 million in capital investment and is committed to supporting jobs and economic development in the communities in which it operates.

Louisiana Governor John Bel Edwards announced his support for the project with the inclusion of an incentive package that contains comprehensive workforce support and tax incentives. REG Geismar was the first renewable diesel plant built in the U.S. and was acquired by REG in 2014. REG made additional improvements to the plant, taking its initial 75 million gallon nameplate facility up to 90 million gallons per year of demonstrated capacity.

54 | FMN Magazine FALL 2020

PDI RELEASES INTERNATIONAL CLOUD-BASED LOGISTICS SOLUTION FOR THE FUEL SUPPLY CHAIN

PDI, a global provider of enterprise software solutions to the convenience retail, wholesale petroleum and logistics industries, announced the release of PDI Logistics Cloud international. The company’s holistic logistics software was specifically designed for the fuel supply chain and helps fuel retail, mineral oil, wholesale and hauler companies gain the end-to-end visibility they need to optimize their operations.

Logistics Cloud enables digital transformation by leveraging the latest technology. Its use of Big Data, IoT and sophisticated algorithms enables better compartment allocation, automation and forecasting. The software’s robust capabilities—including advanced planning and dispatching, mobile tools, forecasting, telematics, compliance and analytics— allows businesses to scale, future-proof their operations and quickly adapt to dynamic market conditions.

LEIGHTON O’BRIEN EXPANDS FUEL CLEANING NETWORK WITH SPATCO ENERGY SOLUTIONS

SPATCO Energy Solutions, a leading supplier of liquid handling equipment and service for the petroleum industry, has expanded its solutions suite following an extended agreement with Leighton O’Brien to deliver its patented fuel cleaning and polishing technology. The agreement expands SPATCO’s suite of Leighton O’Brien’s technologies, including underground storage tank compliance testing.

SPATCO was expected to launch its first fuel cleaning and polishing system in September to service customers in the North and South Carolina region. Fuel cleaning and polishing services will be conducted by fully trained and safety certified technicians and supported by expert fuel data analysis and comprehensive reporting by Leighton O’Brien’s qualified analysts, the company said.

ADD SYSTEMS ANNOUNCES ADD ENERGY E360

Advanced Digital Data Inc. announced an allnew ADD Energy E360—the future of ADD Systems. E360 brings ADD Energy E3 into a web-based, option-rich application with a new user interface that enables clients to tailor and customize their use of ADD software to increase efficiency and profitability. The E360 user interface remains consistent with the familiar E3 concept but includes features that allow users to make changes to meet their needs. ADD clients can prioritize the tools and options they need most and declutter the screen by removing unneeded features. E360 takes advantage of the fastest and most advanced technology, so users can access data anytime and anywhere via a Windows PC, Mac, tablet, or phone. With mature technology like fiber-optic speed and 5G wireless, E360 will run seamlessly for all ADD clients regardless of location, ADD Systems said.

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FMN Magazine FALL 2020 | 55

REMEMBER THIS?

USTs: Back to the ‘80s

BY KEITH REID

O

ne of the most significant regulatory initiatives to impact the industry in (relatively) recent years kicked off in 1988. Implemented as part of the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, these regulations established rigid standards for underground fuel storage tank monitoring, tank protection (such as mandatory cathodic protection for steel tanks), potential tank replacement and leak remediation.

There was a 10-year compliance period.

A cover feature in NPN’s July 1982 issue addressed the publicly blooming problem of ageing tanks from the boom years in the 1950s and 1960s. A leaking Chevron station in suburban Denver forced the oil company to buy several dozen homes. A leaking system in East Meadow, New York, caused the evacuation of 25 homes. One consultant estimated that as many as 70,000 tanks might be leaking, and that as many as 350,000 tanks would be leaking within five years. While this was a small percentage of the total tank base, the

remediation cost could run into the millions of dollars per event—a serious hit for the oil companies and a potentially terminal one for smaller retailers.

The article noted that “up to this time, marketers have been relatively free of regulatory legislation. But there are signs that this happy situation may change in the not-too-distant future.”

Jump ahead to August 1984. The cover story noted that underground tanks might become one of the most expensive things the industry has ever faced. Hundreds of millions of dollars, or perhaps billions in the long run, could be required to comply with a host of federal, state and local laws. “It isn’t likely that underground storage tanks are now the number one item on most oil marketers list of problems, but such priorities are going to be reordered sooner and more radically than many in the industry now realize,” the article noted.

The July 1988 issue covered the largely set federal UST regulations: “the industry seems almost relaxed by the situation—perhaps, resigned to it

would be more accurate.” NPN noted that the key concerns had shifted from the rules governing underground tanks themselves to the EPA’s financial responsibility requirements. “I don’t know of any company that gives that insurance,” said one Oklahoma jobber.

An August 1989 NPN feature story, at the very start of the compliance period, noted the costs. A PMAA survey estimated that the average marketer spent $37,000 on tank upgrades over the previous three years and anticipated spending nearly $40,000 in 1989. The average SIGMA member company’s expenditure for environmental compliance was about $400,000 in 1988, or an average of $8,000 per owned retail station. One small marketer noted, “I’m 57 years old. I just got through paying for all five stations, and I figured I had my nest pretty well feathered. And now this thing [UST regs] hits. I’m looking to do what I can to hang on for another four or five years; to get my sons into something other than the oil business.

I think our days are numbered.”

A lot happened as the decade played out. A review in the December 1999 magazine estimated that when the period ended, roughly 80% of all active tanks were in compliance. While many operators did shut down, it was not as dramatic as some anticipated, and many of those sites changed hands to more capable operators. Solutions at both the state and private levels helped with the liability requirements. But as this month’s cover story notes, the impact of that initial rush to meet the UST regs is still felt today.

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

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

56 | FMN Magazine FALL 2020

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