Commercial Fuel Buyer Fall 2017 by Fuels Market News

FA L L I S S U E 2 0 1 7

Cap Your Diesel Fuel Costs for 2018 A Handy Hedging Strategy

Lower Carbon Intensity Solution

Gouging, Hoarding and Market Disruptions

How Biodiesel Has Become the Answer to Emission-Cutting Initiatives

Reports of the Demise of

Interview with PEI Executive

Petroleum Transport

Vice President Rick Long

Are Greatly Exaggerated

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PUBLISHER’S NOTE EDITORIAL STAFF President and Publisher Gary D. Bevers GBevers@EpicNewsData.com Editorial Director and Digital Publisher Keith Reid KReid@EpicNewsData.com CAO and Associate Publisher Kathy Bevers KBevers@EpicNewsData.com Managing Editor Kyndall P. Krist KKrist@EpicNewsData.com Industry Analysts/Editors Frank M. Hunter FHunter@EpicNewsData.com Nancy Yamaguchi, Ph.D. NYamaguchi@EpicNewsData.com Columnists and Contributors

A note from

Gary Bevers, Group Publisher Along came Harvey… As we were beginning to put together this issue of Commercial Fuel Buyer, my wife and I found ourselves fleeing Houston, racing out of town barely ahead of what was by now Tropical Storm Harvey. As we rode out the storm safe and sound in Dallas, we watched with morbid fascination from the safety of our hotel room the images on TV as our city seemed to sink under water. Our home was safe, but one afternoon we watched the news as boats were motoring down the highway, now a lake, in front of our office building where the water rose 13 feet and wiped out the bank on the first floor! It was seven days before the roads were clear enough for us to drive back to our home in

Greg Cushard

northwest Houston. Oddly enough, we drove out of Dallas during a severe gas shortage

Vladimir Collak

to find our local Houston neighborhood station had fuel when we finally got home.

John Eichberger Doug Haugh

With between 25 – 50+ inches of rain falling on South Texas, from Corpus Christi to

Corey Henriksen

Houston to Beaumont before turning back ashore to hit Lake Charles, Louisiana, Harvey

Maura Keller

turned out to be one of the largest rain storms to hit the U.S. It caused a record-breaking

Alan H. Levine Joseph H. Petrowski

10,000-year flood in Houston alone. And, through it all, the first responders and emergency services had fuel—the life blood of ground, air and water-borne craft—to

W. Brian Reynolds

rescue those in need. With critical lessons learned by the Texas fuel distribution industry

Fred M. Whitaker

from Hurricanes Katrina and Rita, and then successfully put into place in time for

Editorial Board Ed Burke Lisa Calhoun George A. Overstreet, Jr.

Hurricane Ike, Texas search and rescue and emergency services (and the Cajun Navy!) were able to stay on the job and avoid the disasters of the stranded folks we all saw during Katrina and Rita.

Joseph H. Petrowski Art Director Jeff Beene JBeene@sbcglobal.net Account Manager Don M. Hester, Jr. DHester@EpicNewsData.com Digital Products Business Manager Joe A. Martinez JMartinez@EpicNewsData.com Digital Marketing Specialist Scott A. Croom SCroom@EpicNewsData.com Advertising Sales Greg Mosho c 732-610-5735 GMosho@EpicNewsData.com Mailing Address 15201 Mason Road, Suite 1000-288 Cypress, TX 77433

And then came Irma, and then came the headlines… Wide-spread price gouging! Retailers overcharging for gasoline! And on and on. But, for an objective, in-depth analysis, see Keith Reid’s article titled, “Gouging, Hoarding and Market Disruptions.” You will receive a rational discussion on what price gouging is and is not, and some suggestions on what you as a fuel buyer can do to both protect your company from unfair price increases in an emergency environment and recognize the difference between gouging and restricted supply-driven price fluctuations. In this and every issue of CFB, our energy-expert columnists strive to deliver objective analyses of the facts, changes and trends in our industry, and what that means to you as a fuel buyer. As we continue to offer new, value-added fuel-related services to our publication, we promise to work hard to make sure you have every reason to make us your go-to news source for motor fuels buying and supply. Register for our e-newsletter at www.CommercialFuelBuyer.com to get in the loop as new content gets posted. Registration is free, and the process is short and easy.

PUBLISHER’S NOTE

Commercial Fuels and Supply

Gouging, Hoarding and Market Disruptions by Keith Reid

Hurricane Irma and More Price Gouging Accusations by Keith Reid

Reports of the Demise of Petroleum Transport Are Greatly Exaggerated by Joe Petrowski

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Expanding Mobility Continues to Drive Global Demand Growth by Doug Haugh

Cap Your Diesel Fuel Costs for 2018: A Handy Hedging Strategy by Darren Dohme

What Vehicles and Fuel Solutions Will Tomorrow Bring? by Keith Reid

CFB Interviews PEI Executive Vice President Rick Long by Keith Reid

Lower Carbon Intensity Solution: How Biodiesel Has Become the Answer to Emission-Cutting Initiatives by Troy Shoen

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INDUSTRY NEWS ADVERTISER’S INDEX

by Keith Reid

Gouging, Hoarding and Market Disruptions Hurricane Harvey wreaked havoc on the Texas Gulf Coast, and price gouging

is in the news again as a result. The Fort Worth Star-Telegram reported that a local TV crew found hotel rates doubling or tripling compared to the pre-storm rates. There were $99 cases of bottled water and reports of gasoline at $10 per gallon. The Star-Telegram article quoted that more than 500 complaints of price gouging have been lodged with the Texas attorney generalâ&#x20AC;&#x2122;s office.

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FUELS & SUPPLY POLICY BRIEF

High prices, particularly related to gasoline, tend to be an extraordinarily emotional issue given our country’s fixation and dependence on the automobile. Couple that with the trauma of a natural disaster, and you get a public outcry for “justice” with any perception of retailers taking advantage of the situation.

Accusations of price gouging are not new to the fuels industry. Gasoline prices went from being low and fairly stable during the 1990s to increasingly volatile and high during the early 2000s. Virtually any real or potential disruption—a pipeline break, refinery fire, instability in the Middle East or a natural disaster—would lead to an immediate and often dramatic increase in prices. High prices, particularly related to gasoline, tend to be an extraordinarily emotional issue given our country’s fixation and dependence on the automobile. Couple that with the trauma of a natural disaster, and you get a public outcry for “justice” with any perception of retailers taking advantage of the situation. Politicians—from mayors to congressmen to attorneys general—find this outcry to be irresistible. Over the years, there have been numerous price gouging investigations from the local to federal level, although that has dropped off significantly in more recent times. There are several reasons for that, including industry associations (from the American Petroleum Institute [API] down to smaller organizations) conducting public education efforts, and post-fracking and commodities reforms that have lowered prices and reduced volatility. Even an event as disruptive as Hurricane Harvey is having a relatively muted effect—so far—on fuel prices compared to previous events like Hurricane Katrina.

Is Price Gouging Actually Possible?

The philosophical question, and most certainly not the legal one in those states with price gouging laws on the book, is whether or not price gouging is actually real. In a competitive free market system, the price of the good is determined in part by scarcity and is set by what the customer is willing to pay. While the goal of price gouging laws is always stated as being to protect consumers, these emotionally satisfying laws hurt consumers in many ways.

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Disaster situations trigger a hoarding response among the impacted population. Store shelves empty rapidly, as do underground retail fuel storage tanks. Because of the disruption of the supply infrastructure, once those shelves or tanks are empty, it may take weeks for them to be restocked.

When investigations were conducted, those at the federal level almost uniformly determined that little price gouging occurred and pricing was largely related to the dynamics of disrupted markets and increased supply costs. At the local level, such investigations have often taken the form of witch hunts where some degree of public justice is required regardless of the facts. A typical pattern involves casting a wide net and charging numerous businesses, often with a fine that is so low that only an extraordinarily stubborn retailer would refuse the settlement. CFB Magazine 7

www.CommercialFuelBuyer.com

Three gallons of gasoline might get a person 60 – 90 miles out of the danger zone for a total of $30. That’s one heck of a deal compared to being stuck in the devastation because no gasoline could be found.

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FUELS & SUPPLY POLICY BRIEF

Gouging, Hoarding and Market Disruptions

Given the potential liabilities from monetary fines (between $20,000 and $250,000 in Texas) and the damage to an established retail brand, it’s best to consult qualified legal advice and the attorney general’s office on the specific parameters to abide by before a disaster strikes.

While this is entirely logical, it is not emotionally satisfying. Tim Worstall, Senior Fellow at the Adam Smith Institute, made this point about gouging laws and Hurricane Harvey in a recent Forbes article. He expanded the idea to include the thought that it prevents the government from stepping in and setting up a range of direct controls over pricing, as well as encouraging a more rapid reintroduction of product supplies into the market. This fairly common economic viewpoint was so shockingly politically incorrect for Forbes that it pulled the article shortly after publication.

Play by the Rules

Raising prices during any kind of natural disaster will tend to see a retailer considered guilty until proven innocent in the realm of public opinion. Customers, the media and politicians (especially politically astute attorneys general) will not be bending over backward to give the benefit of the doubt.

People who might have enough gasoline in their vehicles to ride out a disruption will often “top off the tank,” and in many cases fill a range of containers with as much gasoline as they can manage, “just in case.” As long as the fuel and other supplies are priced cheaply, that behavior is encouraged.

A number of states, including Texas, have laws against price gouging based on a range of criteria—sometimes specific and sometimes opaque. For example, Texas Attorney General Ken Paxton’s office noted, “Although state law prohibits vendors from illegally raising prices to reap exorbitant profits during a disaster, it does allow retailers to pass along wholesale price increases to customers. Thus, in some cases, increased prices may not necessarily signal illegal price gouging.” You could make a lot of assumptions from the above statement when determining a street price during a disaster. Perhaps those assumptions are correct, and perhaps the attorney general’s office has a different viewpoint about the meaning of “…pass along wholesale price increases to customers…” than your interpretation (or even industry norms).

Gallons of fuel are taken out of the marketplace that might not actually be used until after a crisis is over. With a common range of 300 miles on a tank of gas, most people could drive to a safer and more comfortable place on half of a tank. They could certainly drive to locations where supply and pricing are not impacted. For those sitting it out at home, there’s probably not a lot of commuting or other travel taking place.

Now, take the $10-per-gallon gasoline noted earlier. At this price point, hoarding behaviors will likely be stunted. Underground storage tanks (UST) that would rapidly empty out in the earliest stages of the crisis could have fuel on hand (as long as the pumps are working, at least) for those individuals that got caught significantly short. Three gallons of gasoline might get a person 60 – 90 miles out of the danger zone for a total of $30. That’s one heck of a deal compared to being stuck in the devastation because no gasoline could be found.

Ironically, it’s not as if fuel retailers are immune to the impacts of a disaster situation any more than their customers. A fuel retailer in this situation likely faces uncertain fuel supply, perhaps significant losses in revenue and often significant increases in costs associated with being in a disaster zone. Insurance, while extraordinarily valuable, does have its limitations, and suppliers, lenders and creditors are not typically going to be facing a price gouging investigation if they require existing commitments to be paid. n

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FUELS & SUPPLY POLICY BRIEF

Hurricane Irma and More Price Gouging Accusations by Keith Reid

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The demand aspect on supply was also particularly active during Irma, as the usual consumer hoarding impulses were additionally driven by what amounted to a call to evacuate much of the state.

As I noted on the preceding pages in the policy brief

“Gouging, Hoarding and Market Disruptions,” price gouging is in the news once again. That article contains a general discussion of how price gouging accusations have played out primarily in the early- to mid-2000s as the industry entered an era of a Balkanized fuel supply, tighter inventories and an overall increase in price volatility. That era has only recently died down following various commodity reforms and the amazing supply dynamics brought about by fracking. While there is no need to cover the all of the same ground here, Hurricane Irma with its broad impact over multiple states has intensified gouging sensitivities. With a primary focus on Florida, price gouging complaints rolled in by the hundreds and then thousands as a crisis intensified. The complaints focused on a great number of goods and services, with airline prices getting special attention, and fuel, of course, found itself prominently in the mix. As I previously noted, price gouging investigations at the federal level have generally determined that while such practices do exist, they tend to be uncommon among petroleum retailers, and most price movement tends to be a reflection of wholesale pricing and supply dynamics. In Florida, during a state of emergency retailers are advised not to grossly raise their prices beyond the pricing history for that product over the past 30 days. However, they are allowed to defend such increases based upon market factors. The EIA’s This Week in Petroleum (September 13) outlined the extent and reason of the retail price increases in the market: because Florida is largely dependent on marine

movements from refineries of the U.S. Gulf Coast, any threat of or actual disruption to that supply, such as Hurricane Harvey, will result in higher prices in Florida markets. From August 21 to August 28, when Hurricane Harvey made landfall in Texas, the retail gasoline prices in Florida and Miami increased 10 cents and 5 cents per gallon (gal), respectively. Then as Hurricane Irma approached, increased demand and falling inventories caused Florida and Miami gasoline prices to increase $0.40/gal and $0.39/gal, respectively, between August 28 and September 4. The demand aspect on supply was also particularly active during Irma, as the usual consumer hoarding impulses were additionally driven by what amounted to a call to evacuate much of the state. Matching—and perhaps even eclipsing— price gouging accusations were the reports of stations that had run out of gasoline. This reinforces the idea that by not allowing a market to adjust more aggressively to shortages, or having some form of government sales volume control, a gallon of expensive gasoline can be worth far more than no gasoline for somebody desperately trying to leave the danger area. Retail prices tended to average in the $2.70 set range throughout the crisis, though there were reports of some stations charging $4 or higher—much higher in a few cases. Given that such disasters typically hit retailers just as hard as their customers, such extraordinary pricing might be an attempt to profiteer on the situation (though obviously at the expense of potential price gouging lawsuits and brand damage) or it could easily be more marginal operations desperately trying to stay in business. n

CFB Magazine 10

www.CommercialFuelBuyer.com

by Joe Petrowski

Reports of the Demise of Petroleum Transport Are Greatly Exaggerated The famous paraphrase from Mark Twain, “The reports of my death are greatly exaggerated,” shows that Twain had insight and a sense of humor about the doomsayers and pessimists of his day. Along those lines, there has been much chatter about the end of the oil and gasoline era as a result of electric cars, hydrogen Corporate Average Fuel Economy (CAFE) standards and ride sharing. It seems that doomsayers can never be satisﬁed. In my lifetime, I have witnessed the following fears and predictions:

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• We will run out of food to feed the world! • We will run out of oil and natural gas! • We cannot ﬁnd a home for our waste! • The planet has reached a tipping point on temperature from which there is no escape! • The oceans are overﬁshed!

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www.CommercialFuelBuyer.com

If you come up with strategies to sell natural gas fuels, develop electric charging stations around your brand and hit $20,000 per week in inside sales at a 30% margin, you can generate $500,000 per site per year in gross margin. You can then laugh heartily at the doomsayers.

FUELS & SUPPLY

Instead, this is what I’ve seen develop:

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• The lowest real prices on food in human history and record rates of obesity with 5% of the U.S.population receiving subsidized food. • We now enjoy the largest stocks of hydrocarbons and the largest proven reserves in history. • Over 1,000 landﬁlls and digesters are producing biogas, power and are desperately seeking waste product. • For at least the past two years, global temperatures have decreased.

• Fish catches hit a record high and lobsters are cheaper in real terms than when they were used as prison food in New England’s early days. The lesson learned is that the dire predictions about the future of petroleum transport need to be examined carefully before the hand-wringing begins. We currently consume 161 billion gallons of gasoline annually with 263 million passenger vehicles (45 million of which represent a household’s second or third car). That’s 613 gallons per vehicle per year, or 11.8 gallons per car per week, which is the average fuel sale—funny how that works! Nationally, 70% of households still drive to work, and 80% drive for vacation or home visits with a distance of over 100 miles twice a year. Assume electric vehicles capture 100% of the second- and third-car market (that’s an overly aggressive scenario, but consider it for the point being made). That’s 28 million gallons of displaced gasoline per year. Assume in Tesla’s wildest dreams that electric cars capture 10% of the 218 million primary vehicle market, that’s 21 million vehicles— and another 13 million gallons of gasoline displaced. Now, assume that with 66 million electric cars, we still have 197 million petroleum-powered vehicles, and assume a 10% eﬃciency pickup through a combination of CAFE standards, lighter composite materials and bio-binging— that’s 12.1 billion gallons displaced. Assume all 10 million light-duty trucks and vans switch to natural gas, which is cheaper and creates less carbon dioxide (CO2)—that’s 2 billion gallons of displaced petroleum. CFB Magazine 13

There has been much chatter about the end of the oil and gasoline era as a result of electric cars, hydrogen CAFE standards and ride sharing. It seems that doomsayers can never be satisﬁed.

So, to sum it up: • Electric: 41 million gallons of displaced petroleum • Efficiency: 12.1 billion gallons of displaced petroleum • Light-duty hydrogen or natural gas: 2 billion gallons of displaced petroleum Let’s round up and say that the total displaced petroleum equals 15 billion gallons, so our annual petroleum consumption as a transport fuel drops to 146 billion gallons. With 160 million fueling sites, that’s still about 912,000 gallons per site per year, or 17,000 gallons per week. Additionally, if you come up with strategies to sell natural gas fuels, develop electric charging stations around your brand and hit $20,000 per week in inside sales at a 30% margin, you can generate $500,000 per site per year in gross margin. You can then laugh heartily at the doomsayers. That’s 9.5 million barrels per day of oil production and refining capacity that will not make Carl Icahn or the independent refiners happy, but it’ll make those long renewable identification numbers (RIN) almost giggly. n

CommercialFuelBuyer.com

Joe Petrowski Joe has had a long career in international commodity trading, energy and retail management and public policy development. In 2005, he was named President and CEO of Gulf Oil LP and elected to the Gulf Oil LP Board of Directors. In October 2008, he was named CEO of the now combined Gulf Oil and Cumberland Farms, whose annual revenues exceed $11 billion and who now operates in 27 states. In September 2013, Petrowski stepped down as CEO of The Cumberland Gulf Group. He is now the Managing Director of Mercantor Partners, a private equity firm investing in convenience and energy distribution. Joe is also a member of the Gulf, Yesway and Green Print, LLC boards. www.CommercialFuelBuyer.com

FUELS & SUPPLY

Expanding Mobility Continues to Drive Global Demand Growth by Doug Haugh

fter participating in the Fuels For 2020 conference in Turnberry, Scotland, this September, I left with one overarching conclusion. Mobility is going to keep increasing, and while the emissions resulting from all that moving around are going to improve, we are not going to see a reduction in carbon emissions anytime soon. Three days of a packed agenda covered a wide range of topics, very few of which should have had any direct connection to electric vehicles (EVs) or battery technology, yet every single one ended up being inextricably connected to the topic of the day. I recall industry conferences and gatherings back in 2000, where no matter the agenda, all anyone talked about was the internet. Then, in 2010, everything was connected to the new app economy being born with the huge sales of smartphones. What has become obvious in the last year is that EVs and everything associated with them haveâ&#x20AC;&#x201D;for our industry at leastâ&#x20AC;&#x201D;taken on this same status as the overpowering theme that every presenter must address or risk being left out of the conversation.

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FUELS & SUPPLY

Expanding Mobility Continues to Drive Global Demand Growth

Each speaker was also consistent in that while the transportation market will go through tremendous change over the next 20 years, oil demand likely will not peak globally until 2035 or later. Meaning that for the next 15 years, the demand for oil will still be growing each year.

A presentation by an esteemed geologist from a nearby university on fracking and shale gas reserves in the UK did indeed talk about those reserves, but there was a shadow, a strange light to each statistic. Every prediction, forecast and conclusion was delivered with new caveats and conditioning statements that were heard over and over— essentially all forms of the fundamental question, “When EVs are adopted at x rate over y years, what happens to our industry?” Despite all of the attention, each speaker was also consistent in that while the transportation market will go through tremendous change over the next 20 years, oil demand likely will not peak globally until 2035 or later. Meaning that for the next 15 years, the demand for oil will still be growing each year. Demand will decline in the U.S., EU and Japan, but these declines will be offset by continued increases in Africa, Asia and the rest of the world. What is going to improve dramatically are the emissions of pollutants such as nitrogen oxide (NOx), sulfur oxide (SOx) and particulates. Unlike the carbon dioxide emissions that may create fatalities in the future, these are the pollutants that kill today and they are going to improve dramatically in the next few years. One of the reasons is the fallout from

your own vehicle’s performance at http://www.equaindex.com. The global shipping industry is finally starting their conversion to low sulfur fuels, moving off of Heavy Fuel Oil (HFO) to Ultra-Low Sulfur Fuel Oil (ULSFO), a fuel that hardly exists today. This conversion of between 4 and 5 million barrels

Nick Molden, Emissions Analytics

Volkswagen’s “Dieselgate” debacle, where the promise of clean diesels was revealed to be a falsehood. Nick Molden of Emissions Analytics presented on his company’s real-life measurement of emissions of actual vehicles driving on actual roads by real live drivers. The results were stunning. The average emissions of diesel vehicles “compliant” with EU6 regulations were six times the regulatory limit. Someone in the audience broke the stunned silence that met Nick’s comments by joking that maybe that’s why it was called EU “six.” Funny, but tragically so when one considers the health impacts. Ironically, while most of these vehicles are in Europe, it was an American investigation that revealed the fraud and not a single vehicle’s certification has been pulled in by the EU to date. Mr. Molden’s firm has produced a useful measurement called the EQUA Index and published a free tool on the web to check CFB Magazine 17

per day of fuel that is 50,000 ppm sulfur to fuel that is 5,000 ppm sulfur is going to impact the refining industry, the shipping industry and air quality globally. While emissions are improving dramatically for each mile of transportation delivered, the overall growth in demand for transportation is still expanding. This leads to another consistent conclusion: from academic researchers to industry forecasters, there was consensus that it’s going to get warmer. Regardless of the Paris agreement that the U.S. has now pulled out of, each speaker was quietly resigned to a warmer planet. This event may have been held at the Trump Turnberry resort, but there were no “climate deniers” in this crowd, just clear-eyed realists. Despite the facts that engine efficiency is growing a little every year and batteries are becoming cheaper, with each www.CommercialFuelBuyer.com

new factory expansion, overall carbon emissions are not headed down anytime soon. Increases in mobility lead to increased freedom, growing opportunity and expanding economic prospects for the past 200 years. These benefits will continue to increase with the adoption of autonomous vehicles, car sharing and an increasingly electrified fleet world-wide. I believe the increased transparency of real life emissions along with declining costs per mile of mobility delivered point to a better transportation future for all of us, but we are clearly in a race. A race to harvest those benefits while producing lower emissions as we transition to a more sustainable, electrified future that is going to take decades of innovation and investment to deliver. n

Douglas S. Haugh Doug is currently President and Chief Strategy Officer of Mansfield Energy. The company provides energy commodities and related services to 6,000 customers in 18,000 locations across the U.S. and Canada. The company’s expertise covers a broad range of transportation and facilities energy—from traditional petroleum products, CNG, renewable fuels and specialty chemicals to power and natural gas. Haugh is a frequent speaker on energy, supply chain technology and entrepreneurship. He can often be found leading general sessions or seminars at national conferences and conventions. He also blogs on energy issues at ThinkingOnEnergy.com. The opinions expressed there (and here) are his, and not those of Mansfield.

Cap Your Diesel Fuel Costs for 2018: VENDOR VIEWPOINT:

by Darren Dohme

In the last six months, crude oil prices have dropped from over $55 per barrel on January 3, 2017, to about $42 per barrel on June 21. That’s a 24% drop in the price of oil, and diesel fuel futures have dropped about the same percentage.

You can hardly understand the fundamentals of the world oil market right now, with OPEC trying to hold together their coalition of production cuts only to see Libya and Nigeria jack their production rates higher. Additionally, U.S. shale oil producers continue to drill new wells and bring older ones online that have a sixmonth amortization rate. On the bull side of the market, we have one of the biggest Middle Eastern catalysts seen in years. A Saudi Arabian-led coalition of Middle Eastern countries is set to tighten down severe sanctions on Qatar for supporting terrorist activity. On the other side of Saudi Arabia’s coalition are Turkey and Iran, which are both supporters of Qatar. A big rift in the Middle East could easily spiral out of control in the coming months.

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The decision to buy diesel fuel into the forward curve is mentally one of the toughest challenges you could put on yourself right now. It could also be one of the most important decisions you make for the future proﬁtability of your company. Fuel price risk has not been much of a concern over the last several years. However, with diesel fuel prices trading near the bottom of a three-year trading range, upside price risk seems greater than the downside risk. Now is a good opportunity to hedge that price risk.

A Handy Hedging Strategy The Best Strategy Is a Maximum Price Contract

A maximum price contract strategy will allow you to cap your upside price risk while allowing you to participate in 100% of the downside. To a CFO of a trucking business or any diesel fuel end user, is that not the ultimate deﬁnition of price risk control? A maximum price diesel fuel contract will allow you to come in on budget or under budget—now that’s a winwin strategy. This strategy is achievable through using the futures options market and buying call options to protect your upside price risk. A call option works like an insurance policy against higher prices. You pay a premium for a certain level of price protection. If the futures market rallies, the call option will pay you penny for penny of what the futures market settles above your call option strike price or insured price level. If the diesel fuel futures price does not settle above your price protection level, then nothing happens and all you lose is your option or insurance premium. The house didn’t burn, so to speak. Every year, you purchase homeowners insurance, and you are happy to lose your insurance premium. That’s the mentality that you should have when protecting your diesel fuel price each year. If you lose your call option premium, then the price of diesel fuel did not rally over your protected price level.

Here’s an example of how a maximum price diesel fuel contract works:

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A call option works like an insurance policy against higher prices. You pay a premium for a certain level of price protection. If the futures market rallies, the call option will pay you penny for penny of what the futures market settles above your call option strike price or insured price level.

• First, you need a hedging account. (You can open one with Powerline

Group, and we will walk you through the strategy and hold your hand the entire way.)

• The calendar year 2018 futures price strip for diesel fuel is trading at $1.52 per gallon. For this example, we averaged the 12 months of January – December 2018 futures prices.

• We then buy an at the money call option at a $1.52 strike price. This call option gives you penny-for-penny upside price protection for 16 cents per gallon. That amount is paid upfront.

• We would then add in an estimated basis cost of 15 cents per gallon, which is the diﬀerence between the futures price and cash price.

• Then add in an estimated trucking cost of 4 cents per gallon to the truck stop or to your storage tanks.

• Add in another cost of 15 cents per gallon in estimated margin by the truck stop or jobber.

• Add in the estimated cost of 16 cents per gallon for the call option upside price protection.

A total estimated cost of close to $2.02 per gallon is what you could put into your budget, excluding taxes.

$2.80 $2.70

How Diesel Fuel Maximum Price Contracts Work Market Price Fluctuation

$2.60 With a Max Price Contract, if the market drops below the cap, the customer will always pay the lower market price!

$2.50 End users are protected from higher prices!

$2.40 $2.30

Maximum Price

$2.20 $2.10

Fixed Price: Lock in a set price for a specific amount of gallons for the duration of the contract period. Unable to participate in lower prices.

$2.00 $1.90 $1.80

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FUELS & SUPPLY

Cap Your Diesel Fuel Costs for 2018: A Handy Hedging Strategy

Maximum Price Diesel Fuel Contract Using a Call Option January 2018 – December 2018

The risk of loss in trading futures and/or options is substantial and each investor and/or trader must consider whether this is a suitable investment. Past performance, whether actual or indicated by simulated historical tests of strategies, is not indicative of future results. Trading advice is based on information taken from trades and statistical services and other sources that Powerline Petroleum, LLC believes are reliable. We do not guarantee that such information is accurate or complete, and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades.

What Happens When It’s Time to Deliver/Take the Fuel? • If next January comes and the futures market settles at $2.00 per gallon,

then the call option will be worth 48 cents per gallon ($2.00 - $1.52 = $0.48).

• If next January comes and the futures price expires oﬀ at $1.40 per gallon,

then nothing happens and all you lose is the insurance premium that you paid for the call option.

• If diesel fuel futures are lower than $1.52 at settlement time, then your

company would purchase the physical fuel at a cheaper price than when the hedge was initiated.

This handy strategy can be modiﬁed to ﬁt your own budget and volume needs. n

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Darren Dohme Darren has been in the petroleum hedging business for 30 years. Darren is a managing partner of Powerline Petroleum and understands that every cent counts. Powerline works with transportation companies and other end users of diesel fuel to help cap their fuel prices, in addition to working with petroleum jobbers and wholesalers to offer maximum price contract programs to their customers. If you would like to learn more about how this hedging strategy could work for you, visit www.PowerlineGroup.net.

Trucks move roughly 70% of the nationâ&#x20AC;&#x2122;s freight by weight. In 2015, commercial trucks consumed 54.3 billion gallons of fuel, which breaks down to 38.8 billion gallons of diesel fuel and 15.5 billion gallons of gasoline. The trucking industry spent $105.2 billion buying diesel fuel in the same year. Diesel fuel is often the second highest expense for motor carriers after labor, and can be as much as 20% of total operating costs. Source: American Trucking Associations (ATA)

Bottom Line:

In addition to being the largest mover for inland freight, trucking is also the number one consumer of diesel fuel in the United States.

CommercialFuelBuyer.com

by Keith Reid For years there has been a tremendous regulatory push toward high-efficiency vehicles, using less fuel for comparable performance and simultaneously producing lower carbon output. That push has also encouraged—often through government support—a range of alternatives to conventional fossil fuels. The last eight years of the Obama administration only accelerated these efforts, largely through federal agency regulations. Most prominent among these regulations are the Corporate Average Fuel Economy (CAFE) standards. First enacted by the United States Congress in 1975, the standards are focused on the fuel efficiency of light-duty vehicles (LDV). In 2011, the Obama administration raised average mileage requirements to 54.5 miles per gallon for cars and light-duty trucks by model year 2025.

“”

“Things are going to change in a measured, predictable fashion, and these individuals and groups who are out there saying ‘mass change in 10 years’ are not being realistic. We are starting to develop plenty of information that contradicts that position.”

John Eichberger,

Similar Environmental Protection Agency (EPA) and National Highway Traffic Safety Administration (NHTSA) regulations have already passed through a largely manageable Phase 1 and are set to impact medium-duty vehicles (MDV) and heavy-duty vehicles (HDV)—typically commercial—in a far more aggressive manner by 2027. Phase 2 calls for an average efficiency increase of 22.8% among all classes. The result is a future fuels environment that will most certainly impact fuel marketers, retailers, consumers and commercial fleet operators, but one that is currently uncertain in the likely ramifications. To try to gain some clarity, the Fuels Institute commissioned a study focused on what these audiences can expect in the fairly near future. Founded by the National Association of Convenience Stores (NACS) in 2013, the Fuels Institute is a nonprofit organization dedicated to evaluating issues affecting the vehicle and fuels markets. It commissions comprehensive, fact-based research projects that are designed to answer questions—not to advocate for a specific outcome.

The Fuels Institute partnered with Navigant Research to develop a forecast of vehicle sales and registrations—segregated by primary fuel type and powertrain—through 2025. The institute has released this study in three segments: “Tomorrow’s Vehicles: An Overview of Vehicle Sales and Fuel Consumption Through 2025,” “Tomorrow’s Vehicles: A Projection of the Light Duty Vehicle Fleet Through 2025” and “Tomorrow’s Vehicles: A Projection of the Medium and Heavy Duty Vehicle Fleet Through 2025.”

Fuels Institute

All three segments are free to download after providing some simple registration information, and provide far more detail than what is covered in this article. Those whose livelihood depends on making the right calls relative to fuel marketing, fuel retailing and fleet operations would be hard-pressed to find a better deal on such thoroughly developed information. Editor’s Note: The observations discussed here pertain to the U.S. market, but the report also covers projections for the Canadian market. CFB Magazine 24

www.CommercialFuelBuyer.com

2018 2019 2020 2021. 2022 2023 2023 2024 2025 202 GASOLINE ETHANOL DIESEL BIODIESEL CNG 100RON OCTANE

WHAT VEHICLES AND FUEL SOLUTIONS WILL TOMORROW BRING?

FUELS & SUPPLY

What Is the General Takeaway? “Things are going to change in a measured, predictable fashion, and these individuals and groups who are out there saying ‘mass change in 10 years’ are not being realistic,” said John Eichberger, Executive Director of the Fuels Institute. “We are starting to develop plenty of information that contradicts that position.” In fact, when looking at the range of graphs presented throughout the reports, it can be hard to spot the change. Some alternatives such as hydrogen, which represents a fraction of 1% of the market today, will merely have a larger fraction of 1% of the market by 2025. The report indicates that gasoline and diesel—and similarly ethanol and biodiesel—will remain the dominant fuels into the near future. Gasoline and ethanol demand is projected to decrease, but only by a compound annual growth rate (CAGR) of -0.2% in the base scenario and -0.3% in the aggressive scenario. The aggressive scenario represents a more rapid increase in the price of oil and a more significant decrease in battery cost compared to the base scenario. Gasoline and Ethanol Consumption by Market North America: 2016 – 2025

Source: Navigant Research

Diesel and Biodiesel Consumption by Market North America: 2016 – 2025

Source: Navigant Research

Largely due to increases in heavy-duty class consumption, diesel and biodiesel consumption is expected to rise to a level approximately 14% and 12% higher than 2016 levels in the base and aggressive scenarios, respectively, according to the report.

FUELS & SUPPLY

What Vehicles and Fuel Solutions Will Tomorrow Bring?

“I guess the one thing to take away is that, among the alternatives, CNG has a reasonably strong presence. But even in the aggressive scenario, CNG doesn’t grow into domination.”

“”

John Eichberger, Fuels Institute

Light-Duty Vehicle Market

One LDV offering expected to see a significant drop-off by 2025 is flex-fuel vehicles (FFV). This category is projected to decline from roughly 10% of sales today to around 1% of sales in 2025 due to the expiration of an important automaker CAFE credit in 2019. While producing an FFV is not significantly more expensive than a conventional counterpart, getting FFVs certified is exceptionally expensive. “You have to certify your emissions profile on multiple levels of ethanol blend,” Eichberger noted. “That is tens of thousands of dollars per model. But more importantly, without the CAFE credit, these automakers need to get more efficient, which means an increased use of direct injection or turbo-boosted engines. If you have a flex-fuel component, that gets a lot more complicated.”

Commercial Vehicle Market

Although the LDV market’s overall change in this time frame is expected to be moderate, some interesting trends were identified. According to the report, plug-in battery electric vehicle sales (including plug-in hybrids) are expected to increase to over 5% and over 8% of the LDV market in the base and aggressive scenarios, respectively. That still represents less than 2% of the vehicles expected to be on the road at that time. However, this period may represent a lull before more aggressive growth occurs. “I think that around 2025 – 2030, battery technology is going to get much better,” said Eichberger. “We’re going to get that 300 – 350 mile range and 15-minute recharge capacity, and that’s going to make it a technology that satisfies 95% – 98% of consumer needs.”

Current Phase 2 regulations on MDVs and HDVs are projected to provide a nearly 23% improvement in efficiency by model year 2027. As with LDVs, the impact on the current fuel mix is not extraordinary. Today, gasoline- and diesel-powered vehicles combine to make up more than 96% of the market share for all MDV and HDV vehicle sales. That market share is expected to decrease slightly by 2025 to 93% in the base scenario and 92% in the aggressive scenario. The report notes that the vehicles making up this loss will likely be hybrid or compressed natural gas (CNG) vehicles. Diesel fuel volumes will be increasing slightly as the HDV sector is expected to increase in total numbers, even as the mixes of power plant types change.

If the limited but compounded growth rate for electrics continues, these vehicles are going to have more than a 10% market share of new sales—perhaps even 15% – 20%—and make up 5% – 10% of the vehicles on the road by 2030. Eichberger projects that by 2035, those numbers are going to grow much faster. “I think by 2030, the auto companies will make money on electric vehicles to the point that government support might not be required,” Eichberger explained. “I think by 2030 – 2035, this is a freestanding, competitive market. But at the same time, what we’re showing in this report is that it’s just a seed for future market development.

U.S. Market Share of Commercial Vehicle Sales (Base Scenario)

Sources: Navigant Research, Fuels Institute

U.S. Market Share of Commercial Vehicle Sales (Aggressive Scenario)

“We’re not going feel an impact in the next 12 – 15 years,” he continued. “When we start feeling it, it’s going to be minimal at the beginning, but it will ramp up. The market changes slowly. Even out to 2050, we’ll still be driving internal combustion engines, and they could still make up 50% or more of the market.” One of the more notable losers in this scenario is hydrogen. The cost and infrastructure challenges hydrogen faces are not being overcome at nearly the same pace as the advancements in electric vehicle battery technology.

Sources: Navigant Research, Fuels Institute

CFB Magazine 26

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FUELS & SUPPLY

What Vehicles and Fuel Solutions Will Tomorrow Bring?

“I guess the one thing to take away is that, among the alternatives, CNG has a reasonably strong presence,” said Eichberger. “But even in the aggressive scenario, CNG doesn’t grow into domination and it’s down from when we did this three years ago. We know why—the price competitiveness relative to diesel is not as beneficial as it was a few years ago and investments have dried up.” It is generally difficult to forecast natural gas vehicles, particularly in the LDV class, because so many solutions are aftermarket. “Individual fleets have to make those decisions, and it’s not usually the original equipment manufacturers (OEM),” Eichberger explained. “Thus, predicting that type of investment is tricky. I think the projection is pretty reasonable given the price relationship between the fuel and the conservative forecast, and it’s justified with what we’re seeing today.”

New Octane Fuel? One factor not taken into account is the movement to develop a new high-octane replacement fuel. Until solid movement begins, including such a fuel in the mix would be premature. However, progress is being made. “We’re finally starting to get some coalescence among the auto industry about what they want, and it’s starting to look more and more like a 100RON fuel,” he said. “Our octane study is ongoing; it’ll be available in the first quarter of next year. “We’re modeling formulations of fuels to achieve the characteristics that would make it successful in the marketplace,” Eichberger continued. “What will have to happen then is engines will have to perform as designed on the high-octane fuel, but perform tolerably and safely on premium so the consumer knows they can always refuel. But, if they want full performance, they have to buy the new fuel.”

Will the Regulations Hold Up Under Trump? The Trump administration has indicated a desire to tone down—and in some cases, reverse—the more aggressive environmental regulations pushed through under the Obama administration. This has included revisiting the CAFE standards. “The administration’s actions to date have been misconstrued,” Eichberger explained. “They haven’t said that they’re going to roll back the regulations, and they haven’t started the rulemaking to roll back the regulations either. They reconstituted the midterm review process that the prior administration shortchanged. Let’s say that the administration decides to take the current CAFE standards and stretch them out; change that 2025 target, maybe reduce a little bit, maybe stretch it out to 2030—what’s the impact?” CFB Magazine 27

Eichberger noted that automakers are not just serving the American market; they must satisfy European specifications, which tend to be aggressive, as well as Asian markets. The North American market represents approximately 20% of the global sales market, while Europe is comparable to North America and Asia is close to 48%. In a similar vein, California and 10 other states—largely in the Northeast—have made commitments to aggressive emission and efficiency standards at the state level. That will most certainly influence the automakers as they develop both international and domestic product lines. “They’re going to continue to advance technology to improve efficiency and emissions. Despite what may happen with CAFE standards in the United States, Americans are going to benefit from that technological advancement,” said Eichberger. There has not been much discussion on the relatively new (2016) Phase 2 MDV and HDV standards, but truck manufacturers have been expressing some concern about the complexity of the next-generation technological approaches required to meet them. That is especially the case when carbon dioxide (CO2) requirements meet California’s push for more stringent nitrogen oxide (NOx) requirements, which causes technical issues. “The heavy-duty sector is going to be very different from the light-duty sector,” Eichberger noted. “Because our economy runs on the back of diesel, I would not be surprised to see a relaxation on the HDV side, provided it doesn’t result in an increase in emissions. I would not be surprised to see some slowdown, but probably not a rollback.” You can download the series of “Tomorrow’s Vehicles” reports and more at www.FuelsInstitute.org. n www.CommercialFuelBuyer.com

Interview with

Rick Long

by Keith Reid

PEI Executive Vice President

Q&A CFB:

You had been at PEI for a number of years before the transition. What was it like on the ﬁrst day when you walked in the door and you were in charge?

Rick Long

On June 1, 2017, the leadership at the Petroleum

Long:

Equipment Institute was passed from Bob Renkes to Rick Long. A change in leadership at PEI is not casual matter. Renkes had led the organization for 38 years, having taken the helm from Howard Upton, who had previously led PEI for 36 years.

It certainly was diﬀerent, but the number one feeling was just excitement. I really had been looking forward to that I since a year before when the board named me as the next Executive Vice President. There was a lot of planning to get ready for that day, and we’re engaged in that process right now.

However, Long is not new to the association. He began working for PEI in 2009 as General Manager and Associate General Counsel. Before that, he had his own custom publication marketing communications company for approximately 20 years, which centered on running a proﬁtable publishing operation in diﬀerent industries and established a relationship with PEI during that time.

CFB:

We recently spoke with Long to get his perspective on the organization and what he hopes to accomplish during his leadership. CFB Magazine 28

Can you touch on the state of both the distributor industry and the manufacturer sector today?

Long: I’ve been spending a lot of time visiting members from coast to coast, big and small—some as small as a service contractor who works out of his house and has a truck, to one member that has 300. I think that on our distributor side there’s a lot of excitement about what’s ahead, but there is some concern about things that are beyond their control. www.CommercialFuelBuyer.com

FUELS & SUPPLY Part of it is regulatory and governmental policies. The new administration that’s in right now is kind of a wild card and a question mark for a lot of people. If you can tell people what’s coming, then you can deal with that, but they just don’t know what’s coming. So that’s one thing. There are new channels of distribution that are interesting, but also a little confusing.

CFB: Is Amazon reaching our commercial sector?

Long: Well, here’s the deal. There are PEI members who are selling to Amazon. Amazon is joining some other distributor-based associations. It’ll be interesting to see how that plays out. Are they both a customer and a competitor? And, there are other models for how distributors relate to each other. In some cases, they’re customers of each other, and in others, they’re competitors. We have had a really wonderful networking program with our “Ten Groups,” where members who are non-competitive get together a couple times a year and kick around ideas and serve as each other’s informal board of directors and share practices. Those are great groups, but they’re complicated now because geographic boundaries are not what they used to be, and companies are expanding their footprints. It’s a really interesting time. And then you have just very practical things like all of the work with EMV. With the extension of the deadline, what does that mean for companies who were ahead of the curve and got their customers moving in that direction, and maybe hired up a little bit to make that happen.

CFB: How has that delay impacted what was an almost overwhelming instillation challenge?

Long: The pace of work is … I wouldn’t say it’s slow, I’d say it’s manageable. I think in some respects our members could say the delay helped us, because we had a signiﬁcant shortage of technicians, and now we just have a slight shortage of technicians, maybe. But that’s going to come back again as the new deadline approaches.

CFB Magazine 29

CFB: What about the manufacturing sector?

Long: The challenges are similar, but the context is different. There are fewer competitors. There’s been some gobbling up here and there just as a natural force of the market. But I will tell you that our manufacturers are—and our surveys show this—really excited about moving into expanding internationally as well. There are lots of opportunities there. I met with one of our members and he had out a little display that was showing their products on a table, and I said, “Well, you didn’t have to get that out for me.” And he said, “I didn’t get that out for you, I got that out for a distributor in Iraq that we were meeting with.” And I said, “You think you’re going to do business in Iraq?” And he said, “Oh, we already are. We’re just talking about how to expand it.” And this is not a huge company. So, there’s a lot of excitement about the international market, but there’s a lot of barriers to how you get in there. Do you have to have a physical presence, how do tariffs fit in, and other things? But hopefully we can be a part of helping them engage at that level if that’s what they choose to do.

CFB: PEI is a stable organization, so it’s not some turnaround situation. What are you excited to bring to the table as that next generation of leadership?

Long: PEI is governed by a strategic long-range plan that is developed by our board, but in addition to that we’re doing a lot of strategic work on our own. One of my goals is going to be to make sure that PEI adapts with a changing industry. Even a strong association, of which PEI is certainly one, can’t just rest on what we have done in the past. This is an incredibly active time of transition and change in our industry. There are new products that our members are getting involved in. There are new competitive pressures that our members are facing. There is a lot of consolidation, obviously, on the manufacturer and the distributor sides.

www.CommercialFuelBuyer.com

FUELS & SUPPLY

Interview with PEI Executive Vice President Rick Long

CFB: What are some of the exciting things that you guys are working on at PEI as we speak today? We recently had an all staff offsite experience where we brought in a consultant friend who’s helping us think through some strategic issues. We developed 29 to think about—different things that we could do—and they kind of grouped themselves into three categories. One was what I called leading authority ideas. If our mission is to be the leading authority for fuel and fluid handling equipment, are there gaps—tools, resources or knowledge—that our members need that we’re not yet providing? Are there ways that we can get out the information we’re already providing in faster ways? The answer to both those questions is yes, by the way. For example, the Tulsa Letter, which has been such a bedrock for the association, is basically put out every two weeks. If something happens between 12:00 when I send it out and 12:01, generally speaking, you have to wait a couple of weeks until we can speak on that. We’ve got to do better. We’re working on some models that allow us to get information out more quickly in different formats as well. Different people receive information differently. Some are more visually-oriented. Some are more video-oriented. Some are more word- and text-oriented. We want to be able to deliver information through all of those ways. Another area that we’re looking at is member service ideas. Are there things that we can do to make even applying to join the association easier? How do we welcome new members when they come in so that they really start their engagement off on a good step? Do our members really know all of the benefits that we have? We have learned through surveys that there are some tools and resources we offer that our members aren’t even aware of, sometimes. How can we sort of get that information out so that it’s at the ready when they need it? We’re looking at ways to do that.

CFB: You touched on the international opportunities earlier. Part of your focus moving forward, I assume, involves PEI’s growing international focus?

the board and our staﬀ are really excited about that. Not to distance ourselves from what we’re doing in the United States, obviously, but really to broaden our reach. PEI works hard to do a good job of advising the industry on recommended practices, on safety procedures and things that are good for the environment and good for the whole fueling infrastructure. We want to make sure those practices go beyond the borders of the United States to the extent that we can and where we are invited to so.

CFB: There is some really big news out in the staﬃng department.

Long: We’ve just hired Melinda Whitney, who was President of the International Liquid Terminals Association (ILTA). She has accepted a position with PEI as our director of operations.

CFB: That would seem to work on many angles, including international. ILTA has long had a strong focus on Latin America.

Long: Melinda speaks Spanish and she has done Spanish programming at ILTA’s convention, so that is signiﬁcant. She also brings to us a great perspective on upstream that trickles into our world. We’re not going to become a terminal association, but she understands that side of it. How the fuel gets from the terminal down to the level that we typically represent. That’s terriﬁc. We have some common members. I don’t know the exact number, but maybe 30 or 40 PEI members are also ILTA members. So, there’s a nice continuity there. She understands boards, she understands associations. We’re very excited about her.

CFB: Anything exciting for the upcoming PEI Convention at the NACS Show?

Long:

Long: Our board’s direction is to become more of an international association. For the ﬁrst time at this year’s PEI convention, we are going to do some sessions in Spanish. For the ﬁrst time, we’re going to provide translation for some of our other sessions. We’ve had meetings with a planning committee that we set up consisting of Latin American members and other members who are interested in the region to listen to them and to say, “How can we be of service there? What more can we do?”

CFB: What is the current state of your international membership?

Long: We have membership in a lot of countries, but often it’s just a few companies. We really want to deepen that engagement, so CFB Magazine 30

We have a terrific educational offering. That’s something we have really worked hard on in the last two or three years—to increase the amount of education we have at the show. It’s significant. In addition to the formal educational sessions, we’re adding more informal one-on-one discussions in that area on the floor. As we discussed earlier, the addition of the Latin American effort is very exciting. We’re going to organize a walk-around the trade show floor for non-English speaking Spanish members that will be translated as they go around from booth to booth. In the membership meeting we’re going to have Spanish translation as well, just to let those members know they’re every bit a part of who we are and we want them to feel welcomed. n www.CommercialFuelBuyer.com

Run on Less, billed as a first-of-its-kind

national fuel efficiency roadshow, kicked off with seven differently specâ&#x20AC;&#x2122;d trucks from seven different fleets that will participate in the three-week fuel efficiency challenge. The trucks will be traveling through varied terrain and different traffic and weather conditions. Daily fuel economy, including dollars and gallons saved, will be reported at www.RunonLess.com. The goal is to demonstrate how Class 8 trucks can use different technologies to achieve the best fuel economy possible. With a goal of achieving 9.0 mpg, the trucks have been fitted with different technologies, including 6x2s, automated transmissions, aerodynamics and other technologies that assist with improved freight efficiency. Source: Heavy Duty Trucking, September 7, 2017

Bottom Line:

Technology is driving heavy-duty trucking into the future.

CommercialFuelBuyer.com

Lower Carbon Intensity Solution:

How Biodiesel Has Become the Answer to Emission-Cutting Initiatives

FUELS & SUPPLY

want clean “Californians air and have voted to do

by Troy Shoen

so with both the LCFS and the Cap-and-Trade Program, and now the state is looking to extend the programs and achieve even greater emission reductions.

he Low Carbon Fuel Standard (LCFS) is undeniably altering the transportation landscape in California. The regulation aims to reduce greenhouse gas (GHG) emissions, and almost nothing related to fleet management occurs without taking it into consideration.

“

Todd Ellis, Renewable Energy Group

Many obligated parties and fleets have turned to biodiesel as a lower carbon solution. Here is a sampling of facts and figures showing why:

LOW-CARBON

LCFS FUEL STANDARD

Among liquid fuels, biodiesel consistently has the lowest average carbon intensity value.

Biodiesel accounted for nearly 20% of the LCFS credits generated in 2016.

Biodiesel volumes in California increased 1,196% over the past six years and are projected to increase another 471% between 2017 and 2023.

“Californians want clean air and have voted to do so with both the LCFS and the Cap-and-Trade Program, and now the state is looking to extend the programs and achieve even greater emission reductions,” said Todd Ellis, Executive Director, West Region Sales at Renewable Energy Group, Inc. (REG). “Biodiesel is an ideal fuel to help parties meet requirements of these programs, and the biodiesel industry is in a position to meet demand.”

CFB Magazine 33

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The average biodiesel blend level in California recently experienced a 65.7% yearover-year increase.

FUELS & SUPPLY

How Biodiesel Has Become the Answer to Emission-Cutting Initiatives

LCFS: What You Need to Know The LCFS took effect in 2011 and was reauthorized in 2015. Here are some of the basics of the program.

Objective

Compliance

Its goal is to reduce the carbon intensity of transportation fuels by 10% by 2020. It is one of several measures included in a scoping plan by the California Air Resources Board (CARB) to reduce GHG emissions. A proposed update to the broader scoping plan released in early 2017 calls for a 40% reduction in GHG emissions by 2030.

Regulated parties are often the fuel producer, but the obligation can be passed downstream as far as the rack. Obligation is tracked through credits and deficits. Fuels with a carbon intensity score lower than the annual standard earn a credit. Fuels that are higher than the standard result in a deficit, which must be reconciled annually. Credits can be traded between regulated parties.

Carbon Intensity CARB defines carbon intensity as the measure of GHG emissions associated with producing and consuming a fuel. Simply put, the LCFS promotes the production and use of cleaner transportation fuels, thereby reducing emissions.

Market Picks Fuels CARB says the LCFS is fuel-neutral and performance-based, allowing the market to decide which fuels are used to meet the carbon intensity goals.

Biodiesel Growth in California

Source: https://arb.ca.gov/fuels/lcfs/lrtqsummaries.htm

Biodiesel Has the Right Stuff

definitely “ There’s a sense that the

LCFS will spread beyond the West Coast. Up to this point in time, the LCFS has proved to be a very effective means of decarbonizing and diversifying transportation fuels.

“

Shelby Neal,

National Biodiesel Board

Average Carbon Intensity Value

As you can see from the following chart, carbon intensity is the backbone of the LCFS— and no liquid fuel can match biodiesel.

Source: California Air Resources Board, Q4 2016

CFB Magazine 34

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FUELS & SUPPLY CARB uses a model to calculate the carbon intensity of each fuel. The model accounts for the total amount of GHG emitted during the full life cycle of a fuel—a “well-towheels” approach that captures direct and indirect effects. Producers submit fuel pathway applications for each combination of feedstock and fuel. According to Dave Slade, Executive Director, Biofuel Technology and Services at REG, biodiesel scores so well for three primary reasons:

How Biodiesel Has Become the Answer to Emission-Cutting Initiatives

1. 2. 3.

CARB assigns carbon intensity values to feedstocks, and biodiesel can be made from feedstocks that are waste or by-products, such as used cooking oil and inedible corn oil. The energy used in the production of biodiesel is lower compared to other fuels. Shipping is also a factor. Biodiesel from the Midwest is shipped by rail, which has a lower carbon intensity than shipping by truck.

“Biodiesel feedstock, production and transportation all receive lower carbon intensity values from CARB,” Slade said. “And when biodiesel is used in a vehicle, it has lower hydrocarbon, particulate matter and carbon monoxide emissions than other fuels.”

Biodiesel Market Strong in California The California market has embraced biodiesel for several reasons. • Carbon Intensity Score: Biodiesel sets the standard among liquid fuels for lower carbon intensity. • Ease of Implementation: No infrastructure or vehicle modifications are necessary with biodiesel blends. • Supply: Domestic producers can meet the demand. Ellis said the state is leading the nation in blending infrastructure and is using higher blends, which also helps obligated parties to meet their volume obligations under the federal government’s Renewable Fuel Standard (RFS) program. The average biodiesel blend in on-road taxable diesel in California was 4.89% in Q3 2015 – Q2 2016, up from 2.95% in the four quarters preceding that, according to data supplied by CARB. As a percentage change, that’s a 65.7% increase in blend level over that short period. “The largest biodiesel consumers are fleets—municipal, private and commercial,” Ellis explained. “They are using biodiesel because it is cheaper than diesel and it meets their sustainability and climate goals.” Among the recent trends, Ellis has seen: • Acceptance among end users for higher blends, including B20.

Renewable Hydrocarbon Diesel Renewable hydrocarbon diesel (RHD) is another attractive option for meeting LCFS requirements. Like biodiesel, RHD significantly cuts emissions and has high cetane. It also meets the ASTM diesel fuel spec and is a drop-in replacement for petroleum diesel. The issue with RHD has been a lack of supply to meet high demand. Biodiesel is a more widely available product with a lower average carbon intensity value. A new solution for the market is RHD and biodiesel blended fuel. Biodiesel is blended with RHD instead of traditional diesel, creating a 100% renewable product that captures the best qualities of the two fuels and lowers emissions more than either fuel by itself.

largest biodiesel “ The consumers are fleets—

municipal, private and commercial. They are using biodiesel because it is cheaper than diesel and it meets their sustainability and climate goals. Todd Ellis,

“

Renewable Energy Group

2016 LCFS Credit Generation

• Infrastructure development to provide access to higher blends. B5 – B20 is now offered at most racks. • The overall economics in California have incentivized fleets to use biodiesel, and they’re seeing significant economic value with B20 blends in addition to the environmental benefits. Source: https://www.arb.ca.gov/fuels/lcfs/lrtqsummaries.htm

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FUELS & SUPPLY

How Biodiesel Has Become the Answer to Emission-Cutting Initiatives

Biodiesel Market Projected to Grow Biodiesel and RHD Volumes

The California market will continue to present opportunities for biodiesel. CARB projections show biodiesel volumes growing 471% between 2015 and 2023, reaching 783 million gallons. In that same period, RHD volumes are projected to grow 105%, to 380 million gallons.

Source: www.arb.ca.gov/cc/scopingplan/meetings/090716/bfsmv83b.zip

“It’s not hard to figure out why biodiesel consumption will continue to increase,” said Ryan Lamberg, who has more than a decade of experience in the California biodiesel industry and serves as the Environmental and Technical Consultant for the National Biodiesel Board (NBB).

Lamberg’s market forecast includes these points:

“Biomass-based diesel solutions will remain the lowest cost, lowest carbon intensive and easiest way to meet state requirements,” Lamberg continued.

• CARB proposes even greater carbon intensity reductions by 2030. • The board may pursue a target of 50% renewable content by 2030, as mentioned in the scoping plan it released in early 2017. • Biodiesel and RHD could meet upwards of 50% of the LCFS credits by 2030.

will remain the lowest cost, lowest carbon intensive and easiest way to meet state requirements.

“

Room to Grow in California Projections completed by Lamberg show the market for biodiesel remaining strong in California. Using CARB data, he concluded that the average biodiesel blend level in California will increase to approximately 7.5% within the next few years. He also estimates that biodiesel will generate 25% of the LCFS credits.

“Biomass-based diesel solutions

Ryan Lamberg,

National Biodiesel Board

of LCFS credits in the next few years

When it comes to supplying increased demand, the U.S. biodiesel industry says it is up to the task. “Our industry is underutilized and has ample room to grow,” Lamberg noted. Ellis agreed: “The idle production and incremental gallons that can be optimized at biodiesel production plants today is close to 1 billion gallons. In addition, if the market signals are there, companies will invest in new production capacity.”

average blend in California in the next few years CFB Magazine 38

www.CommercialFuelBuyer.com

FUELS & SUPPLY

California Supply Chain

The operations of REG show how the domestic market can supply California. REG has several pathways approved by CARB, including for its Grays Harbor facility, a biorefinery in Washington with a nameplate capacity of 100 million gallons annually, and several Midwestern biorefineries. Product is shipped to California by rail, which has a lower carbon intensity than shipping by truck.

Impact Outside of California

The LCFS matters beyond the borders of the Golden State. One reason is the sheer size of the California economy. It’s an oftcited statistic that if the state were a country, it would have the sixth-highest gross domestic product (GDP) in the world. Another reason is that while “LCFS” has become shorthand for California’s program, it’s not the only place with emission-cutting regulations.

How Biodiesel Has Become the Answer to Emission-Cutting Initiatives Oregon recently implemented a low-carbon fuel standard that is similar to California’s—a 10% reduction in the carbon intensity of transportation fuels over 10 years. As in California, biodiesel has lower carbon intensity scores and is a key fuel in helping regulated parties meet their obligations. In Canada, the province of British Columbia has a low-carbon policy. Additionally, Canada is considering a national standard. “Over time, these LCFS programs will build an integrated West Coast market for lowcarbon fuels that will create greater market pull, increased confidence for investors of low-carbon alternative fuels, and synergistic implementation and enforcement programs,” CARB says on its website. “There is a distinct growth trend with respect to low-carbon policies,” explained Shelby Neal, Director of State Govern-mental Affairs at NBB. “A lot of people are tired of being dependent on fossil fuels, and they want cleaner fuels and cleaner air. Carbon policies have become a proven way of accomplishing those goals.” As Neal talks to lawmakers throughout the U.S., opinions of the California LCFS vary,

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but one thing is constant—the topic comes up frequently. “There’s definitely a sense that the LCFS will spread beyond the West Coast. Up to this point in time, the LCFS has proved to be a very effective means of decarbonizing and diversifying transportation fuels,” Neal concluded. And as the market-based approach used by California has shown, biodiesel has proved to be an effective means for regulated parties and fleets to meet their low-carbon goals. n

Renewable Energy Group, Inc. (REG) is a leading provider of cleaner, lower carbon intensity products and services. REG is an international producer of biomass-based diesel, a developer of renewable chemicals and North America’s largest producer of advanced biofuel. REG utilizes an integrated procurement, distribution and logistics network to convert natural fats, oils, greases and sugars into lower carbon intensity products. With 14 active biorefineries, a feedstock processing facility, research and development capabilities and a diverse and growing intellectual property portfolio, REG is committed to being a long-term leader in bio-based fuel and chemicals.

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Diesel Fuel & Winter Weather: Additives Keep Working in the Cold Low Temperature Operability Diesel fuel has long been known for gelling and icing of filters in cold temperatures. One method of dealing with cold temperatures (that some diesel equipment owners still follow) is the blending of #1 ULSD with #2 ULSD. This lowers the temperature at which the fuel begins to gel, but also brings with it a number of unwanted side effects. Negative effects include lower BTU (British Thermal Unit) content (which translates to reduced power and fuel economy), along with an economic penalty of increased fuel costs as the dosage of #1 ULSD goes up. Unfortunately, this practice does not address the icing that can occur when water is present. Cold flow improving and anti-icing additives in diesel fuel significantly lower the temperatures at which filter plugging and icing occur. Effective cold flow additives include chemistry to modify the size and shape of the wax crystals in diesel so that large crystals do not form. They may also utilize a wax anti-settling additive to keep the wax crystals in suspension, thus preventing wax fallout and accumulation. These additives can reduce the fuel Cold Filter Plugging Point (CFPP) by as much as 40°F or more. The fuel’s Pour Point (PP) is typically also reduced when using CFPP additives. The pour point reduction can be an even greater amount than the reduction in CFPP in many instances. Keep in mind, the performance of these chemistries is fuelspecific and may vary from beginning of season to end of season based on

Wax crystal formation in untreated diesel fuel

be employed to remove as much water as possible at all steps along the fuel distribution network. Although the current ASTM specification for diesel fuel allows 500 ppm of water in diesel fuel, the engine manufacturers prefer a drier diesel going through their HPCR fuel injection systems. This has led to an increase in use of demulsifiers in diesel additive packages (forcing the separation of water from the fuel), in addition to commonly used icing inhibitors. As the use of biodiesel blends continues to increase, it calls for an increasing need to verify that the cold flow additive being used performs equally well in biodiesel blends.

Wax crystals modified in size and shape by cold flow improvers

Wax crystals suspended by cold flow improver with wax anti-settling agent changes that occur at the point of refining and blending, as well as in the fungible diesel pool that ultimately makes its way to the diesel dispenser. With today’s high pressure common rail (HPCR) direct injection technology, water handling is critical. Best practices should CFB Magazine 41

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Even though they meet a common specification, fuels still vary widely across North America. As previously stated, the chemistries used to improve low temperature operability perform differently in different fuels. It is imperative to verify that a product will work in the fuels you use in your vehicles and equipment.

Let MCC Help You Improve Your Performance

MCC is a fuel and lube oil additive manufacturer and distributor with decades of experience in formulating and producing solutions for our fuel and lubricating oil customers. Visit www.MCChemical.com to learn more about MCC Cold Flo solutions. n

The energy component of the Standard and Poorâ&#x20AC;&#x2122;s Goldman Sachs

Commodity Index (GSCI) fell 11% during the first half of 2017, the largest decline for any commodity group in the index. Developments in available supplies unique to energy are likely to have driven the decline. Crude oil, which makes up 70% of the S&P GSCI, fell nearly 13% with refined products (24% of S&P GSCI) declining 7% and natural gas (6% of S&P GSCI) down the least. Global crude oil inventories remained flat while normal gasoline supply seasonality likely contributed to less of a decline in prices compared with crude oil and other petroleum products. Natural gas prices declined the least in the face of increasing U.S. natural gas exports and relatively flat natural gas production. Source: U.S. DOE/EIA July 7, 2017

Bottom Line:

Forces of supply and demand drive energy prices down pre-Harvey.

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industry news Fleetmatics Electronic Logging Device Solution Registers with the FMCSA After a comprehensive development and evaluation process, Fleetmatics, a Verizon Company, has registered its Fleetmatics REVEAL LogBook Electronic Logging Device (ELD) for Android solution with the Federal Motor Carrier Safety Administration (FMCSA). Commercial drivers who are currently required to maintain records of duty status (RODS) will be required to use an ELD to record hours of service (HOS) by December 18, 2017. REVEAL LogBook ELD manages drivers’ RODS, enabling customers to easily record and store HOS information, and meets all technical specifications mandated by the FMCSA. Rigorous testing and input from industry experts has greatly improved LogBook’s ease of use and helps ease the burden of transitioning to electronic logs. Fleetmatics will also continue to support customers who monitor their FMCSA

RODS and HOS regulations with the LogBook AOBRD-specific solution. Customers utilizing REVEAL LogBook applications have access to 24/7 driver support. The REVEAL LogBook ELD application includes streamlined certification flow, enhanced sub-status selections and improved Driver Vehicle Inspection Report (DVIR) functionality. A redesigned user interface simplifies the transition to ELD for both drivers and the back office. The app also provides flexibility to existing customers, enabling the continued use of their automatic onboard recording device (AOBRD) solution or the ability to upgrade to the new app on their own schedule, without any additional hardware installation. n

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Kenworth Introduces T680 Driver Academy, 20 Short Videos Highlight T680 Vehicle Operation Kenworth has introduced its T680 Driver Academy Training video series for the onhighway flagship Kenworth T680. “We produced 20 short, instructional videos to help new and current Kenworth T680 drivers learn more about their T680s,” said Kurt Swihart, Kenworth marketing director. “For example, one short segment shows where all the fill spots are under the hood and how to replace a headlight bulb. Another segment details all the in-cab switches and identifies the icons, while another discusses the fuse box. And, of course, we have a video on the new PACCAR Transmission, a 12-speed automated transmission for the T680 in line-haul applications.” According to Swihart, the videos can also be used in new truck orientations at fleets.

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CFB INDUSTRY NEWS “When Kenworth T680s enter into a fleet’s operations, the Driver Academy instructional videos can provide a nice overview of the truck’s features and helpful information for simple servicing while on the road,” he said. “The videos provide a nice head start for the driver in operating the T680 and helps visually explain many of the truck’s key functions.” The video series is currently available on the Kenworth Truck Co. YouTube channel (www.youtube.com/user/KenworthTruck Co). The videos will be coming soon to the popular Kenworth Essentials App, which can be downloaded to smartphones and tablets from the Apple Store or Google Play Store by searching on “Kenworth.” n

SPATCO DEF Wins Equipment Innovation Honor at Inaugural DEF Awards 2017 SPATCO DEF Dispensing Solutions announced that it was presented with the DEF Equipment Innovation Award at the

DEF Awards during a ceremony and dinner on September 27, 2017. The event was held in San Antonio, Texas, in conjunction with the 2017 DEF Forum USA presented by Integer Research. Integer Research launched the awards this year to recognize excellence throughout North America’s DEF supply chain. The DEF Equipment Innovation category recognizes organizations within the DEF industry whose equipment or technology has contributed to the growth and development of the industry. Nominees must currently design and manufacture innovative new DEF equipment and/or technology, have made significant improvements to existing equipment and/or technology and demonstrate their products have the ability to resolve unique industry challenges. In late 2007, SPATCO Energy Solutions began engineering and producing a line of Diesel Exhaust Fluid (DEF) dispensing and storage systems under the brand SPATCO DEF in response to the United States Environmental Protection Agency’s Tier 2 emission standards that required

new light duty diesel vehicles and trucks to meet an average NOx emission level of 0.07 grams per mile. The SCR technology that nearly all diesel engine manufacturers chose at that time, and are currently using, require diesel exhaust fluid that is added to the exhaust stream to promote 90 percent NOx conversion efficiency. SPATCO DEF’s custom-designed products are manufactured in the USA and provide the highest quality and most durable products in the industry. Both retail and commercial DEF users can safely store and dispense their fluid from SPATCO DEF equipment without the risk of contamination. SPATCO Energy Solutions, a Blue Ridge Industries company, is a single-source supplier of innovative liquid handling equipment and service for petroleum, diesel exhaust fluid, industrial and natural gas. SPATCO has served the industry for nearly 90 years and is a channel partner and nationwide service and installation provider for Galileo Technologies North America natural gas conversion equipment. n

Blackmer® Introduces SX1B-DEF Series Sliding Vane Pump for Use in DEF FleetRefueling and Tote Applications Blackmer®, part of PSG®, a Dover company, and a global leader in positive displacement, regenerative turbine and centrifugal pump, and reciprocating compressor technologies, is pleased to announce the introduction and availability of its SX1B-DEF Series Sliding Vane Pump. The SX1B-DEF pumps have been designed to meet the strict handling requirements of Diesel Exhaust Fluid (DEF). All of the pump’s materials are either DEF-approved or have been tested to ensure there is no fluid contamination or leeching into the DEF fluid. The SX1B-DEF model is part of Blackmer’s DEF-pump family, joining the STX2-DEF, STX1220-DEF and STX3-DEF models to give users flow-rate options ranging from 10 gpm to 250 gpm (38 to 946 L/min). The SX1B-DEF model has a small, compact

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CFB INDUSTRY NEWS design that makes it ideal for truckmounting and for use in fleet-refueling or tote applications. What further differentiates the SX1B-DEF model from competitive models is a choice of 12-volt and 110-volt motor options. The 110-volt version is available with a 50- and 60-Hz dual-rated motor. One unique feature of the SX1B-DEF pump is the incorporation of a 316-stainless-steel motor shaft as the pump shaft. The Zytel® plastic rotor is installed on the motor shaft and locked into place with a grub screw. Other features of the SX1B-DEF pump are a C-face pump mounting, motor-speed capabilities up to 1,750 rpm, easily maintained and replaceable Duravanes, commercial mechanical seal and 1" NPT and 1" BSPP tapped-port options. n

Scully Signal Releases Scully Connect ™ in North America and UK Scully Signal Company has introduced Scully Connect™ to the North American and UK markets with a well-received response from customers. The patented Scully Connect™ Overfill Prevention System includes many time saving and field reliability features that bring a new standard of quality to the industry.

the safety and reliability that Scully systems are known for. Scully Connect™ is that solution.” n

XL Hybrids Introduces the First Ever Hybrid Electric Upfit for Ford F-250 Pickups and Chassis for Commercial Fleets XL Hybrids, Inc., a leader in connected fleet electrification solutions for commercial and municipal fleets, announced that the company will begin production on the XL3® Hybrid Electric Drive System for Model Year 2018 Ford Super Duty® F-250 pickups in first quarter 2018. XL Hybrids has adapted its XL3 technology for Ford F-250 trucks based on demand from fleet customers who are seeking even better fuel efficiency from Ford’s popular three-quarter-ton work trucks. This will be the first time that Ford F-250 trucks can be ordered by fleet customers with hybrid-

The Scully Connect™ Overfill Prevention System combines innovative technology with proven sensing reliability. It allows for quick, easy, tool-less and error-free installation. Featuring prewired sensors and cables, it will save hours of installation and replacement time, prevent wiring mistakes, disable-sensor-bypassing and allow for trouble-free connections. The sensor and cables have been extensively laboratory and field tested for over two years to withstand extreme environmental conditions and ensure the dependability that Scully products have become known for. “We took the time to really listen to our customers and engineered a system from the ground up to save them time and money,” says Bob McGonagle, Director of Sales and Service at Scully. “Fleets have been asking for a system that is easy to install and replace and also incorporates CFB Magazine 47 www.CommercialFuelBuyer.com

electric drive technology. Now fleets can enjoy an up to 25-percent increase in miles per gallon—and accompanying reductions in CO2 emissions—on trucks used for rugged towing, hauling capacity and utility applications. Fleet customer orders to be announced. The XL3 system will be the first offered as a ship-through upfit on Model Year 2018 F250 pickups. XL3 will be upfit on the Ford Super Duty 6.2-liter V8 gasoline engine compatible with a range of wheelbases, cab and bed configurations in both 4x2 and 4x4 options. As with each XL3 installation, all components are installed under the vehicle, allowing the pickup bed’s full capacity. Installation of the XL3 system can be completed in just hours on F-250 pickup trucks as a ship-through upfit. The XL3 technology leaves the original equipment manufacturer’s (OEM) engine, transmission, fuel system and exhaust system completely intact. Fleets maintain the complete OEM warranty and get a three-year, 75,000-mile warranty from XL Hybrids on the XL3 powertrain. The XL3 system requires no special maintenance,

CFB INDUSTRY NEWS charging infrastructure or driver training. XL Hybrids is a qualified participant as both a technology provider and an installer in Ford’s Electrification Qualified Vehicle Modifier (eQVM) program. n

Runzheimer Introduces Equo Fuel to Simplify, Optimize and Customize Fuel Expenses for True Business Use Runzheimer, a leading business vehicle technology and solutions provider, announced that it has launched a new fuel expense solution called Equo Fuel. This is a fair and accurate mileage-based alternative to traditional fuel cards. The new solution harnesses Runzheimer’s extensive data assets and uses local fuel prices, combined with fleet vehicle miles per gallon (MPG) information, to calculate a geographically accurate cents-per-mile reimbursement rate for fuel expenses.

“By connecting this new solution to actual business miles, our clients will be able to reimburse their employees for the fuel actually used for business—without the administrative hassle of dealing with fuel cards,” said Donna Koppensteiner, Senior Vice President of Business Development and Marketing at Runzheimer. Runzheimer’s mobile app, Equo, automatically captures miles driven and tags trips as “business” or “personal” based on the employee’s work schedule. The recorded business mileage is then reimbursed based on fuel costs per mile, while taking into consideration the category of fleet vehicle driven, local fuel costs, and whether the employee drives in city traffic, rural areas or mountainous roads. Rates are updated daily to provide pinpoint accuracy of fuel fluctuations. The use of Equo Fuel will allow organizations to realize cost savings of 20 percent, while eliminating the administrative costs associated with issuing new cards for new hires and replacing lost cards. n

Ryder Partners with Aperia to Introduce Automatic Tire Inflation Systems Ryder System, Inc., a leader in commercial fleet management, dedicated transportation and supply chain solutions, announced today that the company is expanding its commitment to innovative safety technologies. Ryder has signed an exclusive partnership with Aperia Technologies, the leading supplier of tire inflation solutions for tractors and trailers. The Halo Tire Inflator solution will become the standard specification for Ryder’s heavy duty commercial rental fleet as the company responds to increasing demand from customers looking to improve fleet performance, safety and driver job satisfaction. Additionally, Halo will become Ryder’s preferred tire inflation solution for Ryder ChoiceLease customers and bundled offerings will also be available to Ryder SelectCare customers. This latest Ryder offering signifies Aperia’s first exclusive partnership with a full-service leasing company for a bundled Halo purchase and installation. Tire under-inflation remains an industry hazard for the eight million tractor/trailers on U.S. roadways. Ryder fleets, equipped with Halo, will maximize tire life and reduce fuel consumption based on automatic tire pressure management. Unlike traditional tire inflation systems, Halo is self-powered, self-contained and versatile, making for turnkey integration with the Company’s nationwide network of state-of-the-art service facilities. n

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What Does That Mean

Test Your Acumen The list below represents acronyms used in this issue of Commercial Fuel Buyer.

Per Barrel

Electric Vehicle

NOx

Nitrogen Oxide

API

American Petroleum Institute

FFV

Flex-Fuel Vehicle

OEM

ASTM

American Society for Testing and Materials

Gal

Gallon

Original Equipment Manufacturer

GDP

Gross Domestic Product

OPEC

BTU

British Thermal Unit

GHG

Greenhouse Gas

Organization of the Petroleum Exporting Countries

CAFE

Corporate Average Fuel Economy

HDV

Heavy-Duty Vehicle

Pour Point

CAGR

Compound Annual Growth Rate

HFO

Heavy Fuel Oil

ppm

Parts Per Million Renewable Fuel Standard

CARB

California Air Resources Board

HPCR

High Pressure Common Rail

RFS

CFPP

Cold Filter Plugging Point

LCFS

Low Carbon Fuel Standard

RHD

CNG

Compressed Natural Gas

LDV

Light-Duty Vehicle

Renewable Hydrocarbon Diesel

CO2

Carbon Dioxide

MDV

Medium-Duty Vehicle

RIN

EIA

U.S. Energy Information Administration

NACS

National Association of

Renewable Identification Number

SOx

Sulfur Oxide

U.S. Environmental Protection Agency

NBB

National Biodiesel Board

ULSD

Ultra-Low-Sulfur Diesel

NHTSA

National Highway Traffic Safety Administration

ULSFO

Ultra-Low Sulfur Fuel Oil

UST

Underground Storage Tank

EPA EU

European Union

Convenience Stores

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ADVERTISER’S INDEX

OUR ADVERTISERS Company

Page

Advanced Fuel Solutions

Biobor

Cummins & White

Diesel Direct

FPPF

Inside Front Cover

Innospec

Inside Back Cover

Keystone

Liquid Controls

Lomosoft

MidContinental Chemical Company

40 – 41

OmegaFlex

OPW

RDM

Back Cover

Roth

SE Petro Expo

Tanknology

Valvtect

36 – 37

Xerxes

18 – 19

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