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January/February 2012

Serving Ohio’s petroleum and convenience industry

SECTION

2012 M-PACT Preview

Business Fundamentals • Taming the Loss Monster • Enhancing the Customer Experience

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January/February 2012

In existence since 1922, a renewed OPMCA is moving forward with a new leader, its first in nearly 50 years, and an energized, modern team. Together with its members, the OPMCA is driving Ohio forward. CHAIRMAN Kim Ullman, Ullman Oil Inc., Chagrin Falls VICE CHAIRMAN Mark Lyden, truenorth, Toledo DIRECTORS Brian Burrow, Campbell Oil Company, Wooster Greg Ehrlich, Certified Oil Company, Columbus Patrick Gilligan, Gilligan Oil Company, Cincinnati Barry Henderson, Ports Petroleum Company, Wooster Dave Hogan, Certified Oil Company, Columbus Nancy Kister, O & P Oil & Gas, Andover Denny Knott, Ney Oil Company, Ney Sandra Morgenstern, Par Mar Stores, Marietta James Patneau Jr., Free Enterprises, Inc., Medina Zach Santmyer, Santmyer Oil Company, Inc., Wooster Thomas Stephenson, Stephenson Oil Company, Hamilton Mike Stipp, District Petroleum Products Inc., Huron PMAA DIRECTOR FOR OHIO Ben Englefield, Englefield Oil Company, Newark PRESIDENT & CEO Jennifer B. Rhoads, Esq. jrhoads@opmca.org VICE PRESIDENT David A. Biemel, Esq. dbiemel@opmca.org DIRECTOR OF EVENT MANAGEMENT Shane Schaefer sschaefer@opmca.org ADVERTISING SALES REPRESENTATIVE Valerie Cook vcook@opmca.org EXECUTIVE ASSISTANT Erica Metzger emetzger@opmca.org 17 S. High Street, Suite 810, Columbus, OH 43215 614-947-8646 (phone) 614-947-8648 (fax) www.opmca.org FOLLOW US ONLINE!

TABLE OF CONTENTS

The Ohio Petroleum Marketers and Convenience Store Association (OPMCA) is the statewide trade association representing more than 500 independent, small businesses in the petroleum and convenience industry. OPMCA’s members own and operate the overwhelming majority of Ohio’s 5,200 convenience stores and employ more than 55,000 Ohioans. Members on the wholesale side of the industry employ thousands more in commercial fueling facilities, transportation divisions, heating oil sales, and home offices.

Features

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Taming the Loss Monster Enhancing the Customer Experience

Extras

4 7 21 22 30 31

Workplace Resolutions

2012 M-PACT Preview Fuel Dispenser Upgrades Volatile Diesel Fuel Prices New IRS Rules Fight to Tighten Belt on Trans Fats

Departments 3

Fuel for Thought

24 Capitol Blend 33 Founder’s Circle

facebook.com/DriveOhioForward twitter.com/OPMCA

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Lykins Companies...

Lykins is a premier supplier of traditional and environmentally friendly altenative fuels for all businesses, government fleets, municipalities, homes and farms. Lykins has been a dependable supplier since 1948 providing customer service and quality fuel solutions. Retail Opportunities Lykins Oil Company supplies major oil petroleum products and branded franchises such as BP, Clark, Exxon, Marathon, and Shell to various independently owned retail outlets including service stations, conveniences stores, marinas, sub-jobbers, etc... in Indiana, Kentucky and Ohio. We specialize in working with investors on developing and building new, ground-up branded gasoline facilities in return for a supply contract.

Commercial and Wholesale Lykins Oil Company Commercial and Wholesale Division provides commercial fuel sales, delivery and equipment solutions for customers purchasing quality gasoline, diesel fuels and environmentally friendly fuels for use in fleets, construction sites and farms. Lykins provides quality service and products 24/7 with the right price and the right program to fulfill your petroleum oil needs. Whether you have a 20,000 gallon or a 200 gallon tank, we deliver!

Residential and Business Heating Our Residential and Business Heating Products Division provides the most efficient and cost conscious approach to heat a home or business with heating oil or propane. With our automatic fuel programs you will never be without heat and our friendly payment programs make it easy on your pocketbook.

513-831-8820 800-875-8820 Toll Free www.lykinscompanies.com

Lykins Companies, Inc. 5163 Wolfpen Pleasant Hill Rd Milford, OH 45150


Advocacy. A Fundamental for OPMCA

by Jennifer Breech Rhoads, Esq. OPMCA President and CEO I’ve talked a lot about “The Power of A”—the power of Association. Strength in numbers. A collective voice. A sum greater than the whole of the parts. Association is how we create our collective strength, but there’s another powerful “A” that plays a vital role at OPMCA every day. Advocacy. Advocacy is how we apply our collective strength. In the era of term limits, we’re in an uphill battle to educate Ohio lawmakers. Before they can understand how potential laws and policies will impact the petroleum and convenience industry, they have to understand the industry itself—where it’s been, how it functions today, and where it’s headed tomorrow.

It’s a problem that policy makers on both sides of the aisle recognize—even those who once supported term limits. Representative Vernon Sykes, an Akron Democrat, was recently quoted in the Columbus Dispatch saying, “I’ve come to realize that turnover of the legislature is not a good thing. Longevity and experience is really important in a policy-making body.” Ohio recently established a Constitutional Modernization Commission to review and recommend potential changes to the state’s Constitution. Many hope that term limits will earn a place on the agenda. Regardless, we must advance our aggressive agenda to bring greater awareness within the Ohio General Assembly of the issues and concerns of our industry.

regularly with legislative leaders to discuss Ohio’s commercial activity tax and other key issues facing the industry. Public policy isn’t the only forum for effective advocacy. Advocacy in the marketplace is also bringing value to OPMCA members. Because of our collective strength, we are able to negotiate favorable terms from reputable vendors for valuable services—from insurance services to credit card processing and telecommunications services.

FUEL FOR THOUGHT

And while Ohio lawmakers certainly bring value through their own personal experience, the fact is that as lawmakers, they are collectively more inexperienced that ever before. In 2011, the Ohio Senate saw a record number of appointments to fill vacant seats—those of lawmakers who had moved on to new jobs.

When it comes to advocating for you and your business, it’s about building lasting and positive relationships before a crisis strikes. Too many organizations stumble when faced with a crisis because they must create relationships through the crisis. We’re not leaving that to chance. Your OPMCA team works each day to build a solid foundation on which our members can stand.

Advocacy.

It’s our business fundamental.

We continue take our Legislative Listen & Learn Tour across Ohio, most recently to Caldwell, in southeast Ohio. We meet

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You can resolve a number of important issues with your own in-house I-9 inspection: complete new I-9s for those that have been lost; ensure all appropriate signatures are included; resolve any issues relating to no-match letters; ensure appropriate documentation has been provided; decide whether

Resolutions Workplace

to Start the New Year by Matt Austin Austin Legal, LLC

Ah, New Year’s resolutions … the glorious concept of recognizing how to improve something about yourself, but following through with it only for a few weeks. Has anyone ever told you in June that he is going to the gym because of a New Year’s resolution? Or have

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you overheard a conversation in October about someone keeping in touch with friends and family because it’s her New Year’s resolution? Me neither. I try to make New Year’s resolutions that I know I can keep and that don’t demand an extended amount of time to succeed. Below are three workplace resolutions that you can commit to this year. They won’t take much time and, done right, can save you thousands of dollars in the long run.

to keep I-9s in electronic format; and confirming that electronic versions, if used, are up to date.

Make Sure I-9s Are Current and Correct

Immigration is a hot topic as the government tries to slow the rate at which illegal immigrants enter the United States. In fact, last year the federal government conducted twice the number of I-9 inspection audits as it did the year before. The number of audits continues to rapidly escalate—especially in industries with a large percentage of immigrant workforces.


Ensuring Employees are Appropriately Classified as Exempt or Non-Exempt There is a correlation between the increased number of people who are out-of-work and the increased number of investigations into whether employees are accurately classified as exempt or nonexempt. Briefly, non-exempt employees must receive overtime pay for all hours in excess of 40 hours each week, while exempt employees do not qualify for overtime pay regardless of how many hours they work. Obviously, the more exempt employees a company has, the more hours each employee can work without costing the company any more money. There are only a few types of employees who qualify as “exempt,” though. To qualify as exempt, an employee must meet both the salary test and the duties test.

Salary Test Under the salary test, exempt employees must be paid at least $23,600 per year and must be paid regardless of how much time they work each week. For example, an employee is paid the same amount of money per week whether she works one day a week or five days a week. The salary test is the simple part of determining exempt status. Duties Test The duties test examines the specific duties that each individual performs. Passing the duties test requires the employee to perform relatively high-level activity. The fact that someone supervises others or carries a company credit card does not, in itself, make that employee exempt. Rather, a good rule of thumb as to whether an employee is exempt is whether that employee is considered “the boss” or routinely makes executive decisions. The duties test, however, drills down into the daily job functions of an employee, so don’t rely simply on the rule of thumb when determining exempt status. Both Ohio and the federal governments are vigorously investigating claims of improper classification and unpaid overtime—meaning the employee was erroneously classified as exempt and did not receive overtime pay for hours worked in excess of 40 hour per week. From my experience, the government starts with the presumption that overtime wages are due and requires the employer to prove otherwise. Therefore, it is advisable to make sure that non-exempt employees are receiving the overtime pay they are owed and exempt employees are in fact appropriately classified as exempt.

Handbook Review and Update

The third resolution to consider is reviewing your company handbook to make sure it still complies with the law and to decide if you need to make any policy modifications. For example, did any areas of law change that negate a policy or require a new policy (like social media)? Does your company no longer follow certain policies that are still “on the books?” Have you encountered any workplace issues in the past year that you want to memorialize in a handbook policy, i.e. are employees clocking in too early; is management no longer investigating reports thoroughly enough; are you now allowing accrued but unused vacation days to carry over despite a policy to the contrary?

RESOLUTIONS

When an employer receives a Notice of Inspection, it starts the clock ticking on a 72 hour window before Immigrations and Customs Enforcement comes knocking with its request to inspect all I-9s. Many employers use this time to make sure their I-9s are in order. Unfortunately, corrections made after a Notice of Inspection is received do not alleviate penalties for noncompliance. Therefore, I suggest scheduling an annual inspection of your I-9s to ensure that, if you’re the subject of an audit, you can confidently turn over your I-9s knowing you are in compliance with the law.

Handbooks are tremendous tools to help create a positive work experience for employees. But handbooks are only as good as the policies in them. If those policies are stale, burdensome, confusing, violate the law, or do not reflect how your company operates day in and day out, that handbook will be hard to follow and will create more trouble than good for your company. Matt Austin owns Austin Legal, LLC, a law firm focused on representing employers in labor, employment, and OSHA matters. He is a frequent lecturer and a contributing editor and author for the American Bar Association, the Ohio State Bar Association and the Columbus Bar Association. Reach him at Matt. Austin@Austin-Legal.com or (614) 843-3041.

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Slow Pumps Slow Flow Clogged Filters Clogged filters lead to customer complaints. You’ve heard them and you have certainly lost business to your competition as a result. Changing filters is not a long term fix, if slow flow is your problem you already have contaminated fuel tanks.

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Be sure to check out the March/April issue of

To Advertise in

Articles will include:

Valerie E. Cook Ad Sales Representative P: 614.947.8646 Ext. 8 vcook@opmca.org

• Rest Stop Commercialization Threatens Retailers • Stage II Vapor Recovery — The End of an Era • M-PACT 2012 Highlights

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Contact:

Ohio Petroleum Marketers & Convenience Store Assoc. 17 S. High Street, Suite 810, Columbus, OH 43215


M-PACT Welcomes Jim Tressel

M-PACT 2012’s theme centers on connecting businesses and fueling success. No stranger to success, Tressel will share his journey to become a four-time National Coach of the year, a six-time Ohio Coach of the Year and winner of four Division 1-AA National Championships at Youngstown State University, and, with the Ohio State Buckeyes. He will deliver the keynote speech at the Industry Luncheon on March 14, 2012. “Success in any arena takes guts, determination, risk and perseverance,” said Jennifer Rhoads, OPMCA president and CEO. “These characteristics have formed the foundation of Jim Tressel’s long and respected career. We’re thrilled to welcome Mr. Tressel to M-PACT 2012.” A native of suburban Cleveland, Tressel played quarterback for Baldwin-Wallace College during his father’s tenure as head football coach. As quarterback, he earned four varsity letters, won all-conference honors as a senior, and graduated cum laude from Baldwin Wallace College.

Recognized as a superior football coach, Tressel has been selected National Coach of the Year in 1991, 1993, 1994 and 1997, a six-time pick as Ohio Coach of the Year, and received the Eddie Robinson Award in 1994. During his fifteen years at Youngstown State University, Tressel built the YSU football program into one of the most successful and respected in the nation, posting an impressive 135-57-2 record and winning four Division I-AA National Championships. In 2001 Tressel became The Ohio State University’s 22nd head football coach. During his tenure at Ohio State, Tressel’s teams played in three BCS National Championship Games. His 2002 squad won a national title and achieved the first 14–0 season record in major college football since the University of Pennsylvania went 15–0 in 1897. Tressel finished his career at Ohio State with an official overall record of 94–22 (.810), including six Big Ten Conference championships, a 5-4 bowl record, a 4–3 mark in BCS bowl games, and an 8–1 record against the arch-rival University of Michigan Wolverines. Tressel’s eight wins against Michigan ranks him second only to Woody Hayes in Ohio State history. Tressel is the only Ohio State head coach to win seven consecutive games against the Wolverines.

of Akron. He is also a New York Times bestselling author and has written two books, “The Winners Manual” and “Life Promises for Success.” M-PACT is hosted by the Illinois Petroleum Marketers Association and the Illinois Association of Convenience Stores; the Kentucky Petroleum Marketers Association; the Indiana Petroleum and Convenience store Association; and the Ohio Petroleum Marketers and Convenience Store Association. The three-day show offers educational opportunities on a wide range of topics, from the future of transportation fuels to social media, human resources, and risk management. The M-PACT states represent more than 1,500 member companies that collectively employ approximately 165,000 individuals, operate nearly 20,000 convenience stores or gas stations, total more than $1.5 billion in inside sales, and sell more than 20 billion gallons of petroleum products throughout the Midwest.

M-PACT 2012

Five-time National Champion Collegiate Football Coach Jim Tressel will deliver the keynote speech at the 2012 Midwest Petroleum and Convenience Tradeshow (M-PACT), March 13-15 in Indianapolis. The show draws thousands of energy and convenience professionals each year.

Tressel was recently named vice president for strategic engagement at the University

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Temperature (Fahrenheit)

North West Fuel 5º 0º -5º -10º -15º -20º -25º -30º -35º -40º

-33º Cloud Point

CFPP

Temperature (Fahrenheit)

North East Fuel 5º 0º -5º -10º -15º -20º -25º -30º -35º -40º

-2º -8º

-38º Cloud Point

CFPP

Temperature (Fahrenheit)

South West Fuel 5º 0º -5º -10º -15º -20º -25º -30º -35º -40º

Temperature (Fahrenheit)

South East Fuel 5º 0º -5º -10º -15º -20º -25º -30º -35º -40º

-2º

-35º Cloud Point

CFPP

-30º

Cloud Point

CFPP

Phil Hamilton

National Fuel Additive Manager phamilton@schaefferoil.com 102 Barton St. St. Louis, MO 63104

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Petroleum merchants will have unique challenges in the coming years balancing their need for security with their hardware budgets. Debit payments shifting toward Triple DES encryption (3DES) are now in the history books for most industries, but it is still an ongoing effort in convenience stores due to the expense of card reader upgrades. Added to that requirement, the announcement from Visa® to move toward EMV has made hardware upgrades a potential double hit on merchants’ hardware budgets in coming years. Retailers need guidance throughout the terminal/POS conversion process so that it is as painless as possible. Don’t be fooled—an electronic payments processor who does not fully understand the constraints its retailers face is not dedicated to crafting upgrade plans customized to your needs. Today, retailers running fuel dispensers with singe DES (1DES) encryption using a security module housed in-store are a potential breach risk. This

technology has been a standard in c-stores for years, and is only now giving way as pump vendors release encrypting PIN entry devices for the pump. The 1DES setup is risky due to potential physical breach of the equipment using standardized master keys to gain access to your pumps, placing skimmers to collect the data. Retailers continue to have risk to potential association fines, penalties, and damages related to this type of breach until their pumps are secured, eliminating the skimming threat. There are no hard dates for adoption of the 3DES standard at AFDs, but all merchants are required to have upgrade plans in place by July 1, 2012 showing a clear path to compliance. Similarly, credit cards remain at risk to the same access point. AFDs reading credit card data are vulnerable due to static track data being readable through the card reader at the dispenser. EMV chip technology will introduce to the US market a global standard for securing this data with variable data, eliminating the value of skimming static

card data. The only mandates attached to this push are for acquirers to support it, but through liability shift of fraud and likely PCI cost benefit, it is in the best interest of retailers to adopt EMV as it becomes available.

DISPENSER UPGRADES

Automated Fuel Dispenser Upgrades in a Changing Security Landscape

A holistic upgrade approach that takes into consideration a variety of trends in the industry, such as EMV technology makes the most sense. As retailers draw out plans for upgrades, they are encouraged to include their pump manufacturer’s EMV hardware development and release timeframes into their 3DES push. The goal is to marry these into a single upgrade path that bridges both gaps in a single hardware deployment, with maximum ROI for retailer’s hardware dollars.

One of the few single-source processors in the industry, WorldPay is also the preferred electronic payments processing provider for OPMCA and its members, and a 2012 Founders’ Circle member. Contact WorldPay Customer Service at 877.862.9195 to learn how to realize the benefits of this partnership. l January/February 2012

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VOLATILE DIESEL PRICES

Volatile Diesel Fuel Prices Covering Your Risk Compiled by OPMCA Staff The real story of diesel fuel prices in the past several years has been their volatility. Prices collapse, like they did in 2008 or they soar or they move erratically like they did last year. The problem with this is the havoc the action raises with even normal budgeting and planning. Many companies view volatility and price uncertainty as barriers to business: • Have you lost business because your company has been uncomfortable offering a fixed price to a fuel buyer because of price volatility? • Do you sacrifice margin at retail when wholesale prices rise? • Are you unwilling to take advantage of storage because of fears of falling prices?

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There are ways to handle price volatility in diesel fuel oil. Companies that know how to manage price risk can differentiate themselves from the competition. Price volatility can be used to grow the business. Companies protect themselves with a technique called “hedging.” It’s a strategy to manage risk. Hedging uses two kinds of financial instruments to provide protection. They are Futures contracts and Options on Futures contracts.

Which Strategies Do Hedgers Use?

The answer, simply put, is: what is your risk? The choice of using futures or options on futures depends on the risk aversion of the hedger and the nature of the risk to be avoided. A hedger selling to a consumer at a fixed price could use a futures contract because any loss is effectively passed along to the end user of the diesel. Nonetheless, such a hedger should be prepared to meet the requirement to square up in the event of a selloff in diesel prices. Options have many uses for hedgers. A hedger offering customers a maximum price for diesel fuel must use an option. A “call” option provides price protection in a rising market. If prices fall, there is no further cash flow required to hold the option. He can buy physical fuel at lower market prices to fulfill his obligations. The futures hedger, by contrast, would have to square up and have to fill his customer at lower prices.

What If I Am a Retailer of Diesel Fuel? The retailer’s risk profile is different. The retailer’s risk is the wholesale price moving up faster than the price on the street. This squeezes margins. Hedging can help here too. Many retailers use a combination of futures contracts to combat the erosion of profits in a rising market.


Hedging Tools

Futures contracts are used by the hedger to lock in—or “fix”—a price for some time in the future. A price is fixed at a predetermined place and for a predetermined quantity. (Differences between the prices at your location and the predetermined place—New York Harbor for diesel—are handled with a concept called “basis.”) The hedger deposits a small percent of the value of the diesel fuel futures contract as “initial margin.” This assures the hedger’s creditworthiness. The hedger does this in a futures account. If the hedger is a buyer, his account is credited each day that prices move higher, offsetting increases in the cost of actual diesel fuel. If diesel fuel prices move lower, the hedger squares up the loss each day. Losses in the futures account are offset by lower market prices for diesel fuel.

Buying a futures contract is one way a dealer can offer a fixed price to an end user. The futures contract protects the dealer’s margin. If prices rise, the futures contract will gain in value. These gains are used to offset the higher cost of fuel. In a falling market, there will be losses on the futures contract, but there is an offset: the physical fuel will be less expensive. Options on Futures contracts provide another way to hedge diesel prices. Some buyers of fuel locked in prices in 2008, only to have buyer’s remorse. There is another way to approach the problem. Options buyers pay a premium for the option’s protection. There are no further cash flow requirements. The hedger is not required to square up losses. Therefore, the option buyer can be protected from higher prices, but can enjoy lower prices if they occur. This is unlike the situation for a hedger using futures contracts.

Getting started

• Take an introductory class to learn the ideas and tools of risk management. • Find a competent advisor who can help sketch out alternatives appropriate to the situation. • Set your limits—how big a budget, who’s the decision maker? • Start small, be patient. • Learn what works for you and for your market.

Don’t miss Alan Levine

VOLATILE DIESEL PRICES

The range of strategies available to hedgers using futures, options on futures or some combination of the two is very wide. Hedgers can offer caps, collars and floor prices to customers in very flexible ways.

and Elaine Levin at M-PACT 2012. These regarded energy traders and advisors with Moran Stanley Smith Barney will educate marketers on the full range of strategies and financial instruments available to handle the challenges of price

There is much to learn if hedgers want to control the effect of volatile diesel prices on budgets or as a way to build new business. A few suggestions for getting started:

volatility and its effect on profitability. Learn more at www.m-pact.org.

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CAPITOL BLEND

Mirror, Mirror, On the Wall: A Look At 2012 simply codify what U.S. EPA has been urging UST operators to do for years, others are new requirements that will impact how OPMCA members do business. U.S. EPA is accepting public comments until April 16, but has not yet indicated when these revisions will become effective in 2012.

by David Biemel Vice President, OPMCA As we begin 2012, we expect significant activity from the state and federal governments. Ohio’s primary election is March 6, with voting in party-specific races for offices including president of the United States, congressional representatives, state senators and representatives, county offices and many others. The election season culminates on November 6, with the general election and resolution to the question of which political party will lead the state and nation. While these elections will garner many of the news headlines over the next 11 months, governments of all levels will continue to operate on a daily basis. The U.S. EPA, for example, will take several actions this year that may affect you. First, U.S. EPA recently proposed substantial revisions to the federal underground storage tank (UST) regulations. While some of these revisions

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U.S. EPA also accepted public comments through late last year on how it should proceed with respect to Stage II vapor control. While the U.S. EPA is still reviewing the comments, a final rule is expected in the early part of 2012, providing details as to how Stage II controls will be phased out before June 30, 2013, the date by which the U.S. EPA expects onboard refueling vapor recovery systems to be in widespread use. The final rule should also specify what, if any, procedures must be undertaken to ensure that there is no backsliding on clean air standards. The Ohio Environmental Protection Agency (Ohio EPA) will also weigh in on what measures are needed post-Stage II. Other Ohio agencies will also stay busy this year. The Bureau of Underground Storage Tank Regulations (BUSTR) will begin enforcing the new operator training rule on August 8, 2012. After that date, any owner or operator of an UST system who is not properly trained, may not, by law, operate the system. Further information on this rule may be found on BUSTR’s website and

I strongly urge all readers to visit that site soon to familiarize yourselves with the rule. BUSTR will also be moving forward with at least a dozen other rules, including reporting requirements of hazardous substances; registration of and permits for UST systems; UST installer certification; and how to process systems placed out-of-service, closed-inplace, permanently removed or otherwise changed-in-service. These rules are currently waiting for approval from a legislative oversight committee, but that approval is expected by the end of February with an effective date near the end of March. Legislatively, a bill was recently introduced in the Ohio House of Representatives to modify the Department of Transportation’s business logo sign program and to adjust how BUSTR and the Ohio EPA’s Voluntary Action Program interact. The Ohio legislature is also expected to debate legislation on the Commercial Activity Tax and the regulation of hydraulic fracturing. As always, OPMCA will provide updates on each of these issues as information becomes available. We are confident, however, that Ohio’s elected officials understand the value provided by the petroleum and convenience industry and will preserve our ability to operate, driving Ohio forward.


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LOSS MONSTER

the Loss Monster

Risk management programs help reduce hidden costs “Loss Monsters” rear their ugly heads every time you suffer a loss—whether that loss is covered by insurance or not. Loss Monsters are the cashhungry hidden costs that munch hungrily at your bottom line in the aftermath of every accident or incident.

Direct costs can be identified easily for any type of loss, whether it is an injured employee, an auto accident, or stolen property. That’s why you purchase insurance—to help pay for the direct costs of a loss, such as: • Medical expenses • Indemnity costs • Property damage • Defense costs

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Loss Monsters are the cash-hungry hidden costs that munch hungrily at your bottom line in the aftermath of every accident or incident.


LOSS MONSTER

But what about the hidden costs? Loss Monsters delight in: • Costs to hire and train replacement employees • Additional costs of production downtime • Rental costs on replacement vehicles or equipment • Decreased employee morale, lower productivity, and quality • Loss of customers and customer goodwill If your business has had an accident or loss recently, check your operations. Chances are you’ll spot the Loss Monsters’

tracks everywhere. Even the best insurance coverage can’t curb their appetite. Fortunately, Loss Monsters can be tamed and Federated can help you do it.

Muzzle the Monsters With Risk Management Federated’s Risk Management services can help reduce the Monsters’ meal tickets with an impressive array of strategies that you can implement to help prevent accidents and losses. Continued on page 28…

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LOSS MONSTER

Taming the Loss Monster—Continued from page 26…

A Federated representative can help you identify areas that are at risk, and initiate corrective action—before a loss occurs. In the long run, you may lower your insurance costs through diligent risk management. Just as important, you may avoid the hidden costs, too. It isn’t enough to provide insurance coverage. At Federated, we believe we have to help you find better ways to protect your business, so you can get the most value from your insurance dollar. Federated’s risk management services may not be the only way to stop the Loss Monsters in their tracks, but they can be an important advantage in protecting your bottom line dollars. One distinct advantage of insuring with Federated is our relationships with more than 400 state, regional, and national trade associations and buying groups—including OPMCA. With their input and cooperation, we have produced myriad risk management resources and support for your efforts to reduce losses.

Federated’s Risk Management services can help reduce the Monsters’ meal tickets with an impressive array of strategies

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Workplace Safety Saves Profits

Businesses spend $171 billion a year on the costs associated with occupational injuries and illnesses. Statistics show that a business strategy for managing risk, which includes establishing safety and health management programs, can reduce the costs associated with occupational injuries and illnesses by 20 to 40 percent.1 The ability to anticipate potential losses and to choose the best prevention solution lies at the heart of risk management. Federated’s proactive approach to risk management includes services and tools to help you make sound business decisions— from employee selection and training, to controlling hazards, to choosing types and amounts of insurance coverage.

Designated Risk Manager Training Programs Get Results

Federated’s Designated Risk Manager (DRM) Training Program is a unique opportunity to help your operation initiate a designated risk manager—a key person with the authority to act on and the responsibility for all aspects of safety and government compliance. The Designated Risk Manager Training Program was developed to target specific petroleum industry risk management concerns, and businesses that are the most successful at controlling losses have designated a key person as their risk manager. This person is supported by top management and is both responsible and

accountable for identifying loss exposures and implementing risk management solutions. The resulting reduction in losses for companies that have attended has been impressive! We track the losses of attending groups we insure beginning one year after they attend the program. This allows attendees time to implement their action plans. On average, attending companies have lowered their loss frequency


and severity between 20% and 30% one year after attending.

http://www.osha.gov/Publications/ safety-health-addvalue.html 1

ANNOUNCING— Federated has two 2½Day Designated Risk Management Seminars for Petroleum Marketers and C-Store Operators scheduled for 2012: March 26-28 and September 1012. The seminars are held at Federated’s Home Office in Owatonna, MN. For more information or to register, contact Dave Cameron at djcameron@fedins.com or Royetta Spurgeon at DRM@fedins.com.

LOSS MONSTER

Sessions are currently being scheduled for 2012. If you would like further information on the dates and locations of future risk management programs, please contact your local Federated representative. This is a firstcome, first-served program open to all association members, and you don’t have to be currently insured with Federated Insurance to attend. Due to space limitations, only one attendee per company can be accepted, so it’s never too early to sign up. You would be responsible for the following expenses—airfare, rental car, hotel, and a couple of incidental meals. The cost of the program itself is free.

This article is intended to provide general information and recommendations regarding risk prevention. It is not intended to include all steps or processes necessary to adequately protect you, your business, or your customers. The recommendations in this article may help reduce the risk of loss but is not a guarantee of the elimination of any risk of loss. The information provided herein is accurate as of December 2011 and is subject to change. The risk management practices described above are for illustration purposes only and should not be considered legal, tax, or financial advice. You should always consult a qualified professional for advice unique to you and your business. © 2011 Federated Mutual Insurance Company. All rights reserved.

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Refiners Remind Marketers About New IRS Rules Card-issuing companies

NEW IRS RULES

and those that reimburse others must report all card sales to the agency beginning in 2012. As year-end looms, marketers can expect to receive reminders from their suppliers about new credit, debit and fleet card tax requirements that start next year. ExxonMobil has already reminded its jobbers of the change. The Internal Revenue Service (IRS) adopted rules in late 2010 that require card-issuing companies and those who reimburse others to report all card sales to the agency, starting in early 2012, on a Form 1099K. The regulations apply to all plastic, including credit, debit and many fleet cards, although there are some exceptions. Following IRS guidelines, ExxonMobil has said it will report all card sales to the IRS for its branded wholesalers by the

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end of January. The 1099-K will be an aggregate of all the card payments attributable to sites supplied by the wholesaler and copies should arrive by the end of January, ExxonMobil has told wholesalers. Jobbers also need to check with their tax and legal advisors about their reporting responsibilities for their dealers, ExxonMobil added in an advisory to branded wholesalers. Under the IRS rules, wholesalers are required to submit any 1099-K forms to IRS for any retailers that the wholesaler pays for card sales. In general, marketers should expect to receive a Form 1099K from any entity from which they receive payment card settlements for aggregate settlements exceeding $20,000 and aggregate transactions numbering more than 200, according to another supplier. Marketers may also receive a separate Form 1099-K from fleet card firms Fuelman, Fleet One and other third-party networks that settlement payment cards directly with the marketer’s company.

The Housing Assistance Tax Act passed by Congress in 2008 required financial institutions and third-party card processing networks to file reports on how much they reimbursed merchants for payment card sales. The law was adopted after IRS convinced lawmakers that many small businesses were understating their card income, sources say. IRS defines the reportable amount as the gross amount of all payment card transactions, without regard to any adjustments for credits, cash equivalents, discounts, fees or refunds, according to a branded account expert at another supplier.

Reprinted from NACS Daily with permission. For more information about NACS, the association for convenience and fuel retailing, including retailer or supplier membership or subscription information for NACS Daily, please go to www.nacsonline.com or contact NACS at (703) 684-3600.


Cleveland Fights To Tighten the Belt On Trans Fat In April 2011, as part of its Health Cleveland Initiative, Cleveland City Council passed a law banning restaurants from using cooking oils that contain trans fats.

TRANS FATS

Fast forward two months. In June 2011, the State’s annual budget bill included an amendment to ban municipalities from regulating food preparation ingredients. According to State Senator Scott Oelslager, the amendment was an attempt to maintain a consistent set of statewide standards for food service businesses. The measure was adopted into law.

In January 2012, the City of Cleveland fought back. The city challenged the state’s action in the Cuyahoga Court of Common Pleas, calling it a violation of the city’s home rule authority. “The health and well-being of Cleveland is the responsibility of the City of Cleveland and we are taking proactive steps to help make everyone healthier in Cleveland,” said Mayor Frank Jackson. The future of trans fat in Cleveland is, at this point, uncertain, but Jackson says the city will take it to the Ohio Supreme Court if necessary. Until then, it seems, Clevelanders can have their fries and eat them, too.

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Founders’ Circle

FOUNDERS’ CIRCLE

Marathon Petroleum “at the Heart” of Ohio MPC’s Long History and New Beginning Marathon Petroleum Corporation (MPC) has deep roots dating back to more than 120 years when the Ohio Oil Company was founded in Northwest Ohio. The company experienced a new beginning on June 30, 2011 when Marathon Oil Corporation was divided into two independent, highly-focused energy companies. Marathon Oil, headquartered in Houston, Texas, became an exploration and production company, spinningoff its downstream assets to create MPC. MPC remains headquartered in Findlay, Ohio and is the nation’s fifth largest transportation refiner with 1,193,000 barrels-per-day (bpd) capacity in its six-refinery system. MPC’s marketing network comprises approximately 1,375 Speedway locations in seven Midwestern states and more than 5,000 Marathon Brand locations in the Midwest, Gulf Coast and Southeast regions of the United States.

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On one hand, MPC is a newly created company with its own symbol on the New York Stock Exchange…while on the other it is a very seasoned company with a long history of refining, marketing and transportation experience.

and Texas City, Texas. Highly integrated pipeline, terminal and marine operations continue to provide MPC with ready access to a diverse range of feedstocks and the flexibility to transport products to the highest-value markets.

With the founding of the Ohio Oil Company is 1887, Ohio has a special place in MPC’s history. The Marathon brand name was acquired in 1930 and the company has grown and changed ever since. Today, MPC boasts more than 8,000 employees in Ohio. Its Ohiobased operations include a 78,000 bpd refinery in Canton, Ohio along with 871 Brand and 471 Speedway locations. The company also has extensive pipeline and terminal operations throughout the state.

MPC’s recent growth includes a $3.9 billion expansion to the Garyville, La., refinery which was completed in December, 2009. The 180,000 bpd expansion project provides the equivalent of 7.5 million gallons of clean transportation fuels to the market each day. Additionally, the Detroit Heavy Oil Upgrade Project (DHOUP) began in 2008 and is scheduled for completion during the second-half of 2012. DHOUP will increase the refinery’s capacity by approximately 15,000 bpd and will position the plant to further capitalize on Canadian oil sands production. Both projects provide MPC with operational flexibility and the ability to better serve its marketing area.

So what lies ahead? MPC continues to grow and expand its supply network through its six refineries located in Garyville, La.; Catlettsburg, Ky.; Robinson, Ill.; Detroit, Mich.; Canton, Ohio

While much has changed for MPC, much also remains the same. Marathon Brand and Speedway customers can look forward to the same reliable product supply and dedication to customer service that they have come to expect. MPC’s foundation remains in Ohio and, with the continued support from the Ohio Petroleum Marketers and Convenience Store Association, MPC looks to write the next successful chapter in its company’s history.


To attract a larger following and to avoid having to compete on price alone, a zero sum game that will ultimately destroy brand equity, expressing your brand identity professionally and consistently across all touch points is a must.

SECTION

the Customer Experience By Greg Ehrlich, Convevo Partners & Steve Quinn, Big Red Rooster

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THE CUSTOMER EXPERIENCE

Enhancing the Customer Experience By Greg Ehrlich, Convevo Partners & Steve Quinn, Big Red Rooster Why do customers shop at one store versus another? There are a myriad of answers to this question that one could debate, but only one answer in which all parties agree. The better the customer experience with your store and your company the more likely customers are to reward you with their loyalty, repeat business, and referrals to friends and family. It seems rather simple, but few convenience store operators actually consider all of the touch points that make up the customer experience and affect their ability to influence customer behavior. With the explosion in new media channels and outlets, the fragmentation of media consumption and the exponential growth in the tools available to engage consumers, conducting such an assessment is more important today than ever. Top performing convenience store operators, regardless of size, continuously evaluate the overall customer experience and implement improvements that will result in more meaningful and impactful experiences across all touch points. Let’s start by defining what we mean by a touch point. A touch point is any contact a customer has with your brand, whether it is at the store, on the Internet, or through their mobile devices. At the most fundamental level, the

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customer experience begins with your brand and your position. Whether you have a single store or a chain of 1,000, consumers get an immediate impression based on the strength, clarity, relevance, and consistency of your brand. As Michael Eisner, the former CEO of the Walt Disney Company once noted, “a brand is a living entity, and it is enriched or undermined cumulatively over time, the product of a thousand small gestures.” In a world of overwhelming choices, your brand defines what makes you not only different, but better.

The better the customer experience with your store and your company the more likely customers are to reward you with their loyalty, repeat business, and referrals to friends and family. Sure, there are customers that will shop with you because you are convenient or you offer the lowest prices. However, to attract a larger following and to avoid having to compete on price alone, a zero sum game that will ultimately destroy brand equity, expressing your brand identity professionally and consistently across all touch points is a must. First and foremost, the most critical touch point is the physical condition of your

facility. Modern convenience stores are dramatically different from stores built just a decade ago. Customers expect larger, better-lit stores with improved visibility, attractive architecture, and warm and inviting materials and colors. All things being equal, if you could shop at a modern, attractive store or a smaller, older, poorly maintained store, where would you shop? This doesn’t mean you have to rebuild a store you built 15 years ago, but it does mean you should maintain the exterior (e.g. pavement, landscaping, and painting), upgrade dispensers every 7-15 years depending on volume, and update the store interior as counters, shelving, and equipment do wear over time. Other touch points you should evaluate include your point of purchase (POP) signage, website, loyalty program, Facebook page, and mobile marketing. Which touch points to invest in depend on the company. Single store operators can cost-effectively convey their value proposition with professional POP signs and a text-marketing program. Text marketing is the simplest, most efficient way to build a customer data base and communicate with your best customers to drive sales and build loyalty. Turnkey programs, like The Digital Deal, provide all the elements needed for a successful text-marketing program, including promotional signs and decals, staff training tools, and a marketing plan. Continued on page 36…


E15 One Step Closer To Marketplace On February 17, after reviewing emissions testing performed by Southwest Research Institute and an analysis submitted by Growth Energy and the Renewable Fuels Association (RFA), the U.S. EPA announced its approval of health effects and emissions testing on E15, clearing another hurdle on the way for E15 to be introduced into commerce for use in model year 2001 and newer light-duty motor vehicles.

The U.S. EPA announced its approval of health effects and emissions testing on E15, clearing another hurdle on the way for E15 to be introduced into commerce for use Registration alone does not mean E15 can immediately be sold. Several other steps and considerations must be taken

into account. And because some states restrict the sale of some gasoline-ethanol blends, state law changes may be needed before E15 may be sold in those states. Based on his recent conversations with station owners at the Western Petroleum Marketers Association (WPMA) show, PEI’s Robert Renkes indicated that although most petroleum marketers will take their time before offering E15, nearly all agreed that they inevitably will have to offer E15 unless there is a change in the federal law (RFS2).

E15

Growth Energy and RFA are making their E15 results available free of charge to fuel or fuel additive manufacturers that want to register E15 for sale. Applicants also must submit specific information about the company in the registration

application and may not begin selling E15 until EPA approves the application, a process that can take up to a month.

Source: Petroleum Equipment Institute

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l January/February 2012

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THE CUSTOMER EXPERIENCE 36

Enhancing the Customer Experience—Continued from page 34…

The Digital Deal is a great way to utilize mobile marketing. It’s free to start and requires no hardware, software, or technical skills. All technology and data base management is handled by Convevo Partners as a valueadded service.

The Digital Deal—

A turnkey text-marketing program for convenience stores operators of all sizes Of course, the best consumer experiences begin with great customer service, a critical touch point that can make or break your customer relationship. If you have been around the business for a while, you certainly have seen the positive impact a good crew can have on store sales and, conversely, how sales can suffer from a poor store staff. Top companies are where they are in large part due to the investment they make in their staff. They start by improving their recruitment, application, and hiring processes to help them attract and identify individuals that best fit their needs. They follow this up with training programs and ongoing

January/February 2012 l

development that educate and inculcate staff while making them feel valued. Whether this means developing a professionally designed paper-based program or a blended e-learning and paper-based training system depends on the company and its resources. One thing is certain, investing in your staff is a true differentiator that will more than pay for itself. Consumers prefer to shop with retailers that provide the best experience across all touch points. Within a particular industry, such as the convenience store industry, consumers consciously and subconsciously make decisions based on their overall experience with a company. Make the time to conduct a touch point analysis. You do this by identifying all of the ways a consumer can interact with your brand as well as your key competitors’ brands. You might not be able to offer all of the same experiences as a larger chain, but you can identify best practices that can make a difference and learn from others’ mistakes. Whether you decide to refresh your brand, revitalize your point of purchase program,

or simply add text marketing to provide a direct advertising channel with your customers, you will be enhancing the overall customer experience. Finally, don’t forget to update your touch point analysis each year as technological advancements can create new touch points that should be explored.

About the Authors:

Greg Ehrlich is the President of Convevo Partners, a strategy, operations and marketing consulting firm that helps convenience store operators grow sales and profits. Additional information about Convevo Partners or The Digital Deal can be obtained by e-mailing Greg at gmehrlich@convevo.com or by visiting www.convevo.com Widely known for his inspired and impactful brand identity programs, Steve Quinn, Senior Vice President of Big Red Rooster, develops distinctive, relevant brand identities that effectively evoke values, capture personalities, articulate promises to consumers, and build brand equity for clients that range from multi-national corporations to entrepreneurial startups. For more information, contact Steve at squinn@bigredrooster.com.


. . . e u l a V

one way we stand out!

Building Brand Value: • Marathon Brand employs 33 Territory Managers and 5 Program Territory Managers to deliver value to our customers. • Marathon Petroleum has excellent supply with truck loading racks at our 83 terminals, all operated with the driver in mind. • Marathon Petroleum has approximately 9,400 miles of pipeline, which ensures stable and flexible supply. • Marathon Petroleum is the 5th largest refiner in the United States, owning and operating six refineries with a combined capacity of 1,193,000 barrels per day.

For Brand and Wholesale opportunities visit www.marathonpetroleum.com/brand/


STANWADE TANKS & EQUIPMENT

17 S. High Street, Suite 810, Columbus, OH 43215

January/February 2012  

January/February issue of the 2012 Marketer magazine.

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