Fuel Marketer News Magazine Winter 2017 by Fuels Market News

Winter Issue 2017

Your Source for News and Information

President Trumpâ&#x20AC;&#x2122;s

Energy Policy Managing Aging USTs Additives ROUNDUP

OPEC

Makes a Deal

Self-Driving Vehicles:

Fueling Revolution or Evolution?

S U P P L Y, M A R K E T I N G , D I S T R I B U T I O N , T R A N S P O R T A T I O N & L O G I S T I C S

PUBLISHER’S NOTE

EDITORIAL STAFF Publisher Gary Bevers GBevers@EpicNewsData.com Editorial Director Keith Reid KReid@EpicNewsData.com Managing Editor Kathy Bevers KBevers@EpicNewsData.com

A note from

Gary Bevers, Group Publisher Oh, what a year—or may I say four years—this

Though the upstream oil and gas

portends to be. If you are feeling bullish on the

achievement of energy independence

prospects of the oil and gas industry under the

for the first time in decades may not

Trump presidency, you have good reason to be.

automatically translate to lower fuel

Nancy Yamaguchi, Ph.D. NYamaguchi@EpicNewsData.com

Trump campaigned and then came into office with

prices, the new jobs and higher

an overall pro-business stance that carries over to

employment always bring renewed

Copy Editor/Proofreader Kyndall P. Krist KKrist@EpicNewsData.com

be even more bullish when he begins to talk about

consumer optimism and more spending

America’s energy sector.

at the retail level. Furthermore, U.S.-

Industry Analysts/Editors Frank M. Hunter FHunter@EpicNewsData.com

Columnists and Contributors Greg Cushard Vladimir Collak Shane Dyer John Eichberger Doug Haugh Corey Henriksen Maura Keller Alan H. Levine Joseph H. Petrowski W. Brian Reynolds Fred M. Whitaker Editorial Board Paul Reuter, Editor at Large Ed Burke Lisa Calhoun George A. Overstreet, Jr. Joseph H. Petrowski Art Director Jeff Beene JBeene@EpicNewsData.com Circulation Success Manager Don M. Hester, Jr. DHester@EpicNewsData.com Digital Products Business Manager Joe A. Martinez JMartinez@EpicNewsData.com Advertising Sales Greg Mosho c 732.610.5735 GMosho@EpicNewsData.com Mailing Address 15201 Mason Road, Suite 1000-288 Cypress, TX 77433 www.FuelMarketerNews.com

I don’t believe we have ever seen such an openly pro-energy president since Dwight D. Eisenhower built the U.S. Interstate Highway System so your grandparents could “See the USA in Your Chevrolet” and consume billions of gallons of

stable refining margins and fuel prices overall, as we will be less dependent on OPEC and oil produced by less stable third-world countries.

gasoline along the way. To those of you too young

For more on Trump’s energy policy, please

to remember the ’50s and ’60s, this started the

read Keith Reid’s editorial on page 6, or

golden age of the automobile, refining and the

Dr. Nancy Yamaguchi’s excellent analysis

post-War World II economic boom that carried our

of OPEC on page 18 in this print issue of

grandparents well into their golden years.

Fuel Marketer News. In every issue, our

Trump’s administration clearly ushers in a new type of “climate change”—not just one of pro-energy, but pro-American energy. This change will finally lead us to achieve the energy independence goals put in place in the mid-1970s under President Carter. This led to the creation of the Department of Energy in 1977, which will now ironically be headed by Rick Perry, a former candidate for president who infamously called for its elimination. After years of lukewarm government support, we are already seeing movement on several stalled oil and gas projects as President Trump signed executive orders to revive both the Keystone XL and Dakota Access Pipelines. Trump further directed the Army Corps of Engineers to review and approve the projects in an expedited manner. Many skeptics said this could not be rapidly moved forward, but within a week the Corps granted a critical right-of-way that had been

based crude production does mean more

energy-expert columnists deliver objective analyses of the facts, changes and trends in our industry and what that means to you as a fuel marketer. Whether traditional fossil fuels (gasoline and diesel) or alternative fuels (ethanol, isobutanol, biodiesel, CNG, LPG, hydrogen and electric), we strive to thoroughly and objectively cover the information that matters to your business. For 2017, we again promise to work hard to make sure you have every reason to make us your go-to news site for motor fuels marketing, retailing and supply. Register for our e-newsletter at www.fuelmarketernews.com to get in the loop as new content gets posted. Registration is free, and the process is short and easy.

stalled, permits were refiled and construction

So, here’s looking forward to the next

was ready to go. So, let the jobs begin!

four years…

TABLE OF CONTENTS

PUBLISHER’S NOTE

FUELS & SUPPLY

Energy Policy Under President Trump by Keith Reid

Refining: The Good, the Bad and the In-Between by Joe Petrowski

This Wave of Consolidation Is Different by Doug Haugh

OPEC Makes a Deal, Part One by Dr. Nancy Yamaguchi

RETAIL OPERATIONS

Changes in EMV Adoption by Maura Keller

Self-Driving Vehicles: Fueling Revolution or Evolution? by Joe O’Brien

Managing Aging USTs with Facts and Confidence by Brian Derge

FuelCall Simplifies Refueling for Drivers with Disabilities by Kyndall Krist

WHOLESALE & FLEET OPERATIONS

Doing More with Automated Solutions by Karen Madden, Cathy Duncan and Brian Milne

CO2 versus NOx at the Integer Emissions Summit by Keith Reid

DEF and Mobile Fueling by Maura Keller

When Temperatures Drop, Keep Your Confidence High with Biodiesel by Gregg Hennigan

BUSINESS OPERATIONS

Cut Out Cross-Drops: Keep Your Labeling Up to Date by W. Brian Reynolds

Toxic Leadership by Ann Pitts

Phishing: The Biggest Cyber Threat Today by Bill Boeck

77 PRODUCT ROUNDUP: ADDITIVES

80 INDUSTRY NEWS Regulatory Updates & Vendor News

ADVERTISER’S INDEX

Energy Policy Under President Trump

OPEC Makes a Deal

Part One

Changes in

EMV

Adoption

DEF

and Mobile Fueling

58 Cut Out Cross-Drops

Keep Your Labeling Up to Date

ENERGY POLICY

Under President Trump It’s official—Donald Trump is the 45th President of the

United States. After eight years of an extraordinarily aggressive energy policy, which devalued fossil fuels in pursuit of aggressive climate change goals, and a Clinton administration that would’ve likely continued on the same path, the Trump administration almost certainly represents a significant change in direction.

by Keith Reid

This article originally ran after the election, on November 10. At the current time of writing, the swearing-in ceremony is some weeks off, so providing a definitive look at energy policy under the Trump administration is still highly speculative. However, we can look to one of his recent energy-related speeches to get a feeling for where the Trump administration will be heading with its energy policy, along with his initial cabinet picks in the key areas that impact energy policy.

On September 13, Donald Trump was the keynote speaker at the 2016 Shale Insight Conference. In addition to covering his general, business-friendly economic incentives—such as a significant reduction in excessive regulation and reducing the corporate tax rate from 35% to 15%—he detailed some of the energyspecific initiatives he had in mind. Trump sees the energy sector as a central component to an American economic resurgence, and sees it playing out to all sectors of society. FMNMagazine

fuelmarketernews.com

As he stated in the speech, “America is living on a treasure trove of untapped energy, some $50 trillion in shale energy, oil reserves and natural gas on federal lands, in addition to hundreds of years of coal energy reserves. It’s all upside for this country—more jobs, more revenues, more wealth, higher wages and lower energy prices. I’m going to lift the restrictions on American energy and allow this wealth to pour into our communities.”

FUELS & SUPPLY POLICY BRIEF He remarked that, according to the Institute for Energy Research (IER), lifting the restrictions on American energy would increase gross domestic product (GDP) by more than $100 billion each year, while also adding over 500,000 new jobs annually. Trump further anticipates a wage increase of more than $30 billion over the next seven years, an increase in state and local tax revenues by almost $6 trillion over 40 years and an increase in total economic activity by more than $20 trillion over the next 40 years. Trump noted that the Obama administration had stonewalled various pipeline projects, including the Keystone XL, with notable negative financial impacts for American workers. In addition, oil and gas production permitting has been stifled. He promised to address both areas by being supportive instead of oppositional. Where fossil fuel projects are concerned, Trump cited the Wall Street Journal reporting that more than 12 fossil fuel projects worth about $33 billion have been either rejected by regulators or withdrawn by developers, with billions more tied up in projects still in regulatory limbo. He promised this will not be the case in his administration. Trump also noted that the Democratic Party platform called for a carbon tax. “That’s just political speak for a massive new tax on coal and shale production—a tax on American consumers—and it’s very unfair to our country, and it makes it very unfair and very uncompetitive to do business with other countries,” he said.

“ ”

Trump sees the energy sector as a central component to an American economic resurgence, and sees it playing out to all sectors of society.

“Every energy dollar that isn’t harvested here in America is harvested instead in a foreign country,” and often countries that are hostile to U.S. interests. Trump stated that this is not even environmentally sound, as many of these countries lack the environmental standards we currently possess today for energy production. In what should be comforting news to biofuel supporters, Trump supports an “all of the above” energy policy. “Our energy policy will make full use of our domestic energy sources, including traditional and renewable energy sources—we want everything,” he said. In addition, he promised to eliminate the U.S. Environmental Protection Agency’s (EPA’s) Clean Water Rule, which many see as an extraordinary power grab by EPA to gain regulatory control over vast areas of the country that touch even a marginal water feature. Those who have strongly supported climate change initiatives for both ideological and financial reasons are understandably concerned about the

ramifications of Donald Trump’s presidency. He has been skeptical of the science and ideology behind the climate change movement, as well as critical of the proposed solutions and their impact on America compared to other countries. Where U.S. climate change policy and regulation are concerned, Trump represents a potential sea of change in policy. In the speech, Trump promised to eliminate the $5 trillion Obama Climate Action Plan and the Clean Power Plan. “These unilateral plans will increase our monthly electric bills by double digits without any measurable improvement in climate whatsoever—very unfair to our people and our workers,” he said. “I will refocus the EPA on its core mission of ensuring clean air and clean, safe drinking water for all Americans. That’s what we want. I believe firmly in conserving our wonderful natural resources and beautiful natural habitats. My environmental agenda will be guided by true specialists and conservation, not those with radical political agendas that are putting our country behind the eight ball.” One could easily imagine a similar reversal with the range of regulation, such as the Corporate Average Fuel Economy (CAFE) mileage standards or the developing ozone rule, which impact motor fuels. There has been quite a show at Trump Towers since the election as Trump interviewed numerous candidates for a range of cabinet and agency leadership positions. At the

time of writing, he has made his selections in key areas that impact energy policy—EPA Administrator, Secretary of Energy and Secretary of the Interior. So far, Trump’s agency and cabinet nominees more than support his previous statements regarding U.S. energy policy. While these still have to be approved, Senate Minority Leader Harry Reid’s use of the “nuclear option” to eliminate filibusters on such appointments while Majority Leader during the Obama administration should lead to successful appointments, as long as Trump has Republican support.

EPA Administrator

To many on the Right, the EPA has been out of control during the past eight years, using its regulatory authority to pass an aggressive Obama environmental policy that would not make it through the legislative branch. The Clean Power Plan, ozone regulations, fracking-related methane regulations and a range of other, more granular initiatives have more than overcome the failure to pass an aggressive cap and trade proposal or similar effort in Congress. The response from the impacted parties has been a series of lawsuits aimed at turning back, or at least mitigating, the most extreme impact of these regulations. Trump selected Oklahoma Attorney General Scott Pruitt to head the agency. Oklahoma is a primary energy producing state that has been in the crosshairs of much of the recent EPA policy, and Pruitt has led the legal pushback against the agency. He will certainly be thoroughly familiar with the most controversial EPA policies.

“ ”

Energy Policy Under President Trump

So far, Trump’s agency and cabinet nominees more than support his previous statements regarding U.S. energy policy. The environmental Left is not nearly as pleased. The New York Times, in a piece covering Pruitt’s selection, quoted Ken Cook, Co-Founder and President of the Environmental Working Group (EWG), a Washington, D.C. think tank. “It’s a safe assumption that Pruitt could be the most hostile EPA Administrator toward clean air and safe drinking water in history,” Cook said.

Oklahoma Attorney General, Scott Pruitt

FUELS & SUPPLY POLICY BRIEF

The press release from Trump that announced Pruitt’s selection stated, “For too long, the Environmental Protection Agency has spent taxpayer dollars on an out-of-control anti-energy agenda that has destroyed millions of jobs, while also undermining our incredible farmers and many other businesses and industries at every turn. “As my EPA Administrator, Scott Pruitt, the highly respected Attorney General from the state of Oklahoma, will reverse this trend and restore the EPA’s essential mission of keeping our air and our water clean and safe. My administration strongly believes in environmental protection, and Scott Pruitt will be a powerful advocate for that mission while promoting jobs, safety and opportunity.”

FMNMagazine

fuelmarketernews.com

Of course, the response from the Right is far more supportive. American Petroleum Institute (API) President and CEO Jack Gerard stated, “Mr. Pruitt’s work as Oklahoma’s Attorney General shows that he understands how important America’s oil and natural gas industry is to our nation and to our economy. Under the [Obama] administration, our industry is facing a barrage of 145 regulations that would unnecessarily destroy jobs and add costs to consumers. “Pruitt has a track record of dispelling the false idea that energy development and environmental stewardship cannot go hand in hand. Moving forward, we must have smart, common sense regulations that protect the environment and do not raise prices on Americans.”

Secretary of Energy

Former Texas Governor, Rick Perry

The selection of former Texas Governor Rick Perry to be Secretary of Energy might be seen as instructive, given that Perry said he wanted to abolish the Department of Energy (DOE) during his 2012 campaign for president.

He has apparently softened on that position, stating after his selection by Trump, “I know American energy is critical to our economy and our security. I look forward to engaging in a conversation about the development, stewardship and regulation of our energy resources, safeguarding our nuclear arsenal and promoting an American energy policy that creates jobs and puts America first.” A core focus of the department is the nation’s nuclear arsenal, with some broad input into strategic energy initiatives. Perry is generally considered to have an “all of the above” energy policy, similar to that expressed by Trump, and is certainly a proponent of using natural gas to provide a cleaner alternative among fossil fuels. Texas has also been heavily involved with wind and solar power, though there is an expectation among conservatives that those will be less of a focus compared to more traditional energy sources.

Energy Policy Under President Trump Although the pushback from the Left has been significantly less intense than that focused on Pruitt, it has been present nonetheless. “Perry’s clear financial interests in major energy projects like the Dakota Access Pipeline make it obvious that there’s no way he could manage the agency’s activities impartially. His ideological obsession with promoting dirty fossil fuels and ignoring the climate crisis means he is just as unfit for this position as the other climate deniers Trump is promoting for key posts,” said Sierra Club Executive Director Michael Brune.

Secretary of the Interior The U.S. Department of the Interior (DOI) oversees federal lands that can have a significant impact on the extraction, development and transport of natural energy resources. The Obama administration has been aggressive about limiting energy development on public lands. Trump nominated Montana Representative Ryan Zinke to be Secretary of the Interior. Zinke is a former Navy SEAL who is an outdoorsman in his private life, yet supports a strong domestic energy policy in his public life. When former U.S. Secretary of the Interior Sally Jewell and the Bureau of Land Management (BLM), in furtherance of the Obama Climate Action Plan, issued their final regulatory rule regarding methane gas emissions and flares, Zinke issued the following statement. “Clean air and clean water are absolute top priorities when we talk about responsible energy development, however, the final rule issued by the Obama administration does nothing to further protect our resources. Instead, the BLM has issued a duplicative and unnecessary rule against responsible oil and gas development in Montana and on sovereign tribal lands. FMNMagazine

fuelmarketernews.com

Montana Representative Ryan Zinke

FUELS & SUPPLY POLICY BRIEF

“This rule is a stark reminder that we need to invest in infrastructure projects, like the Keystone Pipeline, so we don’t need to flare excess gas,” Zinke continued. “Furthermore, new technology in oil and gas development has led to incredible reductions in emissions over the years. I trust Montana’s energy workers to continue their good work and technological breakthroughs more than I trust unelected bureaucrats.” Naturally, there is significant pushback against Zinke from the environmental Left. NRDC President Rhea Suh stated, “Without a doubt, Representative Zinke adds another fossil fuel champ to Trump’s propolluter cabinet. While Zinke has opposed selling off our public lands, his record falls way short of being able to meet the full mission of the Interior Department. “All told, Trump’s cabinet represents an unprecedented takeover of our government by special interests,” Suh added to her statement. That’s one way to look at it. An alternative viewpoint is that the Trump administration will be a significant reversal of the dominant role environmental special interests played during the Obama administration. n

at fuelmarketernews.com

REFINING:

The Good, the Bad and the In-Between The U.S. petroleum industry was once dominated by major integrated

refiners, and integration made sense in the creation of a natural hedge among production, refining and distribution. Over the last 40 years, integrated oil has been disintegrating through the divesting of retail and wholesale businesses driven by investment banks, U.S. tax regulations and the belief that the skills necessary for exploration, production and refining did not transfer to real estate, construction, retail and food service.

by Joe Petrowski

FMNMagazine

fuelmarketernews.com

FUELS & SUPPLY

But now, major refiners, importers and producers find themselves exposed to renewable obligations forcing them to purchase renewable identification numbers (RINs), adding to their costs. But these obligations are not affecting all refiners equally. Those companies that still have significant downstream retail, branded supply or wholesale businesses are fairly balanced and are not being greatly, adversely affected. With stock prices as of November 27, 2016, they are:

The “Good” $82

ExxonMobil

$107

CHEVRON VALERO

$65

$35

MARATHON

$48

CONOCO PHILLIPS

$46

SUNOCO

$22

SHELL

$44

CITGO

PRIVATE

For the bad, the imperative is simple—build or acquire a retail and/or wholesale distribution company, or lobby for renewable obligation changes away from the petroleum refiners and importers and toward the “rack sellers” at the terminal level. The U.S. Environmental Protection Agency (EPA) recently considered moving the point of obligation, but on November 10 expressed an intent to deny such a move (though it is accepting final comments). n

READ MORE at fuelmarketernews.com

The “Bad” HUSKY

$11

HOLLY

$28

WESTERN REFINING

$37

DELEK

$25

PBF

$25

PHILADELPHIA ENERGY

PRIVATE

The “In-Between” $86

TESORO CENEX

CO-OP

FLINT HILLS RESOURCES

PRIVATE

NORTHERN TIER ENERGY

PRIVATE

FMNMagazine

fuelmarketernews.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 of 2008, he was named CEO of the now combined Gulf Oil and Cumberland Farms, whose annual revenues exceed $11 billion and that now operates in 27 states. In September 2013, Petrowski stepped down as CEO of The Cumberland Gulf Group. He is now Managing Director of Mercantor Partners, a private equity firm investing in convenience and energy distribution. He is a member of several boards of directors, including Gulf, GreenPrint, Yesway and South Jersey Industries.

by Doug Haugh

This Wave of Consolidation Is Different The continued consolidation across the

petroleum marketing industry is certainly nothing new. When I joined the industry with Exxon some 22 years ago, there were over 14,000 distributors and marketers in the industry. Despite that large number of distributors, one of my earliest jobs was to go find new distributors for Exxon and to sign them up to market and distribute our brands in new markets. As crazy as it sounds today, we were still creating new distributors, even in the face of thousands that were already in business.

FMNMagazine

fuelmarketernews.com

â&#x20AC;&#x153;â&#x20AC;?

Today, not only are there far fewer major refiners who need distributors, but those that do have been proactively reducing the number of distributors they use to move their products.

“”

FUELS & SUPPLY

The growth of these nationally oriented consolidation efforts presents a different challenge to the family-owned businesses who have always made up the vast majority of companies in the distribution and marketing sector of our industry.

We had a good reason for that: Competition. Competition that was much fiercer than what we see today. Many more refiners were fighting for distributors who could secure a local base of customers in their town, which were important outlets of ratable sales. Exxon was competing with Mobil, Conoco was competing with Phillips, Chevron was competing with Texaco and Shell was— well, you get my point.

This Wave of Consolidation Is Different

competing demand for dedicated distribution. The independents seem content to trade out much of their output at the refinery gate and sell the rest on an unbranded basis to hypermarkets and large wholesalers. While reported numbers vary, my estimates equate to there being about 3,500 distributors left, meaning we have been losing about one distributor per day for the past 22 years. Think about that— one every day. The majority of these deals have involved one local player buying or merging with another local player across town or across a part of their state. It was, in a word, “local.” What we are seeing now is, in a word, “national.” As we look in every sector of the petroleum marketing industry, we see a trend toward national consolidation. In retail, we have the large strategic buyers like Couche-Tard and 7-Eleven constantly buying in nearly every region of the country. In lubricants, we have large public companies like Brenntag working to build a national lubricants platform to complement their national chemicals franchise. They are competing for lubricants deals with private equitybacked consolidators like RelaDyne and PetroChoice, who are progressing beyond the East and Midwest into much broader geographies. None of these players are national yet, but their intent is clear and their pace is aggressive.

Today, not only are there far fewer major refiners who need distributors, but those that do have been proactively reducing the number of distributors they use to move their products. In addition, many independent refiners, who for the most part are running assets that were divested from major oil, have not created new

quarter, “We continue the build out of our national commercial and industrial platform.” The growth of these nationally oriented consolidation efforts presents a different challenge to the familyowned businesses who have always made up the vast majority of companies in the distribution and marketing sector of our industry. Having worked personally with the owners and extended management of these family-owned enterprises for decades, it has been impressive to see many who have done very well through the past wave of consolidation.

“”

The systems, management organization and operational capabilities needed to run dozens of facilities scattered across several states are distinctly different than those needed to run a large regional operation where most everyone still knows each other.

The commercial side of the fuels business is rapidly changing along with retail gasoline and lubricants. The mobile fueling niche of the diesel business is growing overall, but is increasingly dominated by super-regional players.

Those who could manage the generational transitions and continued to invest in their businesses were presented with growing opportunities as other families exited the business. These family enterprises and the second generation of leaders who guided them have thrived with larger, more efficient operations, better buying power and a more diverse market that was less susceptible to the downturn of one sector or one town.

Quick Fuel, Diesel Direct and On-Site Fueling Services all cover between 30 – 40 cities and reach over a dozen states each. Last but not least, in the commercial fueling sector, we have perhaps the biggest consolidator of them all—World Fuel Services (WFS). To quote WFS’s earnings call transcript from last

Many of these companies that moved to buy out their cross-town rivals found they were much larger than the other local competitors who remained. They were more attractive to major oil companies who wanted fewer distributors to manage. They continued to grow through both

FMNMagazine

fuelmarketernews.com

FUELS & SUPPLY

This Wave of Consolidation Is Different

Douglas H. Haugh Doug is currently President and Chief Strategy Officer of Mansfield Energy. He is the driving force behind Mansfieldâ&#x20AC;&#x2122;s corporate strategy, acquisitions and partnerships. His strategic and technology-driven focus allows the organization to develop future programs and systems, while maintaining high-level execution for the companyâ&#x20AC;&#x2122;s customers. Haugh is a frequent speaker on energy, supply chain technology and entrepreneurship. He also blogs on energy issues at thinkingonenergy.com. The opinions expressed there (and here) are his, and not those of Mansfield.

acquisitions activity and more sophisticated organic sales strategies in an industry that had started to shrink overall. Now these successful regional companies face a rapidly changing landscape, and in talking with many of the largest and most successful players, they are recognizing that this time is different. Buying that next competitor means digesting and financing a much larger deal. The systems, management organization and operational capabilities needed to run dozens of facilities scattered across several states are distinctly different than those needed to run a large regional operation where most everyone still knows each other. The challenge for those companies who remain is not a linear one of simply taking the next step, but a geometric one of taking the next leap. You donâ&#x20AC;&#x2122;t often fall to your death taking it one step at a time, but not all leaps across the chasm are successful. I am excited for the companies and families that take the leap despite the challenges. There are many more generations of opportunity available in this industry. The risk is greater, but so is the reward. n

FMNMagazine

fuelmarketernews.com

by Dr. Nancy Yamaguchi

OPEC Makes a Deal Part One Editorâ&#x20AC;&#x2122;s Note: This article was written in early December 2016. New developments regarding the OPEC deal and production cuts will be included in Part Two of this article in the Spring 2017 issue of Fuel Marketer News.

Introduction In early 2016, many market analysts, financial institutions and government agencies were basing their mid-term forecasts with $50* per barrel (/b) crude oil prices built in by the end of the year. The market was moving toward a better balance of supply and demand. By summertime, West Texas Intermediate (WTI) crude prices had already touched the $50/b level, but oil prices began to ebb once again. Supply continued to expand beyond demand, and surplus oil was flowing into stockpiles around the world. With the presence of such a massive amount of oil in inventory in August, WTI prices were teetering on the brink of falling below $40/b. As a cartel, OPEC has been struggling to retain unity and credibility. Oil exporters have been enduring low oil prices ever since Saudi Arabia stepped away from its role as swing producer and began to increase its crude production to recapture lost market share. Spot prices for European Brent crude were approximately $110/b in December 2014, but one year later, Brent spot prices had fallen to $62/b. The price war continued, and in December 2015, Brent prices had fallen to $38/b. In 2016, OPEC and other producer countries began to face budgetary problems and started to try to work together to stabilize oil prices.

*All monetary references are in U.S. dollars

“”

FUELS & SUPPLY

As a cartel, OPEC has been struggling to retain unity and credibility. Oil exporters have been enduring low oil prices ever since Saudi Arabia stepped away from its role as swing producer and began to increase its crude production to recapture lost market share.

Courtesy of Reuters

In September 2016, OPEC and select non-OPEC oil producing countries met in Algiers, Algeria, to discuss possible cooperation to stabilize oil prices. The very act of holding the discussions caused prices to rise, though there was widespread skepticism about OPEC’s ability to work together as a group.

The November 30, 2016, OPEC meeting was looming, however, and no official commitments had been made. A number of OPEC members were balking at their proposed production cuts. Prices slid below $50/b, then below $45/b in November. On the eve of the November 30 meeting, Goldman Sachs calculated the market-based odds of a successful OPEC deal at only 30%. Against these odds, OPEC emerged with a deal.

Therefore, it came as quite a surprise when the Algiers agreement was announced. OPEC announced that it would work to achieve a cut in production to 32.5 – 33.0 million barrels of oil per day (MMbpd). WTI crude prices had been in a bandwidth of around $42 – $45/b, and the bandwidth was then bumped up a notch to $45 – $48/b. By October, WTI prices were above $50/b again.

Moreover, it was not simply a facesaving deal, but one that targeted the more aggressive of the production cut levels from the Algiers agreement: the 32.5 MMbpd production level rather than the 33.0 MMbpd level. Crude prices immediately soared by over 8%.

FMNMagazine

fuelmarketernews.com

The coming months will bring intense focus on the market to see, first, whether the production cuts are made and policed diligently, and second, whether the cuts are sufficient to start draining some of the world’s overflowing oil stockpiles. OPEC currently has 13 members: Algeria, Angola, Ecuador, Gabon, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates (UAE) and Venezuela. Indonesia, a net importer of oil, left OPEC. At this interesting point in their history, it is worthwhile to delve more deeply into their backgrounds, their oil and gas production levels, the impact of low oil prices on their net oil export revenues and the recently struck deal on the production cut scheduled for January 2017. In this two-part feature, we provide brief profiles for the OPEC countries. In this issue, part one focuses on the Middle Eastern OPEC countries and the current production cut agreement. In the next issue of Fuel Marketer News, part two will focus on the African and Latin American members. At that time, we will assess how OPEC has followed through with the production cuts. Unless otherwise noted, BP is the source of oil and gas production data and the liquefied natural gas (LNG) export data, while the U.S. Energy Information Administration (EIA) is the source of the data on OPEC net oil export revenues. The OPEC Secretariat and company websites are the source of historical country information. OPEC is the source of the final section on the crude production cut allocations agreed upon at the November 30, 2016, OPEC meeting.

FUELS & SUPPLY

OPEC Makes a Deal

PROFILE:

Middle Eastern OPEC Members Figure 2: Iran Net Oil Export Revenues (US$B)

Iran Oil and Gas

Iran is one of the original five founding members of OPEC in 1960, along with Iraq, Kuwait, Saudi Arabia and Venezuela. As Figure 1 indicates, its oil production has been subject to huge swings up and down. Production was climbing in the 1970s, but it plummeted during the Iranian Revolution and it has never regained its peak production levels. During the 1980s, infrastructure was repeatedly damaged during the Iran-Iraq War. Production began climbing gradually after the war ended in 1988 until international sanctions cut exports once again. In 2015, the United Nations set out a schedule for lifting sanctions, and production began to rise. Natural gas production has risen more steadily, and Iran retains ambitions of becoming an exporter of LNG. Iran’s proven reserves of natural gas are the second largest in the world, following Russia. It has aggressively developed natural gas for domestic use, freeing up oil for export.

Figure 1: Iran Oil and Gas Production, MMT

“”

Source: Energy Information Administration (EIA)

PROFILE:

Iranian output dropped in the aftermath of the Iranian Revolution in 1979 – 1980, and conﬂict spilled into Iraq as well. The Iran-Iraq War lasted eight years, causing immense casualties and damage to both sides.

Iraq Oil and Gas

Iraq is one of the original five founding members of OPEC in 1960. Figure 3 presents the tumultuous course of oil and gas production in Iraq since 1970. Like neighboring Iran, Iraq’s production was surging in the 1970s, but the oil price shocks derailed output. Iranian output, as noted, dropped in the aftermath of the Iranian Revolution in 1979 – 1980, and conflict spilled into Iraq as well. Iraq feared that Iranian insurrection would spread into Iraq, and Iraq invaded Iran in 1980. The Iraqi invasion was repelled, and Iran then went on the offensive. The Iran-Iraq War lasted eight years, causing immense casualties and damage to both sides.

Source: BP

Iran’s net oil export revenues have dropped sharply, as Figure 2 shows. In 2011, export revenues were $85.8 billion. They fell to $27.1 billion in 2015, a 68% drop. International sanctions account for most of the drop, but the lifting of the sanctions in early 2016 coincided with, and directly contributed to, a period of low oil prices. Iran raised production as quickly as possible in a bid to restore output to approximately 4 MMbpd in 2016. Crude production rose from 2.84 MMbpd in 2015 to 3.465 MMbpd during the first 10 months of 2016, according to OPEC. FMNMagazine

What Does It Mean? MMT

Million Tonnes

US$B

Billion U.S. Dollars

MMTOE Million Tonnes of Oil Equivalent

fuelmarketernews.com

OPEC Makes a Deal

After the close of the war in 1988, Iraqi oil output began to recover, but it never regained the peak levels achieved in the 1970s. The Iraq Civil War from 2014 on has continued to cripple the country’s energy industry, and attacks on oil fields, pipelines and export facilities are impeding exports.

Figure 3: Iraq Oil and Gas Production, MMT

PROFILE:

FUELS & SUPPLY

Kuwait Oil and Gas

Kuwait was one of the original five founding members of OPEC in 1960. The first commercial oil discovery was in 1938 at the Burgan field, and commercial exports began in 1946. Figure 5 presents Kuwaiti oil and gas production from 1970 – 2015. Like many OPEC countries, Kuwait’s oil production dropped sharply during the oil price shocks of the 1970s. The sharpest curtailment in output, however, came in 1990 – 1991 when Iraq invaded Kuwait. The Iraq-Kuwait War included a seven-month long occupation of Kuwait before the United Nations demanded an Iraqi withdrawal. Direct military intervention was led by the United States. As Iraq retreated in 1991, its military forces set fire to approximately 600 – 700 oil wells. The fires blazed for months, causing immense damage and an environmental disaster. Kuwaiti oil production was flat for around a decade. Output grew after 2000, but the recent weakness in oil prices has caused production to flatten again recently with a drop in investment. Production in the Partitioned Neutral Zone (PNZ) has been stymied by disputes with Saudi Arabia, which shares the PNZ with Kuwait. Kuwait is a modest producer of natural gas. During the Iraq-Kuwait War, production was largely shut in.

Source: BP

According to the International Monetary Fund (IMF), crude oil exports accounted for 93% of Iraq’s total government revenue in 2014. Figure 4 presents the EIA’s assessment of Iraqi net oil export revenues. The formation of the new government after the execution of Saddam Hussein 10 years ago was seen as positive for exports. Prices were also rising, but lasting peace and a stable central government have yet to be achieved.

Figure 5: Kuwait Oil and Gas Production, MMT

Oil export revenues fell from $89.2 billion in 2014 to $57.2 billion in 2015. In 2015, Iraq’s oil export revenues were 24% lower than they were in 2011. The drop in oil prices and the high cost of fighting against the Islamic State of Iraq and the Levant (ISIL) have contributed to serious growth in the country’s budget deficit.

Figure 4: Iraq Net Oil Export Revenues (US$B)

Source: BP

According to the IMF, petroleum export revenues accounted for over 70% of Kuwait’s government revenues in 2015. Figure 6 presents the EIA’s assessment of Kuwait’s net oil export revenues. Revenues peaked at $93.1 billion in 2012. The oil price war caused prices to collapse, and Kuwait’s revenues fell to $39.7 billion in 2015, a 54% reduction. Source: Energy Information Administration (EIA)

FMNMagazine

fuelmarketernews.com

FUELS & SUPPLY

“”

OPEC Makes a Deal

Kuwait is attempting to diversify its energy industry by developing non-associated natural gas, which is in short supply. The electric power sector often fails to meet peak demand for electricity.

Figure 6: Kuwait Net Oil Export Revenues (US$B)

As the figure illustrates, natural gas production caught up with oil production (in oil equivalent terms) by 2007. Gas production then quickly pulled away from oil, and natural gas production is now roughly twice as large as oil production. Qatar’s natural gas reserves are the third largest in the world, following Russia and Iran.

Source: Energy Information Administration (EIA)

PROFILE:

Qatar’s natural gas reserves are the third largest in the world, following Russia and Iran.

Qatar Oil and Gas

Qatar is far and away the world’s largest exporter of LNG. In 2015, Qatar exported 106.3 billion cubic meters (BCM) of LNG, accounting for 31% of total world LNG exports of 338.3 BCM. The second-largest exporter was Australia at 39.8 BCM.

Qatar is the smallest country in OPEC in terms of area and population, and joined OPEC in 1961. Figure 7 presents the longterm trend in Qatari oil and gas production. Qatar was an early entrant into the oil field as the Dukhan Field was discovered in 1935, and commercial production began in 1939 – 1940. The Dukhan Field is still in production. For much of the time period from 1970 through the mid-1990s, crude output stagnated while natural gas production grew slowly and steadily.

Figure 8 displays the rise and fall of net oil export revenue in Qatar. Revenues were approximately $43 billion from 2011 – 2013, but the collapse of oil prices caused revenues to fall by more than half. Revenues of $19.7 billion in 2015 were 46% of their level in 2011.

Figure 7: Qatar Oil and Gas Production, MMT

Figure 8: Qatar Net Oil Export Revenues (US$B)

Source: BP

FMNMagazine

Source: Energy Information Administration (EIA)

fuelmarketernews.com

PROFILE:

“”

The oil and gas sector is responsible for 50% of GDP and 85% of Saudi Arabia’s export earnings. Protecting market share was a chief motivation for the current oil price war.

Saudi Arabia Oil and Gas

Saudi Arabia was one of the original OPEC members, and it continues to be a leader within OPEC and the global oil market in general. It is the world’s largest oil producer, though the U.S. briefly held this distinction during the height of light tight oil (LTO) production from shale plays. The Dammam oil field was discovered in 1938, so oil prospecting has a long history in Saudi Arabia. Figure 9 presents the trend in oil and natural gas production. Natural gas production has grown slowly and steadily, but oil production has varied tremendously. It was trending up strongly during the 1970s with a visible downturn during the Arab Oil Embargo. That was followed by a resumption of growth, then a steep collapse after the second oil price shock. Output remained low until oil prices collapsed in 1986. Much of the growth after this was prompted by the Asian economic boom. In 2015, Saudi Arabian crude production was reported at 10.123 MMbpd. Production grew to an average of 10.351 MMbpd during the January – October period of 2016.

FMNMagazine

21 25

fuelmarketernews.com fuelmarketernews.com

FUELS & SUPPLY

“”

OPEC Makes a Deal

The relative situation of various OPEC members has changed significantly since the price war began. Saudi Arabia kicked off the price war by ramping up production in an effort to regain lost market share. High-cost production around the world began to be shut in, including a large amount of production from shale plays in the U.S.

Figure 10 illustrates the rise and fall of Saudi Arabia’s net oil export revenues, as calculated by the EIA. Revenues rose to $297.2 billion in 2012, but began to slide thereafter. In 2015, oil export revenues had fallen to $130.1 billion, approximately 44% of the level achieved in 2012. Saudi Arabia is now launching an initiative geared toward “life after oil,” which aims to diversify the economy so the vagaries of the global oil market cannot have such large impacts on the economy.

Figure 9: Saudi Arabia Oil and Gas

Production, MMT

Figure 10: Saudi Arabia Net Oil

Export Revenues (US$B)

Source: BP

As noted earlier, Saudi Arabia is the world’s largest exporter of oil. OPEC reports that the oil and gas sector is responsible for 50% of gross domestic product (GDP) and 85% of Saudi Arabia’s export earnings. Protecting market share was a chief motivation for the current oil price war. Source: Energy Information Administration (EIA)

FMNMagazine

fuelmarketernews.com

PROFILE:

FUELS & SUPPLY

“”

OPEC Makes a Deal

United Arab Emirates Oil and Gas

The United Arab Emirates is made up of seven emirates: Abu Dhabi, Ajman, Dubai, Fujairah, Ras Al-Khaimah, Sharjah and Umm Al-Quwain. The first commercial oil discoveries were made in 1958 with the onshore Bab-2 well and the Umm Shaif offshore field.

OPEC surprised the majority of the world’s oil market watchers when it succeeded in making a production cut agreement at its November meeting in Vienna.

The oil and gas sector accounts for approximately 40% of the UAE’s GDP. Although LNG exports have helped during the last two years of low oil prices, the UAE has seen its net oil export revenues decrease by half between 2012 and 2015, as shown in Figure 12.

Figure 11 presents a look at the UAE’s oil and natural gas production since 1970. Oil production rose quickly until the oil price shocks of the 1970s. Production then dropped until the collapse of oil prices in 1986 unleashed global oil demand, and production began to rise once again. The UAE is a significant exporter of LNG. Exports are typically 7 – 8 BCM annually.

In 2012, oil export revenues totaled $58.7 billion. This fell to $28.5 billion in 2015. The UAE has worked to diversify its economy, so it has been more well-equipped to weather the current period of low oil prices. However, even the UAE is now facing a budget deficit.

Figure 11: UAE Oil and Gas Production, MMT

Figure 12: UAE Net Oil Export Revenues (US$B)

Source: BP

FMNMagazine

Source: Energy Information Administration (EIA)

fuelmarketernews.com

FUELS FUELS&&SUPPLY SUPPLY

OPEC Makes a Deal

OPEC Production Cut Agreement OPEC surprised the majority of the world’s oil market watchers when it succeeded in making a production cut agreement at its November 30, 2016, meeting in Vienna, Austria. The Algiers meeting in September yielded a proposal to cut production to 32.5 – 33.0 MMbpd. After two months of difficult negotiations following the Algiers meeting, there was widespread skepticism about OPEC’s ability to reach consensus at the Vienna meeting. In the end, however, the agreement was not merely a face-saving measure. OPEC chose the more aggressive target of 32.5 MMbpd in January 2017. According to the group’s internal calculations, this will be a cut of around 1.2 MMbpd from current levels. The agreement also calls for 0.6 MMbpd of cuts from non-OPEC countries, to be led by Russia, which pledged to cut 0.3 MMbpd. On paper, Saudi Arabia will institute the largest cut at 486 thousand barrels per day (kbpd). Iraq will follow with a cut of 210 kbpd. Iraq, for a time, indicated it would not accept a cut, using the rationale that it needed funds for its war on terrorists. However, Iraq ultimately relented and joined the agreement. The following table presents a summary of OPEC’s production agreement.

OPEC Planned Production Cut, kbpd Member

January 2017 Planned Cuts

Adjustment*

Algeria Angola Ecuador Gabon Iran Iraq Kuwait Qatar Saudi Arabia UAE Venezuela

1,039 1,673 522 193 3,797 4,351 2,707 618 10,508 2,874 1,972

-50 -80 -26 -9 +90 -210 -131 -30 -486 -139 -95

Participating OPEC 11

30,254

-1,256

OPEC publishes two sets of crude production data: one that is based on official submissions from the member countries, and one that is compiled from secondary sources. For some countries and in some months, there are gaps in the data. Moreover, the data is subject to political pressure. There has been an incentive to boost production and/or production data to secure a larger baseline from which the production cuts would be made. Therefore, adopting an acceptable baseline of current crude production was not a simple matter. The table provides the agreed-upon production level for January 2017 along with the derived adjustment from current production levels. The relative situation of various OPEC members has changed significantly since the price war began. Saudi Arabia kicked off the price war by ramping up production in an effort to regain lost market share. High-cost production around the world began to be shut in, including a large amount of production from shale plays in the U.S. Figure 13 illustrates the year-over-year (YOY) change in crude production by the 11 participating OPEC countries. Excluded are Indonesia (a net importer of oil), which withdrew from OPEC, and Libya and Nigeria, which were exempted from the cuts because of chronic civil unrest. The data used in this chart are taken from OPEC secondary sources, and the YOY figure for 2015 – 2016 is based on the January – October 2016 production average. Saudi Arabia increased its crude production by 435 kbpd in 2015, and by another 228 kbpd during the first 10 months of 2016. By agreeing to cut production by 486 kbpd in January 2017, it essentially reverses three-quarters of the new output. Production will be at a higher level than it was before the price war. The lifting of sanctions on Iran freed the country to boost production by 625 kbpd during the first 10 months of 2016 relative to production in 2015. Gaining Iranian participation in the current production deal was impossible without a concession that allows its January 2017 production level to be 90 kbpd above its current baseline. Iraq also made huge production gains, with 2015 production 666 kbpd above 2014 levels, and another 404 kbpd of production added during the first 10 months of 2016. Iraq agreed to cut production by 210 kbpd in January 2017. The UAE increased crude production by 97 kbpd in 2015 and another 28 kbpd during the January – October 2016 period for a total addition of 125 kbpd. By agreeing to cut production by 139 kbpd, it will reverse these gains, plus cut a small amount more.

*Adjustment is based on OPEC’s adopted baseline of current production

What Does It Mean?

Notes: Indonesia (a net oil importer) withdrew from OPEC Libya and Nigeria received exemptions because of internal unrest Iran negotiated an increase because of prior sanctions FMNMagazine

OPEC

Organization of the Petroleum Exporting Countries

UAE

United Arab Emirates

PNZ

fuelmarketernews.com

Partitioned Neutral Zone

“

FUELS & SUPPLY Algerian crude production has been in a period of decline, largely caused by a lack of investment. Production fell by 17 kbpd in 2015 and 20 kbpd during the first 10 months of 2016. Algeria agreed to reduce production by 50 kbpd in January 2017. Angolan production rose by 100 kbpd in 2015 but declined slightly in 2016. Angola agreed to a production cut of 80 kbpd. Ecuadorian output has been stable at around 550 kbpd. The country agreed to cut production by 26 kbpd.

OPEC Makes a Deal

The increase in global oil prices since OPEC made the deal has already been sizeable. If prices continue to strengthen and the market moves more quickly into balance, OPEC oil revenues will rise, and the group will be able to view the price war as a success.

Gabon’s output has also been stable at approximately 220 kbpd. Gabon agreed to a cut of 9 kbpd. Kuwait has more flexibility than many in terms of output, though it has recently lagged in terms of pursuing investment. Its production fell by 51 kbpd in 2015 and rose by 45 kbpd in the January – October period of 2016. Kuwait agreed to cut production by 131 kbpd. A certain amount of production has been shut in because of disputes with Saudi Arabia over the jointly held PNZ.

”

Recently, however, the two countries announced that they planned to resume PNZ production.

2016 for a total addition of 2,368 kbpd. The proposed cut will remove 1,256 kbpd, slightly over half of the volume they have added over the past two years.

Qatar’s oil production declined by 47 kbpd in 2015 and 10 kbpd in 2016. Qatar agreed to reduce output by 30 kbpd in January 2017. Qatar is the world’s largest exporter of LNG, which reduces its reliance on oil as a source of export earnings.

At the time of writing, the latest news indicates that OPEC production hit a new record in November 2016, just before the production cut agreement was made. Some of this production came from Nigeria and Libya, which are exempt from the deal. It is impossible to say whether their production will continue to rise, or whether internal strife will quell output once again.

Venezuela’s oil sector has been in turmoil. Production fell slightly in 2015—by 4 kbpd—but it has fallen sharply in 2016, by 171 kbpd at the time of writing. Venezuela agreed to reduce output by 95 kbpd in January 2017. The 11 OPEC countries now participating in the production cut added 1,240 kbpd of new crude to the market in 2015. They added another 1,128 kbpd to the market during the January – October period of

Figure 13: The OPEC 11: Approximate YOY Change in Crude Production, kbpd

However, this raises the question of whether other producer countries will cut deeper into production to compensate. The increase in global oil prices since OPEC made the deal has already been sizeable. If prices continue to strengthen and the market moves more quickly into balance, OPEC oil revenues will rise, and the group will be able to view the price war as a success. n

Dr. Nancy Yamaguchi

Based on OPEC secondary sources data, with 2016 data January – October average.

FMNMagazine

fuelmarketernews.com

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

Autonomous, or self-driving, commercial trucks have the potential to change the industry. Sales of autonomous trucks could be as much as 15% of truck sales by 2035 in the big, Class 8 weight segment, assuming the technology is adopted and reaches â&#x20AC;&#x153;appreciable levelsâ&#x20AC;? by the end of the next decade.

Bottom Line

There are many positive impacts that autonomous trucks could have on the commercial trucking industry, including reducing driver distraction and human error, addressing the driver shortage and solving hours of service issues by allowing productive rest while the vehicle drives itself. Sources: American Transportation Research Institute (ATRI), IHS Markit and Trucks.com

at fuelmarketernews.com

by Maura Keller

Change is constantly afoot within the electronic payment industry. From regulatory compliance issues to innovative technological advancements, fuel marketers and retailers are required to stay on top of these regulations and the recurring changes involved. The longstanding EuroPay MasterCard Visa (EMV) implementation across the industry is the latest example of why retailers need to be on top of industry changes that affect the way they do business.

Changes in EMV Adoption In early December 2016, Visa announced the decision to delay the implementation deadline for fraud-resistant EMV â&#x20AC;&#x153;chip cardâ&#x20AC;? technology at the forecourt from October 1, 2017, to October 1, 2020. The rationale for this move has been the challenges and complexities associated with updating card readers with this new technology at the dispenser function. This not only points to the costs involved, but also the physical ability to perform the required upgrade work by the old deadline. One complication, for instance, is a shortage of certified technicians needed to complete the dispenser upgrades.

FMNMagazine

fuelmarketernews.com

RETAIL OPERATIONS

“”

Changes in EMV Adoption

Industry Response and Overview “The response within the industry has been quite mixed,” says Patricia Stancati, Marketing Communications Program Manager at Gilbarco VeederRoot. “As expected, many retailers are relieved to have more time to complete their forecourt upgrades. However, a large portion of retailers invested resources in meeting the original EMV timelines, and will continue to execute their plans to accept chip payments at the fuel dispenser in 2017.”

“Despite the delay in the forecourt EMV liability shift date to 2020, most major POS providers are still working toward certifying EMV software for the forecourt in 2017, which will enable a large portion of the market to turn on EMV [chip payments] at the pump beginning in the first half of 2017.” Patricia Stancati

Marketing Communications Program Manager, Gilbarco Veeder-Root

Petroleum retailers have been adopting EMV-capable point of sale (POS) systems and dispenser payment terminals for over five years, and a large percentage of the market now has the hardware needed to enable EMV both in-store and on the forecourt. “Most of the major POS providers have completed certifications of EMV software to support in-store chip transactions on the large payment networks,” Stancati notes. Bill Reichhold, Vice President of North America at Dover Fueling Solutions, says in-store adoption of EMV is well ahead of the forecourt since the liability mandate for indoor was October 2016. On December 12, 2016, Dover completed its previously announced acquisition of Wayne Fueling Systems, which is now incorporated into a new entity, Dover Fueling Solutions. “Many retailers are still actively engaged in this effort,” Reichhold comments. “Outdoor adoption is in the early stages.” Joseph O’Brien, Vice President of Marketing at Source North America Corporation in Addison, Illinois, reports that estimates vary widely, but a reasonable expectation is that EMV adoption is over 50% in-store and under 30% at the forecourt. FMNMagazine

fuelmarketernews.com

Early Adoption In addition to the enhanced security of EMV for their customers, many retailers will continue to upgrade early to take advantage of additional technologies available on EMV-capable dispensers, such as near-field communication (NFC)/contactless readers, dispenser media and merchandising capabilities, barcode scanners and remote dispenser management solutions. Gilbarco released its indoor EMV software in May 2016 for networks covering the bulk of the Passport POS installed base, and they’ve been seeing retailers rapidly turn on EMV acceptance inside the store. “Now, POS providers are shifting focus to integration of the EMV protocols for forecourt payment terminals,” Stancati says. “Despite the delay in the forecourt EMV liability shift date to 2020, most major POS providers are still working toward certifying EMV software for the forecourt in 2017, which will enable a large portion of the market to turn on EMV [chip payments] at the pump beginning in the first half of 2017.” Essentially, the deadline extension means an outside influence that was forcing a rapid equipment change has been removed. Now the decision can be made on factors that are more critical to the business owner. “EMV adoption was and is considered a significant expense, thus the benefit is that business owners can elect not to face this cash outlay in 2017,” O’Brien explains. “Generally, the larger the cstore operation, the more likely they have already, or are planning on becoming, EMV-ready at the pump. These organizations have done the analysis and weighed the potential risks, and have concluded that complying with the deadline is the best long-term decision.”

RETAIL OPERATIONS

“”

Changes in EMV Adoption

For those retailers that delay their upgrades until 2020, there could be negative impacts to their customers and their businesses. As general retail and proactive petroleum operators continue upgrading for EMV along the original timelines, fraud will continue to migrate to locations that are less protected, leaving the forecourt as a big target for fraud in the U.S.

As general retail and proactive petroleum operators continue upgrading for EMV along the original timelines, fraud will continue to migrate to locations that are less protected, leaving the forecourt as a big target for fraud in the U.S.

“”

Despite the delay in fraud chargebacks to retailers, consumers will continue to be impacted by having their card data left vulnerable to capture. And as consumer expectations on chip acceptance continue to grow, retailers that delay upgrades could see a loss of fuel volume as securityconscious customers look to do business at locations capable of accepting their chip cards.

Security, Your Customers and Your Business

“EMV upgrades in the store should have been done, and station owners face liability issues if they have not done so,” O’Brien says. “The drawback to not being EMV-ready at the pump is that a station can be perceived as technologically inferior to competitors or, even worse, potentially unsafe for credit card transactions at the pump.”

While the deadline extension to 2020 might allow some retailers to experience a sigh of relief, the extension doesn’t mean retailers can fully relax with their EMV upgrades, nor are they completely off the hook.

“A large percentage of fuel dispensers in the field today already have EMV hardware and will begin accepting chip payments in 2017 as the software becomes available.” Stancati notes. “As that happens, paired with chip acceptance at broader retailers approaching closer and closer to 100% in 2017, consumers will become increasingly aware of which locations offer the enhanced security of chip payments, and fraud will continue to migrate to locations that are less protected.”

“There are numerous examples of skimming devices and other methods by which credit card fraud can occur at an unmanned POS. So, any delay in making this transaction point more secure for consumers leads to possible consequences for consumers.” Joseph O’Brien

Vice President of Marketing, Source North America Corporation

“For some on the c-store side, it is a relief and a chance to make this investment in a less stressful environment,” O’Brien comments. “For others on the c-store side that already pursued meeting this deadline in good faith, there is a distrust in the future intentions of the credit card folks. For those service providers and manufacturers that were banking on this deadline to stimulate sales, they now have to hedge their plans.” FMNMagazine

“EMV is a more secure transaction at the pump than what is currently commonplace,” O’Brien explains. “There are numerous examples of skimming devices and other methods by which credit card fraud can occur at an unmanned POS. So, any delay in making this transaction point more secure for consumers leads to possible consequences for consumers.” 36

fuelmarketernews.com

RETAIL OPERATIONS

Changes in EMV Adoption

Looking Ahead While the change in the forecourt EMV liability shift date may cause some retailers to spread their upgrades out through 2020, Stancati believes many retailers will continue their current upgrade plans, despite the delay, to provide additional security to their customers and to take advantage of new technologies available on EMV-capable platforms. Reichhold says the change in EMV adoption means a more balanced migration over time rather than a mad dash with retailers competing for materials and technical resources. “We are also already seeing a number of retailers reevaluate their plans to put retrofit kits on older dispensers, and begin to migrate more toward getting to EMV with newer dispensers now that they have some time to put together more comprehensive plans,” Stancati comments. O’Brien believes EMV will continue to be adopted during the next four years, before the deadline is reached, because it is a standard part of any upgrade. “EMV installations will likely continue at about the same pace as the prior year, and smaller organizations will also begin to do this as part of general site improvements,” O’Brien says. “The only real counterpoint to EMV adoption would be the development of a new form of payment at c-stores that supersedes credit card payments. For example, if mobile payments became predominant, it would reduce the necessity for adhering to a system required by credit card companies.” n

READ MORE at fuelmarketernews.com

FMNMagazine

fuelmarketernews.com

VENDOR VIEWPOINT:

“

SELF-DRIVING VEHICLES:

FUELING REVOLUTION OR EVOLUTION? by Joe O’Brien Since a self-driving tractor-trailer successfully completed a 120-mile interstate trip in October, speculation about the mainstream rollout of autonomous vehicles has kicked into high gear. The truck, introduced by Uber’s self-driving vehicle operation, Otto, hauled 2,000 cases of beer from Fort Collins, Colorado, to Colorado Springs, Colorado, with no problems. A trained driver sat in the truck’s cabin during the beer run as a safety precaution. Proponents tout the driverless technology’s safety benefits (eliminates crashes caused by human error) and efficiency (minimizes drive times and maximizes fuel economy through optimized driving). For the everyday motorist, the technology could unlock time to pursue recreational or work activities while the car drives itself. Although the technological innovation suggests the possibility of a somewhat utopian union of operational efficiency, quality of life enhancement and public safety advancement, it is nevertheless poised to change the automotive industry—both consumer-driven and commercial.

Numerous car and tech companies are aggressively pursuing the technology. Ford announced it would mass-produce driverless vehicles by 2021. Tesla has said its autonomous vehicles will be available by 2019. Cities including Boston and Pittsburgh are testing self-driving vehicles. Just as automakers are ramping up to make the technology ready for mainstream application, regulatory agencies are beginning to assert their authority to define safety standards. In late 2016, the U.S. Department of Transportation (DOT) and the National Highway Traffic Safety Administration (NHTSA) released the Federal Automated Vehicles Policy, which is steering the way toward the safe deployment of highly automated vehicles. All of these signs are evidence that the automotive industry and regulatory agencies are taking the new technology seriously. Members of the fuel industry would be wise to do the same, as the technology could impact the industry’s status quo. With that in mind, the following are some scenarios to consider in which autonomous vehicles may impact the future of the forecourt.

”

The good news for fuel

marketers is that, regardless of the pace of the shift, driverless vehicles will still need to be refueled—whether by a robot or human, or by alternative or traditional fuel.

WHEELS

R ETURN

OF FULL SERVICE:

How far will the automation go? In a scenario where driving becomes 100% driverless (no safety attendant in the vehicle), fueling centers may need to have personnel on-site to fuel the autonomous vehicles. We may see a whole new business model develop where the makers of driverless vehicle technologies contract with retail fuel operations to provide attendants for fueling.

C ONCIERGE

FUELING:

Volvo recently partnered with the on-demand fuel delivery company Filld to bring fuel to its customers as part of a pilot program that enables Volvo owners to order such concierge services as refueling, cleaning or to request someone to take their car in for service. As both an extension of automotive autonomy and consumer convenience, increased collaboration between driverless car manufacturers and on-demand fuel companies is a reasonable expectation for the era of autonomous driving.

R OBO-FUELING:

On the other side of the fueling spectrum, autonomous vehicles lend themselves to automated fueling. Supported by radio frequency identification (RFID) or other wireless fuel management technology, driverless vehicles could pull up to a fueling station where robotics-assisted fueling equipment communicates with on-board vehicle systems to complete a fueling transaction.

L ESS

FREQUENT FUELING:

Driverless vehicles maximize fuel efficiency for all manner of vehicle types—from cars to heavyduty trucks. In many instances, autonomous semi-trucks will be able to travel farther than their human-operated counterparts, because current federal DOT regulations limit truck drivers to 11 hours of driving per day. By eliminating driving time limitations, the trucks could, in theory, travel farther distances between stops (depending on load size and numerous other variables).

F OLLOW THE

The good news for fuel marketers is that, regardless of the pace of the shift, driverless vehicles will still need to be refueled— whether by a robot or human, or by alternative or traditional fuel. And as is the case with most automotive innovations, fuel sites that prepare to meet the fueling needs created by driverless technology will be in a better position to capitalize on a potential new revenue stream. Fuel marketers can put themselves in the driver’s seat by partnering with an experienced and trusted fuel equipment advisor who is dedicated to staying on the forefront of emerging fueling technologies and industry regulations. Should driverless technology require new fuel dispensing systems or controls, fuel equipment suppliers will have information about potential grants and other financial incentives that can help with funding investments. n

LEADER:

Auto companies are also testing the concept of “platooning automobiles” on both passenger cars and commercial vehicles. In this scenario, vehicles share operational data to improve safety and efficiency. It’s not difficult to imagine a scenario where large freight companies leverage highly coordinated logistics to enhance the efficiency of the overall fleet through platooning. Perhaps convoys of trucks will pull into a station to refuel at the same time.

C ENTRALIZED

FREE WEEKLY eNEWSLETTER

fuelmarketernews.com

FUELING:

Most motorists today decide when and where they want to fuel. For a passenger in an automobile that is part of a larger fleet of autonomous vehicles, however, the decision of when and where to fuel could be made for them. Rather than stopping at whichever retail fuel station the motorist chooses, the motorist may be directed to centralized commercial fueling hubs, similar to those for bus fleets.

I NCREASED

IN MOTION

Some industry experts suggest we will begin seeing driverless vehicles become commonplace in the next 10 – 15 years. Others say it may take much longer for the technology to realize widespread adoption as most urban infrastructure—and its innumerable variables—isn’t currently designed for driverless operation. Cyber security (to prevent hacking into vehicle systems), liability issues and safety regulations must also be addressed. And whether or not American consumers will be willing to give up control of their automobiles—even for the possibility of extra personal time and increased safety— remains to be seen.

CONSUMPTION:

Autonomous cars will make travel much more accessible and convenient. Driverless vehicles could enable people with disabilities, seniors and others who might currently be challenged by driving limitations to travel much more independently. In addition, the added leisure time that self-driving brings to time-taxed commuters and families may encourage increased travel, and therein, increased fuel consumption. FMNMagazine

fuelmarketernews.com

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

VENDOR VIEWPOINT:

Managing Aging USTs with Facts and Confidence by Brian Derge

n the 1980s, the U.S. Environmental Protection Agency (EPA) was at work developing the first comprehensive set of regulations governing underground storage tanks (USTs). Simultaneously, the retail fuel industry was working to upgrade existing locations throughout the U.S. and add new ones at a rapid pace. At that time, retail fuel was still dominated by the major oil companies. The cost of gas had just crossed $1.00 per gallon for the first time in 1979, and existing mechanical dispensers couldn’t handle pricing above 99.9 cents. That drove the major oil companies to embark on substantial upgrade programs, with new dispensers and USTs going into the ground at an unprecedented pace. In 1986, pay at the pump was introduced, further driving the need for updated technology at the dispenser level. In many cases, this translated to wholesale site upgrades, including new tanks. The USTs going into these new and upgraded sites in the 1980s were both steel and fiberglass, and mostly single-wall in construction. The people who have been in this industry since those days often remark that it’s hard to fathom that was 30 years ago.

“”

In tank years, 30 years is generally considered the end of operating life—or, at the very least, the end of the manufacturer’s warranty. So, those thousands of single-walled USTs that went into the ground in the 1980s are at, or nearing, the time to consider replacement. Major oil has largely exited the retail fueling business, and their sites have been sold—and in many cases sold again, and maybe again— to subsequent owner-operators. In our experience in these situations, records can be scarce and current owners tend to know little about their tanks and their current condition. This is an issue throughout the retail petroleum industry, where the proportion of tank systems around 30 years of age is sizable. A common challenge operators face involves determining exactly what they have in terms of USTs in the ground and how to prioritize their replacement.

RETAIL OPERATIONS

Once a UST is 30 Years Old, Does It Have to Be Replaced? In a small number of jurisdictions, they might have to be replaced simply because they are 30 years of age—but in the majority of the country, that’s not the case. In our experience, some 30-year-old tanks are in better condition than tanks half their age. A complex mix of variables determine the life of a UST. That makes it difficult to know which of them could continue in operation for another 10 or more years, and which need to come out sooner rather than later. Our proactive clients with tanks in this age range are taking an investigative approach to assessing their tank population. They can’t just replace all of their tank systems in a two- or three-year period, the economics simply aren’t feasible. Instead, we’re helping our clients with individual site assessment programs, which enable them to tackle their biggest potential concerns right away and spread their upgrade programs over several years. This allows them to appropriately plan and budget with confidence, and the assurance that they aren’t missing something potentially catastrophic.

Managing Aging USTs with Facts and Confidence

How Do You Assess Whether a Tank Should Be Replaced? As previously mentioned, there are a lot of variables, and they differ depending upon whether the UST is steel or fiberglass. Keep in mind: most of the tanks installed in the 1980s were single-walled. The following is a recommended practice for making an assessment. Look first at the history of the UST, its date of installation and its history of maintenance and repairs. In cases of property transfers, this can be challenging, as maintenance records and logs often don’t get passed along, or their importance is overlooked at the time and they end up getting destroyed somewhere along the way.

If the UST Is Steel: • Has it had consistent corrosion protection? If so, what was the date of install? • Are there reliable maintenance and compliance records? • Are there any inspection records? If so, what do they reveal? • What type of fuel has been stored in the tanks? Are there any records of tank cleanings?

If the UST Is Fiberglass: • What is the history of product storage, particularly with oxygenated fuels? Most would have contained MTBE, and others could have contained ethanol, which may have developed fuel compatibility issues depending on the date of manufacture. • Have there been any corrosion issues with non-tank components of the fueling system? • Has the tank been measured for bottom flatness? Improper installation practices could have led to settling that caused tank deformation.

For All Tanks: W

hat is the leak detection history of the tank? Was a reliable method used for consistent tracking and responding to alarms? The leak detection method should provide passing results every month. Any months with missing or inconclusive results could indicate a problem.

Have consistent measures been

taken to minimize water intrusion? Water is never good for fuel or tanks. With ethanolblended fuels in particular, water is your worst enemy, so a strict water management program can help alleviate a lot of issues.

Is there a visible presence of

corrosion in the tank, piping, shafts, sumps, filters or other tank system components? Such visible corrosion is likely indicative of a problem in the tank itself. If corrosion is present through the system, does it seem to be excessive or especially fast growing? This is common in both steel and fiberglass tanks that contain ultra-low-sulfur diesel (ULSD). The presence of water is the driver of this type of fastgrowing corrosion.

Unfortunately, in many cases, these questions cannot be answered. Again, the records are minimal. The changes in ownership and management have resulted in significant assets that are largely unknown. What do you then?

FMNMagazine

fuelmarketernews.com

“”

Some 30-year-old tanks are in better condition than tanks half their age. A complex mix of variables determine the life of a UST. That makes it difficult to know which of them could continue in operation for another 10 or more years, and which need to come out sooner rather than later.

When Records Are Poor, How Do You Assess a Tank? Tank Assessments

Visual Inspection

When assessing assets to help owners get a better sense of what they have and begin to prioritize their repair and replacement programs, our typical approach is to start with an overall assessment of each site. This includes a detailed visual inspection and documented assessment of the entire fueling system—tanks, piping, dispensers, sumps, etc.

To get a detailed look at what’s really happening inside a tank, we sometimes recommend a remote video inspection. Our TankCam® inspection service provides a clear video of the tank interior.

This phase also includes amassing all the available records on maintenance, leak detection reports, tank and line testing results, corrosion protection inspection records and so on, limited as they may be. Information from tank manufacturers can be helpful, especially for fiberglass tanks, to help determine ethanol compatibility.

Testing Based on an analysis of the assessment phase results, we may recommend tightness testing the tanks and lines to verify full system (liquid and ullage) integrity. With a fiberglass tank, a bottom flatness measurement might be performed to determine whether any tank deformation may have occurred.

Getting clear, first-hand pictures like these used to require evacuating the tank of all fuel, inerting it to avoid the possibility of explosion and having a person enter the tank to personally inspect it. Given the danger and expense of such manned entry, this is rarely an option. The remote camera technology Tanknology employs doesn’t require any of those precautions, so it is a fraction of the cost. The photos accompanying this article are still images from one of our video inspections.

For fueling facility owners of any number of sites, a lot of money is invested in their facility, tanks, pipes, dispensers and so on. It is, without question, an assetheavy business. Managing those assets well can truly make the difference between success and failure. To do that cost effectively, owners need to understand exactly what they have now so they can make sound decisions, plans and budgets for their facility upgrades going forward. Just because a single-walled tank is 30 years old doesn’t mean it can’t continue to serve you well for years to come. You just need to be sure. n

READ MORE at fuelmarketernews.com

Tank Cleaning A thorough tank cleaning is often a good option for a 30-year-old tank. It can make the difference between a decision to pull and replace a tank and getting another 10 years of life out of it. For our clients making an asset decision like this, we will typically recommend combining the remote video inspection along with the tank cleaning to get the clearest understanding of exactly what they have once the tank is clean and empty.

FMNMagazine

fuelmarketernews.com

Brian Derge Brian is the Chief Operating Officer for Tanknology Inc., the largest company in the world devoted to compliance testing, inspections and assessments of fueling facilities. In his position, Brian oversees all service operations and inspection services nationwide. Brian is a near 20-year veteran of the company and industry, and serves on multiple petroleum industry committees.

FuelCall Simplifies Refueling for Drivers with Disabilities

New and Interesting Product

by Kyndall Krist

“”

For most drivers, refueling their vehicle is

a simple, routine task that is completed without much thought. But for the 15 million drivers with disabilities in the U.S., this seemingly mundane chore can be difficult, frustrating and time consuming. Fortunately, Inclusion Solutions is working to remedy this issue with FuelCall™, a turnkey, inexpensive touchpad solution that ensures stations are Americans with Disabilities Act (ADA) compliant by providing those customers with the option to easily request assistance at the gas pump.

“Many times, drivers with disabilities engage family members or friends to pump their gas. When a family member isn’t present, they will often engage a stranger at the pump because gaining the attention of station employees isn’t easy.”

Patrick Hughes, Jr., Founder and CEO of Inclusion Solutions

“Many times, drivers with disabilities engage family members or friends to pump their gas,” said Patrick Hughes, Jr., Founder and CEO of Inclusion Solutions. “When a family member isn’t present, they will often engage a stranger at the pump because gaining the attention of station employees isn’t easy.” To solve this problem, FuelCall comes with a large touchpad that extends from the island, allowing drivers to push the button without exiting their vehicles and alerting an attendant via transmitter and intercom that assistance is needed. “According to ADA legislation, gas stations are required to pump gas for drivers with disabilities when there is more than one employee on duty,” Hughes commented. “However, how does the driver know when there is more than one employee on duty? FuelCall signage provides the driver with clear hours of service,” thus eliminating the guess work and adding to the business’s efficiency and service capabilities.

While gas stations are legally required to provide refueling assistance for drivers with disabilities under the Americans with Disabilities Act of 1990, FuelCall helps to better serve other customer markets as well, according to Hughes: “For example, parents with kids in the car may need something from the c-store, but are uncomfortable leaving their children in the car unattended. Also, many

FMNMagazine

fuelmarketernews.com

RETAIL OPERATIONS

FuelCall Simplifies Refueling for Drivers with Disabilities

“Some of our customers have 50 – 70 customers per week who use FuelCall. In these instances, it’s because the stations have embraced the service aspect of FuelCall, versus simply seeing FuelCall as a compliance requirement.”

Patrick Hughes, Jr., Founder and CEO of Inclusion Solutions

senior citizens prefer to stay in their vehicles, especially during inclement weather. This group in particular is a loyal buying group and a great source of repeat business. We always ask our prospects, if the profit center for your station is the cstore, what could your staff do to cater to customers who struggle to get inside?” “You’ve got to make them think that it’s not an inconvenience,” said Edward Person, Gas Station Manager in Kalamazoo, Michigan. “It’s just a different way of doing business—a different type of way of doing business—and we enjoy it.” Hughes also emphasized this sentiment, saying, “Some of our customers have 50 – 70 customers per week who use FuelCall. In these instances, it’s because the stations have embraced the service aspect of FuelCall, versus simply seeing FuelCall as a compliance requirement. Customer surveys indicate station employees love having the opportunity to connect with the public in a meaningful way, in addition to taking a break from the monotony of the c-store.”

“”

Recently, FuelCall alert systems were installed in every U.S. military base worldwide to better help those veterans who once struggled to refuel. Inclusion Solutions has received glowing reports from veterans who enthusiastically thank them for this simple service. Inclusion Solutions has even gained support from Congresswoman Tammy Duckworth, an Iraqi War veteran who lost both her legs and partial use of her right arm when her helicopter was hit by a rocket-propelled grenade in 2004. The complete FuelCall system, which costs $1,200 per unit with bulk discounts available, includes: • BigBell™ Transmitters, which are consistent with ADA law and pass the Department of Justice (DOJ) “fist test” • Wireless Chime Receiver, which is easily heard by all employees • Two steel J-bars for proper mounting of BigBell, reinforced to handle abuse • Signage for island cap and roadside marquee • Installation tools To find gas stations where FuelCall systems are available, or for more information about the system, visit www.fuelcall.net and www.inclusionsolutions.com. n

FMNMagazine

fuelmarketernews.com

The United Statesâ&#x20AC;&#x2122; rig count is on the rise. During the first week of February 2017, 17 new rigs were added for a total U.S. rig count of 729. There are 158 more rigs compared to the same time last year.

Bottom Line

In contrast to the international production cuts following the OPEC deal, the U.S. rig count is steadily increasing and is at its highest point since October 2015. Sources: Baker Hughes and Reuters

at fuelmarketernews.com

READ MORE at fuelmarketernews.com

DEF and

MOBILE FUELING by Maura Keller

“”

“Mobile fueling creates value by removing the client’s hourly cost and associated truck time allocated to the refueling process. The same value savings for that calculation are present with mobile DEF service.” Bradley Davis, Managing Partner, Mobile Force Refueling

In January 2010, the U.S. Environmental Protection Agency (EPA) established new emissions standards that require medium and heavy-duty vehicles to significantly reduce engine emissions, particularly nitrogen oxides (NOx) and particulate matter (PM).

The solution adopted by the marketplace was Selective Catalytic Reduction (SCR), an advanced active emissions control technology system that injects a liquid-reductant agent through a special catalyst into the exhaust stream of a diesel engine. The reductant source is usually automotive-grade urea, otherwise known as diesel exhaust fluid (DEF), which is a combination of two parts water and one part urea (fertilizer). DEF sets off a chemical reaction that converts NOx into nitrogen, water and tiny amounts of carbon dioxide (CO2), which is then expelled through the vehicle tailpipe.

FMNMagazine

fuelmarketernews.com

DEF offers more efficient combustion, resulting in clean nitrogen and water emissions. Fleet vehicles using DEF and SCR technology can also experience the added benefit of fuel savings— around 5% compared to similar 2007 models. Most new diesel trucks, pickups, SUVs and vans are now fitted with SCR technology and have a DEF tank that must be regularly refilled. Refilling can be accomplished through two-gallon jugs, or a dispenser attached to a tank or tote system. These are located at a fleet site that handles its own onsite fueling, or off-site at a truck stop. But what about fleets and fuel suppliers that offer mobile fueling services?

BENEFITS of MOBILE FUELING As Amanda Cola, Senior Compliance Manager at Diesel Direct, explains, there are several benefits for a fleet to utilize a DEF mobile fueling service, such as the service Diesel Direct provides. “By incorporating DEF mobile fueling, a company assures their fleet is receiving American Petroleum Institute (API) certified DEF,” Cola says. “Another advantage to using the service is to eliminate potential workers’ compensation claims, and the liability of contamination and damage to the motor from accidentally dispensing DEF into a diesel saddle tank. “The service also eliminates the annoyance of having half-full and contaminated containers being left around the site. Lastly, the service saves the fleet owners the time and labor costs associated with having their drivers dispense the DEF.” Diesel Direct manages their own national fleet and understands the challenges of operating a fleet of vehicles. In addition, the company manages the supply,

delivery and fueling for more than 50,000 client sites and vehicles each week. After the introduction of DEF, Diesel Direct quickly recognized that this product had the potential for creating problems for the drivers and dispatch teams if not managed properly. Diesel Direct has a fleet of vehicles specifically designed to handle DEF and to dispense the product safely and efficiently for their customers. “A mobile fueling provider that can also provide mobile DEF fueling can accommodate all of their customers’ fueling needs,” Cola comments. “There are many ways to provide this service. At Diesel Direct, we use a Weights and Measures certified dispensing model and believe it is the best model for our customers.”

PRICING and VALUE

“”

“A mobile fueling provider that can also provide mobile DEF fueling can accommodate all of their customers’ fueling needs.” Amanda Cola, Senior Compliance Manager, Diesel Direct

for any client currently utilizing mobile fueling, the value savings of DEF are precisely the same.

“Mobile fueling creates value by removing the client’s hourly cost and So, what about the pricing models being used associated truck time allocated to the within the industry as it relates to DEF? Is the refueling process,” Davis says. “The cost folded into the fuel price, or is there a same value savings for that calculation separate DEF price? Actually, there are as are present with mobile DEF service. many methods for pricing DEF as there are for DEF is just a different product; however, pricing fuel. Every company is different the economics to the service remain depending on their business model. the same. In the same way that clients cannot fuel their trucks in more a costAccording to Bradley Davis, Managing Partner effective fashion than mobile fueling, at Mobile Force Refueling in Tempe, Arizona, the formula is the same for DEF. FMNMagazine

fuelmarketernews.com

“The labor and delivery costs can be broken out if needed, but that’s really dependent on the client. We will bill them in whatever fashion they’d prefer, although most clients like it all rolled into one price per gallon.”

EQUIPMENT SPECIFICS The equipment and technology required in the DEF fueling process is no different than what is already deployed in the mobile fueling business. However, DEF does require its own “dedicated” pump and meter due to its corrosive properties. “The costs for the equipment are all relatively the same for other mobile fueling products,” Davis explains. Quick Fuel Fleet Services, a leading fuel services provider, dispenses DEF using a closed-loop system, which means the fluid is not at risk for possible contamination from the point of manufacture to the point of delivery to the customer. This reduces the customer’s risk of voided engine warranties and costly mechanical repairs. What’s more, 33 of Quick Fuel’s cardlocks nationwide have DEF dispensers. For Quick Fuel customers who want DEF on-site, packaged DEF is available in totes (330 gallons), drums (55 gallons) or smaller containers ( 2.5 gallons).

“”

“In a time of increased regulation, driver turnover and uncertain fuel costs, fleet managers don’t want to worry about DEF deliveries.” Jay Buehler, DEF Manager, Jacobus Energy and Quick Fuel Fleet Services

LOGISTICS “DEF has become a critical component for fleet managers as trucks turn over and more and more of them require DEF,” says Jay Buehler, DEF Manager at Jacobus Energy and Quick Fuel. “However, the logistics of DEF delivery can be challenging to marketers. You’re typically delivering only a few gallons of DEF to each vehicle.” Most fleets are looking for an efficient, worry-free method of receiving DEF. “In a time of increased regulation, driver turnover and uncertain fuel costs, fleet managers don’t want to worry about DEF deliveries,” Buehler explains. Diesel Direct uses specialized equipment for their DEF product. “We believe a calibrated and proved meter is the best practice, and is effective at accurately calculating all gallons that are dispensed,” Cola says. “The DEF FMNMagazine

fuelmarketernews.com

replenishment needs for a customer’s truck are calculated based on the size of the DEF tank and the amount of diesel the truck uses.” At Mobile Force Refueling, offering DEF delivered on-site and directly into the fleet is a key benefit for customers. The company’s on-site delivery solution provides the convenience and security that fleets will be fueled with top-ofthe-line DEF wherever and whenever they need it. “Our globally recognized TerraCair brand is a 32.5% solution of high-purity

urea chemical reactant in demineralized water,” Davis says. This solution is designed specifically for use with Mobile Force Refueling’s SCR systems to reduce the amount of NOx emitted into the atmosphere. “It makes sense to incorporate mobile DEF service into the operation because it is now a mainstream need with high demand within conventional diesel fleets,” Davis continues. “The product is truly now part of any transportation operation, and what I would consider to be a necessity for any mobile fueling company. The obvious benefits are offering your client a one-stop shop and creating a solution for a logistical headache.”

The drawback of not providing mobile DEF is that your client is forced to go to a fuel station to get DEF, and if he or she is there already, why not fill up with fuel as well? “This could certainly cut into delivered gallons at any given location if the client is having to supplement DEF fueling on their own,” Davis explains. And as far as tracking customers’ replenishment needs go, Mobile Force Refueling normally has clients on a weekly schedule in most applications. “About 95% of the equipment we provide DEF services to is fine on a ‘weekly’ fill, so we’ve adopted that type of schedule for everyone,” Davis says. “There are a few exceptions, but very, very few.” As DEF becomes a mainstream component of the petroleum industry, API has initiated a voluntary program for certifying DEF producers and distributors through its Diesel Exhaust Fluid Certification Program. Suppliers who have been approved by API display its logo on their DEF products, guaranteeing the quality of the purchase and its suitability for proper SCR operation. API takes random samples in the market to ensure DEF quality. n

FREE WEEKLY eNEWSLETTER

fuelmarketernews.com

According to www.DiscoverDEF.com, a website geared toward the DEF industry, the production, handling and transportation of DEF are governed by the ISO 22241 standard. The standard covers five main points:

Urea concentration: DEF must have a urea concentration of 32.5% by weight. This concentration was selected because it has the lowest freezing temperature, 12°F (-11°C).

Contamination: Contaminated fluid can damage SCR injectors and catalysts, resulting

in system malfunction or failure. Therefore, the maximum level of impurities permitted in DEF, such as calcium and various metals like iron, copper, zinc and aluminum, are clearly specified. Their limits are set low. For example, a spoonful of table salt in a DEF tote would push the sodium content far above the ISO 22241 limit of 0.5 ppm.

Quality: ISO 22241 excludes the use of urea granules used as fertilizer in agriculture, and

requires water purified by distillation or deionization.

Materials:

Only certain materials are permitted for the storage and handling of DEF. DEF is corrosive to many materials, including carbon steel, copper and aluminum, which cannot be used. The main risk of using incorrect materials with DEF is that the material will contaminate it, resulting in damage or failure of the SCR system on your truck.

Handling guidelines: Guidelines require manufacturers to follow clear procedures for

the manufacturing and distribution of DEF, ensuring the product meets the requirements of vehicle manufacturers. FMNMagazine

fuelmarketernews.com

VENDOR VIEWPOINT:

When Temperatures Drop,

Keep Your Conﬁdence High with Biodiesel

Cold Flow Facts

by Gregg Hennigan

The frigid temperatures

much of the U.S. and Canada are experiencing serve as a reminder of one of the more persistent myths about biodiesel: it does not perform well in the cold.

That’s simply not true. Science has proven it, and so have fleets everywhere. From New England to the Rocky Mountains and up into Canada, fleets run their diesel vehicles on biodiesel blends all year. “With high-quality biodiesel, there’s almost no effect on cold weather operations with blends of 5% and below,” says Dave Slade, Executive Director, Biofuel Technology and Services at Renewable Energy Group, Inc. (REG), a leading biodiesel producer and supplier

First, here’s a quick review of some cold flow basics, which apply to petroleum diesel and biodiesel:

Cloud point:

based in Ames, Iowa. “And even in the heart of winter, many fleets use up to a 20% blend. Biodiesel can gel in very cold temperatures, but the same is true of petroleum diesel.” Proper additive use, storage and blending methods will help fuel marketers and fleets keep their operations running smoothly in the cold. The payoff is potentially significant. Not only does biodiesel often make good financial sense to marketers and fleets, its low emissions help organizations meet both their own and their customers’ environmental goals—an important issue as the sustainability trend continues to grow. FMNMagazine

68 64

Temperature at which wax crystals first appear in the fuel

Cold filter plugging point (CFPP): Indicator of cold weather operability

Pour point:

Lowest temperature that fuel continues to flow

Cold flow properties vary based on several factors, including the source of the crude oil, the feedstocks used to produce the biodiesel, the quality of the fuel, geography and more. Pure biodiesel, or B100, freezes at a higher temperature than most No. 2 Ultra-Low-Sulfur Diesel (ULSD), and untreated B20 usually freezes 2 – 10 degrees Fahrenheit (°F) faster, according to the National Biodiesel Board (NBB). “What’s important to remember is that blends up to B20 can be used successfully in cold weather with winter additives,” Slade mentions. “Fuel marketers and fleets that operate in cold weather are already well versed in using winter additives with petroleum diesel.”

fuelmarketernews.com

“”

“What’s important to remember is that blends up to B20 can be used successfully in cold weather with winter additives. Fuel marketers and fleets that operate in cold weather are already well versed in using winter additives with petroleum diesel.”

Many cold flow improver (CFI) additives are viscous, so it’s important for them to be warm enough that they mix well. “If this does not happen, the CFI can concentrate in one part of the tank and cause issues,” Slade advises. To test an additive’s effectiveness, place a small additized fuel sample in a refrigerator for one day. If particles or residue develop, make a new sample with more additive and try again. If the additive shows no effect at a level of 1 ounce per 3 gallons, consider switching additives.

Dave Slade, Executive Director, Biofuel Technology and Services for REG

Slade offers these tips for using additives with biodiesel blended fuel: • Use quality winter additives designed or biodiesel blends. Additives used in straight petrodiesel may not be the right solution. • Use in-line blending to ensure the best mix. • Keep the bulk fuel warmer than the additive’s handling temperature. Otherwise, the fuel can chill the additive and prevent good mixing. • Introduce the additive while the fuel is in motion and at a temperature high enough to ensure both the additive and the fuel flow easily. The minimum handling temperature should be provided by the additive manufacturer. If the additive is denser than the fuel, add it to the top of the tank. If t’s less dense, add it to the bottom of the tank.

It’s important to know the cold weather specifications of both your base diesel fuel and biodiesel before blending. For biodiesel, that should include the monoglyceride content, cold soak filtration test time and cloud point. A respectable supplier will provide a Certificate of Analysis that includes the product’s properties. That certificate isn’t always available with petroleum diesel from a terminal, but blenders should know the cloud point and/or CFPP of the diesel. When it comes to the actual blending, try to blend the biodiesel and petroleum diesel at least 10°F above their respective cloud points. Also, the warmer the biodiesel, the better it will blend, with 70°F or above being ideal. “If you are blending warm biodiesel into petrodiesel, that’s a good time to also mix in the additive,” Slade says. “The biodiesel will help the additive disperse throughout the fuel.” FMNMagazine

69 65

The cloud point of the biodiesel blend will determine the storage temperature of the fuel. For blends up to B20, heated and insulated tanks are not typically needed except in extremely cold climates. It is recommended that B100/B99 be stored in heated and insulated tanks. Extra precaution is needed in extreme cold. Above-ground storage and handling systems—including pipes, tanks and pumping equipment— should be protected with insulation, agitation, heating systems or other measures if temperatures regularly fall below the cloud point.

Blending Additives

Storage

fuelmarketernews.com

A good rule of thumb is to store biodiesel blended fuel at least 10°F warmer than its cloud point. This is less critical for tanks used consistently, or ones that can be recirculated or heated.

Distillation Many fuel marketers and fleets are aware of distillation because of its use in oil refineries. The purification process is relatively new to the biodiesel industry, and distilled biodiesel is already generating a lot of interest because of its many benefits. These include the end product’s purity and

WHOLESALE & FLEET OPERATIONS

When Temperatures Drop, Keep Your Confidence High with Biodiesel emissions emitted by biodiesel helped with their sustainability goals. G&D Integrated enjoys those benefits all year round, even during the Midwest’s freezing winter months.

low carbon intensity score, but perhaps the biggest advantage of distilled biodiesel is its cold weather performance. Compared to the traditional method for purifying biodiesel, distillation does a better job of removing minor components that cause filterplugging issues. This gives distilled biodiesel advanced cold weather properties. Even at a higher cloud point, distilled biodiesel can outperform undistilled low-cloud biodiesel in cold weather. “We’ve also found that, with the superior removal of minor components, distilled biodiesel offers a little more flexibility on additives and can be stored closer to the fuel’s cloud point—about 5°F warmer compared with 10°F for undistilled biodiesel,” Slade comments.

Fleet Uses B20 All Year So, what does cold weather biodiesel use look like in the real world? G&D Integrated is an Illinois-based for-hire carrier and third-party logistics provider. It has a fleet of over 400 vehicles travelling up to 26 million miles a year. G&D Integrated started using biodiesel blends several years ago, thoroughly testing the fuel and finding it had no negative effect on performance. In fact, the increased lubricity helped with engine functionality, and the lower

FMNMagazine

fuelmarketernews.com

The key, according to Vince Buonassi, the company’s Group Manager of Transportation Programs, is getting high-quality fuel, understanding cloud points and blending it properly. “We ran on a B20 blend throughout all of last year, and we didn’t have any engine issues,” says Buonassi. “We didn’t have one clogged filter. We didn’t have any gelling.” n

REG is a leading North American advanced biofuels producer and developer of renewable chemicals. REG utilizes a nationwide production, distribution and logistics system as part of an integrated value chain model to focus on converting natural fats, oils and greases into advanced biofuels and converting diverse feedstocks into renewable chemicals.

Cut Out Cross-Drops Bottom of the Tank:

Keep Your Labeling Up to Date

by W. Brian Reynolds

When it comes to petroleum fuel deliveries, it should be completely obvious as to what product goes in a specific tank with just a quick glance at the label.

How hard can it be to make sure the petroleum storage tanks (PSTs) have the correct placards for ease of identification? Apparently, after about two years of continuous operations, tanks magically start to lose their identity! For reasons that are mostly wear and tear, placards and color-coding tank lids and lines need maintenance just like anything else. Even automatic tank gauge (ATG) mapping can accidently change.

FMNMagazine

fuelmarketernews.com

It is easy to determine when fuel is delivered to the wrong tank. The ATG can show a greater volume than expected, continuous fuel monitoring can detect when the deed happened, diesel engines quit running and, of course, customers start to complain. Then there is the bill of lading (BOL): Does the truck tanker even contain a matching product on board?

“

My old stand-by test for handling complaints was, “If one customer complains, he’s probably a lunatic. If 100 customers start to complain all at once, it’s a problem that requires immediate attention.”

API Color Codes

If 100 customers pounce on a store manager, is the answer going to be, “No problem, we stand by our product”? Have you priced how much it costs to overhaul a diesel engine? You probably have liability insurance to cover such things, but how would you really handle a contaminated fuel problem? If it wasn’t contaminated at the The delivery driver often gets blamed for product terminal, then it’s not cross-drops. After all, that is who put it in the the fault of the supplier. If the tanks are mislabeled, it tank. But how often does anybody go out and probably isn’t the fault of the physically look and see how easy it would be driver or carrier. Are you sure to make a mistake? the insurance will pay?

There are all kinds of ways to determine when a cross-drop occurs. The problem with figuring out when it happened is that it already happened! Putting super in the regular tank, while expensive, is no big deal, but putting regular in the super tank or gasoline in the diesel tank is a big deal. Detection is great, but prevention is the best course of action. The delivery driver often gets blamed for cross-drops. After all, that is who put it in the tank. But how often does anybody go out and physically look and see how easy it would be to make a mistake? Painting the cover and lid sounds good, but what if the flange that holds the lid up is a different color? What if the paint is no longer visible? What if the lid has no paint? Does the location have multiple identifiers for the tank? After a while, paint fades or wears off from being repeatedly driven over, or sometimes the color seems to change. Vinyl fill neck rings are great, but they go missing in action. Brass concrete placards are even better, but concrete crumbles and the placards can fall out. How do you label a manifolded tank? How do you go about figuring when octane has been diluted to the point of needing a pump-out?

”

Store managers quickly learn how to diffuse situations with irate customers. However, being out of Amaretto creamer at the coffee bar and dealing with a stalled car driven by a mother with three kids in the backseat during a snowstorm are not exactly the same kind of problem! How do you handle the scenario when a customer pays cash for fuel? You have no documentation, no receipt and no video surveillance, yet the customer is adamant that bad fuel caused an engine problem. On top of everything else, this customer is related to everybody in town, just returned from four tours in Afghanistan where he was awarded the Congressional Medal of Honor, his mother taught first grade for 40 years and his dad is the town doctor! Disaster recovery and loss prevention often only occur after the low-hanging worst-case scenarios, such as storm- and fire-related issues, data loss, inventory and theft. Cross-drops happen all the time, but luckily most involve only small quantities and nothing dramatic happens. Regardless, it’s a good practice to inspect the tank labels and to practice how store personnel can handle real events caused FMNMagazine

fuelmarketernews.com

by a cross-drop that results in the wrong fuel being dispensed into a noncompatible engine. Fire marshal codes and other regulatory agencies require proper labeling, but frequently that becomes an out of sight, out of mind type of thing as it applies to petroleum storage tanks. Fire marshals and city inspectors tend to show up after something bad happens, and can frequently make their points about you and your store as the example after the fact. The good news about labeling or relabeling tanks is that it doesn’t cost much to do it correctly! n

Brian Reynolds Brian began his career working as a teenager in his family-owned jobbership in Cisco, Texas. He was at the forefront of cardlock systems in the 1980s, high-volume supermarket fueling centers in the 1990s and reward-based fueling loyalty technology and programs in the 2000s. Today, he is a leader in the promotion of continuous fuel monitoring for Wayne Fueling Systems.

The United States has more than 210 natural gas pipeline systems and 305,000 miles of interstate and intrastate transmission pipelines. Recognizing the importance of America’s pipeline system, President Trump addressed the Keystone XL Pipeline and Dakota Access Pipeline in two presidential memorandums shortly after his inauguration.

Bottom Line

While these orders are not quite “green lights” for builders to restart construction on the Keystone and Dakota Pipelines at this point, they invite the potential for progress on these projects in the future. Sources: U.S. Energy Information Administration (EIA) and the White House Press Office

at fuelmarketernews.com

Toxic Leadership

by Ann Pitts

major news story of 2016 broke when one of the largest banking institutions in the U.S., Wells Fargo, admitted that a large number of employees committed fraud against their own customer base by routinely opening accounts, including issuing credit and debit cards, without the knowledge of or permission from the customer.

FMNMagazine

According to media reports, over 5,300 employees were involved in this massive fraud, which is the largest scheme ever uncovered in a banking setting. The eventual cost to Wells Fargo is immeasurable, but includes $180 million in fines and unbelievably bad press resulting in customer loss. In addition, the scandal has, quite frankly, made a laughing stock of this financial giant.

fuelmarketernews.com

BUSINESS OPERATIONS

“

This is a bank known for having one of the strongest cultures in the industry, and is a core holding of investor Warren Buffett, for whom integrity is a key value. It’s a hard cold fact that no one wants to bank where there is no trust or integrity.

The examination must start with corporate culture, which can be defined as the beliefs and behaviors that determine how a company’s employees and management interact and handle outside business transactions.

The banking scandal has unfolded to be a leadership debacle that will, no doubt, be studied and dissected in business classes for many years to come. It will most likely result in federal regulators coming down hard and fast with new regulations and rules for the entire banking industry.

Often, corporate culture is implied, not explicitly defined. It develops organically over time from the cumulative traits of the people the company hires, and resulting actions from the top down. The culture is naturally affected and molded by organizational tolerance, including dress code, business hours, office setup, employee goals and measurement, hiring decisions, customer service and customer satisfaction.

In addition to regulatory attention, it’s been interesting to observe how Wells Fargo has handled a few of the key leaders. Executive reimbursement of salaries, bonuses and unvested stock awards has created one of the largest “claw backs” in history.

”

It’s highly doubtful that the bank’s hiring processes attracted a large group of immoral, ethically-challenged banking professionals. It’s much more likely that good employees were doing what they thought they were supposed to do, or at least had license to do, within the boundaries of their job.

For shocked business leaders watching this story unfold, the news flash is that this is not a problem specific to banking, but a leadership crisis that could happen anywhere. It’s an extreme example of a horribly corrupt business culture, in a setting where culture was supposedly held in high esteem.

Poor corporate culture might not be created by toxic leadership, but it is fed and tolerated by lack of direction and vision. Toxic leadership often lives in the gray areas of decision-making. Delayed decisions, unclear communication and tolerance of missteps greatly erode a highperforming corporate culture.

Strong cultures are built on the foundation of teams knowing exactly what the company’s corporate vision is, what is expected of them to achieve that vision as well as managers who are highly adept at motivating and inspiring employees.

How did this goliath bank, previously known for its reputation of financial strength—especially through the banking meltdown of 2008—create a culture that resulted in 5,300 employees exhibiting a shocking lack of morals and values? It’s highly doubtful that the bank’s hiring processes attracted a large group of immoral, ethically-challenged banking professionals. It’s much more likely that good employees were doing what they thought they were supposed to do, or at least had license to do, within the boundaries of their job. By the bank’s own admission, leadership established unrealistic, unachievable sales goals that were easy to get around by opening, and then deleting, fraudulent accounts.

Company vision must be supported by written policy, the game plan fully communicated and understood by all. Realistic, attainable goals that are measurable and framed in time with a beginning and an end must be part of the vision. Goals tied to compensation plans that are designed to be transparent and easily understood by both employees and management are key to motivation. Are the action items that make up the goals actually within the control of the folks being measured? Verification strategies should be in place to make sure employees are doing the right thing and not cutting corners or “fudging” results to meet their goals.

The fact that over 5,300 bank employees were performing this fraudulent action points to the obvious conclusion that the culture encouraged less-than-honest means to meet sales goals. This type of staggering misdeed by junior-level employees is just the trickledown effect. The breadcrumbs always lead to the top.

Wells Fargo set up admittedly unattainable goals, with no followup on the execution of achieving those goals. Auditors should have been able to see that the fake accounts were set up under Wells Fargo email addresses—ending in “@wellsfargo.com”— which was a huge red flag that something was not right.

The whole debacle is a critical and inexcusable error on the part of Wells Fargo’s leadership, and an error worth examining in relation to all businesses. It’s easy to sit back and be critical about others’ shortfalls, when truthfully, there could be many aspects of any corporate culture that could use some serious introspection and work. Recognizing weaknesses and flaws within one’s own company is much harder than picking those qualities out in another.

Under the surface of the company vision lies the core values that set the rules of behavior and priorities within an organization. These values help guide a group of employees around specific, idealized behaviors. Good examples of core values include demonstrating honesty, strong ethical behavior, stellar treatment of customers, the selling of high-quality products and serving the community. “Achieving sales goals (no matter the cost)” is not included here, but might be at the top of a toxic leader’s list.

FMNMagazine

fuelmarketernews.com

BUSINESS OPERATIONS

Toxic Leadership

Company vision and core values are helpful guidelines that serve to keep teams working together within the desired boundaries. That being said, it’s imperative that strong teams have the freedom to voice concerns or questions about these boundaries. Exceptional leaders encourage and invite critical, honest feedback. A group of followers do not create an acceptable corporate culture. However, the message that results from this feedback must be received with careful thought, consideration and even appreciation. Knowing employees’ honest opinions about company decisions helps to assure moral and ethical consistency between employees and leadership.

“How to lift some men up, how to calm down the others, until finally they’ve got one heartbeat together—a team. “There are just three things I’d ever say: if anything goes bad, I did it. If anything goes semi-good, then we did it. If anything goes real good [sic], then you did it. That’s all it takes to get people to win football games for you.” Wise words on leadership, no matter what kind of team. A final thought: recent ads run by Wells Fargo proclaim they are “moving forward to make things right.” Heavy emphasis on the moving forward part, which can’t happen soon enough for this banking giant. n

And finally, exceptional leadership fully and completely takes the blame when something does go wrong—no excuses, no finger pointing, no blank looks. Forensic-style examination of the breakdown in culture should be a priority addressed at the top level. The good news is that corporate cultures are fluid and can be changed for the better. When something goes wrong, identify the problem, address it and remove it like a surgeon cutting out cancer. Only truly toxic leaders would allow the cancer to continue unchecked.

Ann Pitts

A timeless example of terrific leadership is expressed by the great football coach Bear Bryant, who once said, “I’m just a plow-hand from Arkansas, but I have learned how to hold a team together.

FMNMagazine

fuelmarketernews.com

Ann is the President of The Pitts Group, a company dedicated to assisting petroleum marketers with increasing their cash flow by improving accounts receivable results. Staff training, sharing of best practices and strengthening company policy are all part of The Pitts Group program. Ann is an experienced business speaker and trainer who has enjoyed focusing on the petroleum industry for over 12 years. Contact her via cell, 817-304-1533, or email, ann.pitts@pittsgroup.net.

Phishing: The Biggest Cyber Threat Today by Bi ll

Boec k

strong argument can be made that phishing (including its variants, clone phishing, spear phishing, whaling and smishing) is the most important cyber threat facing companies and individuals today. Phishing allows criminals—known as phishermen—to exploit human weaknesses, to obtain information and access systems that are otherwise well protected. The consequences can be dire and the attacks are hard to prevent, so companies must understand the threat and be prepared for it.

What Is Phishing?

For the uninitiated, phishing involves sending an email that purports to be a legitimate message from a well-known sender. In fact, the email is from a criminal whose goal is to convince the recipient to send confidential information, or to insert malware into the recipient’s computer system.

FMNMagazine

fuelmarketernews.com

A typical phishing email might say the recipient’s account could be compromised, asking him or her to “update” information on a spoofed website that appears to belong to the legitimate third party. The phisherman then uses the information to steal the individual’s identity. Here is a good example of this type of phishing email:

“

BUSINESS OPERATIONS Phishing emails can have even more sinister and catastrophic uses. Phishing emails are also used to deliver malware into corporate systems, which then transmits confidential information to the phishermen. Such emails reportedly led to the Target breach in 2013, to the Anthem breach early this year and to other recent high-profile breaches. This second type of phishing email is frightening. If directed to someone who has the necessary computer system credentials to access confidential data—think C-suite executives or senior information technology (IT) staff—the email may allow the criminals to capture login information or to implant malware that will allow them to completely circumvent safeguards, such as data encryption, firewalls and so on. This is the reason why reports have stated that encryption would not have prevented the Anthem breach. Ironically, this second, more sinister type of phishing email is often a precursor to the first type of email directed at consumers. For example, the Anthem breach led to phishing emails just two days after the breach was disclosed. The following is an example:

Companies that have been phished risk the loss of

As fraudulent emails go, this one isn’t too bad. This example needs to be read closely to find the telltale characteristics of a phishing email, which will be discussed later. Take a look at this now, though, and ask yourself whether you would have clicked on this. If not, what would have aroused your suspicions? Don’t feel too bad if you would have responded to this. According to the Verizon 2015 Data Breach Investigations Report, 23% of people who receive phishing emails open them.

confidential information.This can include data that will facilitate the theft of money, but can also involve the theft of trade secrets and intellectual property. As seen in some high-profile breaches, a phishing attack may also result in the exposure of information that could be embarrassing to the company and its staff.

What Harm Comes from a Phishing Attack?

Who Are the Primary Targets of Phishing Scams?

According to a report issued by the Anti-Phishing Working Group, in Q4 of 2014 (the most recent quarter for which information is available), just three industry sectors were targeted in more than 75% of all phishing attacks.

other 4.71%

financial 20.79%

The harm to consumers is the most obvious. If someone responds to a phishing email, the information he or she provides is certain to be used for identity theft. Depending on what information is given, this can lead to the fraudulent use of credit cards, obtaining bank loans, theft of funds from bank accounts, filing tax returns and the theft of tax refunds, among other equally concerning events.

Companies that have been phished risk the loss of confidential information. This can include data that will facilitate the theft of money, but can also involve the theft of trade secrets and intellectual property. As seen in some high-profile breaches, a phishing attack may also result in the exposure of information that could be embarrassing to the company and its staff.

retail/ service 29.37%

payment services 25.13%

A phishing attack can also damage a company’s reputation, even if the company FMNMagazine

fuelmarketernews.com

had nothing to do with the attack. Phishermen regularly use the brands of companies to phish consumers. If an attack is large and successful enough that people associate the attack with the company, the company may unfairly suffer damage to its reputation, which could lead to a decline in its business. While the introduction of malware designed to capture confidential information is a primary goal of phishermen now, a frightening possibility exists. Phishing emails could be used to introduce malware, such as the Stuxnet worm, into industrial control systems to cause physical damage. According to a SecurityWeek report, this has already happened to a steel mill in Germany. It is easy to imagine lives being lost as a result, in addition to damaging the company’s reputation.

How to Avoid Phishing Losses

It would be ideal to say there are hardware and software fixes companies and consumers can use to guard against phishing attacks. While such defenses exist, they are not cure-alls. In reality, it is essential for email recipients—from a company’s CEO down to each of its customers—to be vigilant about spotting phishing emails to avoid opening or responding to them.

BUSINESS OPERATIONS To recognize and prevent phishing attacks, consider the following:

Companies need to train their

employees to identify phishing emails. This is the best defense available, and needs to be implemented mindfully and continually.

Phishing attacks frequently

originate in non-English-speaking countries, so employees need to look for awkward phrasing. This is one of the indicators in the previously mentioned email examples where phishermen posed as Citibank and Anthem.

Employees also need to check

any links in an email, but not by clicking on them. If the link appears to lead to an odd-looking web address, the email may be suspect. Likewise, if the web address is similar to, but not exactly the same as, a known address, that is a good sign the email is a phishing attempt.

Emails requesting personal

information should be treated as suspect. Given the prevalence of phishing attacks, few companies should be sending legitimate emails asking for such information.

Spear phishing emails often

purport to come from someone or an organization known to the recipient. Employees need to be especially careful about any email that does not seem quite right, either in content, phrasing, appearance or in the overall context of the individual’s relationship with the supposed sender.

When there is any doubt

about an email, an individual should verify that it is legitimate. The best place to start is a company’s website. In the case of Anthem, the company states on its website that it will not contact anyone by email. It is also possible to search the Internet using aspects of the suspect email to determine if it is part of a known scam.

How to Avoid Phishing Phishing and Cyber Losses from Insurance A phishing attack on a the Use of company should be covered a good cyber policy. Your Brand under A policy should cover legal Phishing: The Biggest Cyber Threat Today

For a company whose brand might be used in a phishing attack, there are fewer steps the company can take to protect itself and its customers.

One step would be for companies to clearly state on their website how they will communicate with customers. This will give customers a reference point to help determine if an email is legitimate. The site could also be a place where a company reports known phishing scams involving their brand. Another step companies can take is to include digital signatures in email messages. Such signatures are cryptographic codes that allow recipients to be certain the email was sent by the specified sender. While the technology for digital signatures currently exists, unfortunately many email senders, internet service providers, email client developers and others have not yet implemented the necessary infrastructure. There are additional email authentication actions companies can take. Email Answers’s article titled, “Phishing Emails: The Unacceptable Failures of American Express,” highlights a good example of the bad publicity a company may face if it isn’t as careful as it could be.

FMNMagazine

expenses and the cost to investigate what happened. If the attack leads to a data breach, a cyber policy should cover the resulting costs to notify affected individuals, as well as any other costs, such as credit and identity monitoring. Any liability to third parties should be covered under privacy and/or security liability insuring agreements. In the event the phishing attack results in the corruption or destruction of data, or in business interruption loss, most standard policies will not cover the company’s resulting losses. Such coverage is available, though, and is often an inexpensive policy addition. If a phishing attack leads to an infiltration of malware that causes physical damage or bodily injury, no standard cyber policy will respond to that loss. Some property policies might conceivably provide some coverage for property damage, but that is by no means certain. Fortunately, insurers are beginning to offer policies that address this exposure. No cyber policy will cover a damaged reputation sustained by a company whose brand is used in a phishing attack, though it may be possible to cover that loss in a specialized policy.

fuelmarketernews.com

Better Safe Than Sorry

While phishing is a growing concern and threat in today’s business environment, the awareness of the problem, preventative steps and insurance measures discussed in this article allow companies to combat many of the negative consequences of cybercrime. As phishermen become more advanced in their tactics, so do the security and preventative measures available to companies. n For a full list of references, view the online version of this article at FuelMarketerNews.com.

READ MORE at fuelmarketernews.com

Bill Boeck Bill is the Senior Vice President, Insurance & Claims Counsel, Global Technology and Privacy Practice at Lockton. More than 6,000 professionals at Lockton provide 50,000 clients around the world with risk management, insurance and employee benefits consulting services that improve their businesses. Contact 816-960-9670 or wboeck@lockton.com.

ROUNDUP:

ADDITIVES

Advanced Fuel Solutions, Inc.

Afton Chemical Corporation

Biobor Fuel Additives

Advanced Fuel Solutions, Inc. (AFS) develops, brands and markets nextgeneration premium fuel treatments for wholesalers, dealers, jobbers and fleets all over the country. While we will confidently put our suite of advanced multifunctional additive packages (which collectively treat all middle distillate fuels) against any on the market today, our customers tell us it is our commitment to service, reliability and quality assurance that distances our brand from the field. Established in 1996, we have built our business strategically and thoughtfully, one customer at a time. We are mindful that the rate of our growth never eclipses the quality of our service, and that the solutions we provide never cost more than the value they return. We’re proud to say that our very first customer is still with us today. At AFS, we treat our customers as carefully as we treat their fuel. Our field-proven products include OPT-AF™, ODT-21™, AWDA 1500™ and Slipstream® Premium Marine Fuel.

Afton Chemical, with over 90 years of experience in the fuel and lubricant additives marketplace, is one of the largest additive suppliers in the world. Afton Chemical Corporation uses its formulation, engineering and marketing expertise to help their customers develop and market fuels and lubricants that reduce emissions, improve fuel economy, extend equipment life, improve operator satisfaction and lower the total cost of vehicle and equipment operation. Afton Chemical Corporation develops and sells an extensive line of unique additives for gasoline and distillate fuels, driveline fluids, engine oils and industrial lubricants. Afton Chemical Corporation supports global operations through regional headquarters located in Asia Pacific, EMEAI, Latin America and North America. Afton Chemical Corporation is headquartered in Richmond, Virginia.

Biobor Fuel Additives has been a worldwide leader in the treatment of diesel, jet fuel and gasoline since 1965. The company’s flagship product, Biobor JF, is a widely used and recommended biocide for diesel and jet fuel, carrying an extensive list of OEM approvals from some of the world’s largest engine manufacturers. Additionally, Biobor produces a full line of diesel conditioners, cold flow improvers, detergents, cetane improvers and lubricity additives, solving a wide range of today’s fuel related issues. Fuel retailers across the country use Biobor JF as part of a regular maintenance program to keep storage tanks free from microbial contamination, while also offering consumer packaged products to diesel and gasoline customers. Bulk treatment programs are available with summer and winter premium diesel additives to offer your customers a premium fuel with added value.

www.yourfuelsolution.com

www.aftonchemical.com

READ MORE at fuelmarketernews.com FMNMagazine

fuelmarketernews.com

www.biobor.com

ADDITIVES ROUNDUP FPPF’s complete line of high-quality products. FPPF Chemical has distributors in all 50 states, Canada, Latin America, Europe and Australia. Virtually every truck stop in North America handles FPPF products. FPPF Chemical Company, Inc. FPPF Chemical Company, Inc. is a major U.S. manufacturer of fuel additives, conditioners and treatments founded in 1975. FPPF is a leader in quality and innovation for diesel fuel additives and treatments in the marketplace. FPPF’s original diesel fuel additive, Fuel Power®, remains a leading year-round diesel fuel treatment in the U.S. and Canada. As fuels have changed, FPPF’s highly skilled technical personnel have researched and developed many new products to enhance the company’s product line. These include Lubricity Plus Fuel Power, 8+ Cetane, Killem (Biocide), Marine Formula, Total Power (complete multifunctional additive), Polar Power (cold weather diesel fuel treatment), FPPF 4000 Cooling System Treatment, FPPF Ethanol Gas Treatment and a complete line of aerosol products and cleaners. Recently, technologically advanced biodiesel fuel additives now augment

www.fppf.com Howes Lubricator

Fuel Quality Services, Inc. Established in 1984, Fuel Quality Services, Inc. (FQS) is internationally recognized for providing superior and cost-effective fuel system biocides, stability additives, microbial test kits and on-site services to solve client issues in the crude oil and finished fuel markets. www.fqsinc.com

FMNMagazine

fuelmarketernews.com

Howes Lubricator is a fifthgeneration, family-owned company that produces some of the highest quality fuel and oil additives on the market. In 1920, Founder Wendell V.C. Howes formulated a line of preventative maintenance products that would fuel the company to worldwide recognition. Today, the Howes family is more dedicated than ever to giving their customers stateof-the-art, top-of-the-line products that meet the demands of changing fuels and engine designs. Using only the highest quality petroleum-based ingredients, Howes products differ from others because they never use alcohol or harmful solvents. All of their products are safe to use and guaranteed to work, giving your engine the best power, performance and protection available. Howes products include Howes Diesel Treat,

ADDITIVES ROUNDUP a top selling anti-gel in the United States and Canada, as well as Howes Meaner Power Kleaner, Howes Oil Enhancer and Howes Multi-Purpose Lubricating and Penetrating Oil, among others. www.howeslube.com

Innospec Fuel Specialties Innospec is a global specialty chemicals company focused on bringing innovative new technologies to market, combined with a fast and responsive service. To deliver maximum performance, modern engines need the very best fuels. All diesel fuel starts the same and can compromise vehicle operations. They impact power, increase engine noise and affect fuel economy and emissions. Untreated fuels can lead to an excess of corrosion, injector fouling and harmful emissions. Innospec’s Performance Specialties fuel additives offer a wide range of solutions to upgrade the performance of fuels. Innospec is solely dedicated to fuel and fuel additive technology. Our team is focused on the high performance premium diesel and gasoline markets. Whether a customer is looking to open up new markets, develop new products or optimize performance of a particular type of fuel, our team has the market knowledge, technical expertise and capability to deliver customer- and application-specific fuel treatments.

ValvTect Petroleum Products Schaeffer’s Fuel Additives Schaeffer’s Fuel Additives have a reputation for extending engine and component life, increasing fuel economy and improving overall engine efficiency and performance. In particular, Schaeffer’s CarbonTreat™ premium fuel additive line is specifically designed for high-pressure common rail (HPCR) systems, and compares to other products that offer similar technology but without a complete premium package. Schaeffer’s CarbonTreat™ premium fuel additives are multifunctional, ULSDcompliant diesel fuel additives that are highly effective at combating sludge and plugging issues that can impair engine performance. They are also formulated to improve fuel economy, reduce exhaust emissions and increase horsepower. Schaeffer’s CarbonTreat™ premium fuel additive line is available in summer, winter and all-season formulations, and can be used in any diesel-powered vehicle and in all types of diesel fuel, including low-sulfur diesel fuel and biodiesel blends. www.schaefferoil.com/carbontreat

www.innospecinc.com

MidContinental Chemical Company, Inc. MidContinental Chemical Company (MCC) manufactures and distributes petroleum additives that enhance the performance of fuels and lubricating oils. MCC provides comprehensive additive solutions to the petroleum industry, including refineries, pipeline operators, petroleum terminals, fuel distributors/jobbers, retail fuel marketers, c-store chains, aftermarket product packagers and lube oil and grease manufacturers. www.mcchemical.com FMNMagazine

fuelmarketernews.com

ValvTect Petroleum Products is a leading supplier of high performance diesel, high performance winterized diesel, heating oil and gasoline additives to fuel distributors, truck stops, fleets, marinas, railroads, terminals and refiners nationwide. ValvTect also supplies a complete line of propane gas additives and BlueMoon filters and filtration systems to propane and gas distributors and dealers. Our registered trademarks—Diesel Guard, XP+, Energy Additives (EA), BioGuard and ValvTect Marine Fuels—represent not only quality fuels sold to millions of consumers, but are also supported by marketing programs, in-field technical expertise and advanced formulas to meet the demands for the ever-changing fuels that are available. We specialize in providing solutions for you and your customers’ fuel problems at an economical cost. www.valvtect.com

READ MORE at fuelmarketernews.com

FUEL MARKETER NEWS

INDUSTRY NEWS

REGULATORY UPDATE:

Visa Moves Back Forecourt EMV to 2020 Visa announced the decision to delay the implementation deadline for fraudresistant EuroPay MasterCard Visa (EMV) “chip card” technology at the forecourt from October 1, 2017, to October 1, 2020. The rationale for this move has been the challenges associated with updating card readers at the dispenser function with this new technology. This not only points to the costs involved, but also the physical ability to perform the required upgrade work by the old deadline. As Visa noted on its website, “The fuel segment has its own unique challenges, which we recognized when we first set the chip activation date for automated fuel dispensers/pumps (AFDs) two years after regular in-store locations. We knew that the AFD segment would need more time to upgrade to chip because of the complicated infrastructure and specialized technology required for fuel pumps.” Commenting on the new EMV deadline, Gray Taylor, Executive Director of Conexxus, noted, “I believe the card brands have come to understand that these challenges are not of retailer

creation, but a result of late specifications, certification complexity and supply chain constraints, rather than a lack of resolve to adopt EMV. We don’t see this announcement as a true game delay, but a bit of breathing room to work out the challenges.” The National Association of Convenience Stores (NACS) has estimated that the cost to bring EMV to the forecourt will be roughly $30,000 per store, for a total industry cost of approximately $4 billion. For a more detailed review of the delayed deadline, early adoption and what’s next for EMV in the future, see “Changes in EMV Adoption” on page 33. n REGULATORY UPDATE:

EPA Announces Final RFS Volumes for 2017, and the Biomass Diesel Volume for 2018 On November 23, the U.S. Environmental Protection Agency (EPA) finalized the volume requirements and associated percentage standards that apply under the Renewable Fuel Standard (RFS) program in calendar year 2017 for cellulosic biofuel, biomass-based diesel, advanced biofuel and total renewable fuel. EPA also FMNMagazine

fuelmarketernews.com

finalized the volume requirement for biomass-based diesel for 2018. As the agency noted, “The final volumes represent continued growth over historic levels. The final standards meet or exceed the volume targets specified by Congress for total renewable fuel, biomass-based diesel and advanced biofuel.” This is a notable turnaround by an EPA that previously focused on blend wall concerns—the ability to blend ethanol in gasoline at levels no more than 10%, which is the most universally acceptable level where automobiles and fueling infrastructure warranties are concerned. To learn more about the changes outlined in the EPA announcement, see the full article on our website, www.FuelMarketerNews.com. n REGULATORY UPDATE:

API’s Jack Gerard Looks Forward to Working with Pruitt as EPA’s Next Administrator American Petroleum Institute (API) President and CEO Jack Gerard released the following statement on then-

INDUSTRY NEWS President-elect Donald J. Trump’s nomination of Oklahoma Attorney General Scott Pruitt to serve as the next Administrator of the U.S. Environmental Protection Agency (EPA). “Mr. Pruitt’s work as Oklahoma’s Attorney General shows that he understands how important America’s oil and natural gas industry is to our nation and to our economy,” said Gerard. “Under the [Obama] administration, our industry was facing a barrage of 145 regulations that would have unnecessarily destroyed jobs and added costs to consumers. “Pruitt has a track record of dispelling the false idea that energy development and environmental stewardship cannot go hand in hand. Moving forward, we must have smart, common sense regulations that protect the environment and do not raise prices on Americans. “We look forward to working with Mr. Pruitt, the new administration and the new Congress on policies that will keep energy affordable, create jobs and strengthen our economy as we lead the world in the production of oil and natural gas and reducing carbon emissions.” n REGULATORY UPDATE:

NRF Welcomes Defeat of Labor Department’s “Persuader” Rule The National Retail Federation (NRF) welcomed a permanent injunction issued by a federal judge, declaring the Labor Department’s “persuader rule”—which limits employers’ use of outside legal counsel or consultants to fight union organizing—to be unlawful. The regulations would have dramatically expanded employers’ disclosure requirements for any communications that could even indirectly persuade workers regarding collective bargaining. “The court rightly came down on the side of protecting free speech and attorneyclient privilege,” NRF Senior Vice President of Government Relations David French said. “Smaller retailers would have been the first to suffer from the chilling effect the persuader rules would have

Regulatory Updates had on simple legal advice regarding collective bargaining issues. Retailers are pleased that the courts have put a stop to this unnecessary and harmful overreach of power by the Labor Department.” NRF and other business groups expressed concern that the rules would discourage employers from seeking advice of counsel in a broad swath of areas that had nothing to do with traditional “persuader” activities. U.S. District Judge Sam R. Cummings agreed, saying some law firms had already decided to refuse to provide advice they feared might trigger reporting requirements to the federal government under the new standards. n REGULATORY UPDATE:

FMCSA Establishes National Training Standards for New Truck and Bus Drivers The U.S. Department of Transportation’s (DOT’s) Federal Motor Carrier Safety Administration (FMCSA) announced a final rule establishing comprehensive national minimum training standards for entry-level commercial truck and bus operators seeking to obtain a commercial driver’s license (CDL) or certain endorsements. The standards established in the rule address the knowledge and skills necessary for the safe operation of commercial motor vehicles, and also establish minimum qualifications for

At the end of 2015, more than 80% of the world’s proven crude oil reserves were located in OPEC member countries, with the bulk of OPEC oil reserves in the Middle East, amounting to 65% of the OPEC total. Source: Organization of the Petroleum Exporting Countries (OPEC)

FMNMagazine

fuelmarketernews.com

entities and individuals who provide entrylevel driver training. The entry-level driver training final rule retains many of the consensus recommendations of a negotiated rulemaking committee, comprised of 25 stakeholders and FMCSA representatives. The comprehensive CDL training requirements, which emphasize safety and promote driving efficiency, will result in lives saved, reductions in fuel consumption and emissions, vehicle maintenance cost reductions and industrywide performance improvements. The rulemaking was mandated by Congress in the Moving Ahead for Progress in the 21st Century Act (MAP-21). n REGULATORY UPDATE:

AFPM Petition for Waiver of 2016 Cellulosic Biofuel Volumetric Requirements American Fuel & Petrochemical Manufacturers (AFPM) filed a petition requesting that the U.S. Environmental Protection Agency (EPA) waive the 2016 Renewable Fuel Standard (RFS) cellulosic volumes, to avoid “phantom fuel” compliance payments arising from a shortfall in 2016 cellulosic production. AFPM estimates that a favorable decision on this petition would reduce payments for these non-existent fuels by $50 – $75 million. As noted in the petition, “AFPM represents high-tech American manufacturers, fueling and building America’s future. Our members produce virtually all the refined petroleum products and petrochemicals manufactured in the United States, and are obligated parties under EPA’s RFS. “AFPM’s refining members are adversely impacted by EPA’s overestimate of 2016 cellulosic biofuel production, and are unable to acquire the requisite amount of cellulosic biofuel Renewable Identification Numbers (RINs) to comply with EPA’s 2016 cellulosic mandate under the RFS.” n

INDUSTRY NEWS

PDI Acquires Pinnacle’s ERP Assets

Pinnacle will retain the remaining assets and customers for its point of sale (POS), payments, loyalty and new Affinity™ mobile solutions.

PDI, a leading provider of software solutions to the convenience retail and wholesale petroleum industries, announced it has acquired the enterprise resource planning (ERP) assets of The Pinnacle Corporation, a privately held company with corporate headquarters in Arlington, Texas.

PDI recently completed the acquisition of Intellifuel Systems Inc., a provider of fuel management and logistics solutions for downstream and midstream participants in the fuel supply chain, to help petroleum marketers automate the entire order cycle.

Pinnacle, a leading supplier of technology to the convenience store and fuel petroleum markets, currently serves convenience retailing clients and fuel marketers representing over 20,000 convenience stores across the United States. PDI will acquire Pinnacle ERP software assets, intellectual property, development and support resources— adding these solutions to PDI’s software offerings for retail automation, fuel supply chain, business intelligence and workforce management.

It was also announced that former Pinnacle President Drew Mize is moving to PDI as Vice President of PDI/Pinnacle Operations. Mize will spearhead PDI’s integration strategy following the acquisition of Pinnacle’s ERP assets. n

OPW Celebrates 125th Anniversary in 2017 OPW, a Dover company and a global leader in fluid-handling solutions, is proud and honored to announce it will observe a year-long celebration of the company’s 125th anniversary in 2017. OPW was

founded as the Ohio Pattern Works & Foundry Company in Cincinnati in 1892. Founded through a $390 investment by Victor E. Tresise and Joseph E. Hausfeld, OPW began life during the Industrial Revolution as a company that created wood and metal patterns for use in the manufacture of everything from grave markers to oil valves. Over the years, the company was able to thrive by identifying and reacting to changes in the markets in which it operated. Through a series of shrewd business decisions and strategic acquisitions, OPW has established a global reputation as the fluid-handling equipment brand of choice, earned by providing high-quality products that deliver trust and peace-of-mind assurance in the areas of safety, reliability, durability and environmental sustainability in critical fluid-handling operations. n

Dover Completes Acquisition of Wayne Fueling Systems Dover has completed its previously announced acquisition of Wayne Fueling Systems, a global provider of fuel dispensing, payment, automation and control technologies for retail and commercial fuel stations. The Wayne acquisition is Dover’s fourth acquisition in the retail and commercial fueling space since the beginning of 2016. Dover is now combining these companies into a new business called Dover Fueling Solutions (DFS), which includes Wayne, Tokheim, ClearView, Fairbanks, ProGauge and OPW’s Fuel Management Systems. The focus of DFS will be to deliver advanced fuel dispensing equipment, electronic systems and payment, automatic tank gauging and wetstock management solutions to customers worldwide. The combined product portfolio of DFS and OPW represents the industry’s only global end-to-end fueling solution. David Crouse, former President of OPW for 10 years, has been named President

FMNMagazine

fuelmarketernews.com

INDUSTRY NEWS of the Dover Fueling Solutions business. Dover Fueling Solutions will be headquartered in Austin, Texas, and will have a significant manufacturing presence around the world, including facilities in the U.S., UK, the Netherlands, Sweden, France, India, China and Brazil. n

Growth Energy: American Drivers Surpass 500 Million Miles on E15 Growth Energy announced that E15 has reached a milestone. Based on sales and consumption data reported over the past 12 months by major gasoline retailers, drivers across the United States have driven more than 500 million miles on E15, highlighting the fuel’s performance, safety and value for American consumers. “Ethanol is already in 97% of the gasoline sold in the United States, so drivers are accustomed to the better

value and higher performance of fuel blended with ethanol,” said Emily Skor, Growth Energy CEO. “Now drivers are finding out that E15, which contains 15% ethanol, is an even better choice for their wallets, their engines and the environment. That’s why more than 400 stations across 28 states are selling E15, and demand continues to grow.” n

SkyBitz Introduces Tank Monitoring Division SkyBitz®, a leader in commercial Internet of things (IoT) telematics, introduces the SkyBitz Tank Monitoring division (previously known as TankLink). The new SkyBitz division also launched the SMARTank™ portal and mobile app. The SMARTank Portal, previously known as TankDataOnline, delivers all of the critical tank level information needed to make smart inventory management

FMNMagazine

fuelmarketernews.com

decisions. The new SMARTank mobile app allows inventory managers, suppliers and distributors to easily access tank information from anywhere on their Android or iOS mobile devices. With the easy-to-navigate SMARTank portal and mobile app, users can access tank level information, trends, logging and reports, and can receive notifications, alerts and alarms based on criteria they set, and more. A non-branded version of the app is also available for use by thirdparty suppliers and distributors. n

REG Celebrates Completion of $34.5 Million Upgrade Project at Danville Biorefinery Renewable Energy Group (REG) marked the completion of $34.5 million in upgrades and enhancements of its Danville, Illinois, biorefinery on October 4

INDUSTRY NEWS with a ribbon cutting ceremony and visit by Congressman John Shimkus. The upgrades include the addition of biodiesel distillation and other manufacturing upgrades, which will allow the 45-million-gallon nameplate capacity biorefinery to use a wider array of lower carbon intensity feedstocks. The project also included logistical improvements, such as an additional truck loadout, new warehouse and office space and the acquisition and integration of approximately 13 million gallons of biofuel and feedstock storage from the neighboring Bunge facility, which will significantly improve year-round production and storage capabilities at REG Danville and within REG’s logistics system. REG acquired the Danville biorefinery in 2010 from Blackhawk Biofuels LLC. It is one of the company’s 11 biomass-based diesel refineries across the U.S. that have a combined nameplate production capacity of 452 million gallons annually. n

NitroVend Self-Service Nitrogen Tire Inflation Launches in Louisiana Stores in Baton Rouge, Louisiana, and throughout the state are now offering easyto-use self-serve nitrogen provided by NitroVend tire inflation machines. NitroVend is the first self-service nitrogenproducing machine that gives drivers the easy drive-up access for topping off, or to completely fill and purge tires for a full conversion from air-filled tires to nitrogen. Longer lasting tires mean fewer tires end up in landfills, which is one of many environmental benefits to having more nitrogen-filled tires on the road. Customers using the new NitroVend machines can still get air service if they prefer to maintain airfilled tires. It takes just minutes to top off nitrogenfilled tires, and less than five minutes to completely fill and purge a tire for a full

nitrogen conversion. The cost to top off four tires is $5, and the cost for a complete conversion is $5 per tire. Following NitroVend’s November 2016 soft launch in Louisiana, stores in seven other key states will begin offering NitroVend tire inflation self-service. n

Warburg Pincus Agrees to Acquire Ascentium Capital Warburg Pincus, a global private equity firm focused on growth investing, announced that funds affiliated with the firm have agreed to acquire Ascentium Capital, the third largest private-independent equipment finance company in the U.S. by origination volume, with assets over $1.1 billion. Tom Depping, CEO of Ascentium Capital, has agreed to roll over his entire equity ownership stake in the business and continue to lead the company. Ascentium Capital offers a suite of financial products that cater to the capital needs of small businesses. The company is a leading provider of vendor financing, as it partners with manufacturers, distributors, resellers and franchise organizations to finance the equipment and technology purchases of their small business customers. The company also has a growing direct-to-end-customer business where it directly finances small businesses. Since its founding in 2011, Ascentium Capital has provided over $2 billion in financing, and since 2012, the company’s originations have grown at a 51% annualized growth rate. n

U.S. Bank Voyager® Network Expands Private Site Acceptance, Adds Richer Data U.S. Bank will be expanding its Voyager® Network by making its fuel card usable at thousands of additional private fueling sites. The card will provide fleet managers with richer data and more control when their drivers access such automated, unattended fuel sites. FMNMagazine

fuelmarketernews.com

INDUSTRY NEWS Corporations, government agencies and other organizations often power their fleets with fuel purchased in bulk, dispensed from private locations. These private fueling sites, sometimes known as “cardlock” or “backyard” sites, offer flexibility beyond the usual gas stations and truck stops.

Matrix Announces the Successful Sale of F.L. Roberts’s Convenience Store, Car Wash and Jiffy Lube Businesses

Gilbarco Veeder-Root, Xpedient and P97 Partner to Deliver a Mobile Commerce Solution

With the Voyager Network expansion, drivers can access thousands more private sites with their fleet cards, while fleet managers get additional controls, pricing capabilities and robust “level III” fleet data, such as vehicle identification, odometer reading, fuel grade and gallons for each purchase.

Matrix Capital Markets Group, Inc. announced the successful closing on the sale of F.L. Roberts & Co., Inc.’s convenience store, car wash and Jiffy Lube businesses. The convenience store and car wash businesses were acquired by the affiliated companies of Nouria Energy Corporation, and the Jiffy Lube business was acquired by Atlantic Coast Enterprises, LLC.

Gilbarco Veeder-Root, Xpedient LLC and P97 have partnered to enable the next advancement in payment, loyalty and food ordering from a mobile device. P97’s PetroZone® solution for mobile payment and digital offers has been tested and certified with the Gilbarco Passport® Point of Sale.

The Voyager Network is owned and operated by U.S. Bank and includes more than 230,000 locations nationwide. This marks the second expansion for Voyager in as many months. In late August, U.S. Bank launched the new Voyager Fleet Card: the first fully integrated fuel payment solution to cover all vehicle classes—from cars to light-duty trucks and over-the-road rigs—on a single card. n

The company, headquartered in Springfield, Massachusetts, owned and operated a chain of 26 convenience stores and retail fuel outlets, 22 Golden Nozzle car washes and nine Jiffy Lube quick lube facilities in the greater Springfield and Hartford, Connecticut, markets as well as northern and western Massachusetts. n

FMNMagazine

fuelmarketernews.com

This new mobile commerce solution is based on the Conexxus Standard Interface, and mobile ordering has been integrated through an application programming interface (API) provided by Gilbarco’s food service partner, Xpedient LLC. n

READ MORE at fuelmarketernews.com

INDUSTRY NEWS

7-Eleven, Inc. Selects NEC as Exclusive Point of Sale Provider NEC Corporation of America, a leading provider and integrator of advanced information technology (IT), communications, networking, retail and biometric solutions, announced it will be the new exclusive point of sale (POS) provider to 8,600 7-ElevenÂŽ stores throughout the United States and Canada. n

READ MORE at fuelmarketernews.com

Par Pacific Selects PriceAdvantage to Execute Remote Fuel Price Changes PriceAdvantage, a fuel price management software company and division of Skyline Products, announced that Par Pacific Holdings, Inc. has selected PriceAdvantage fuel pricing software to help determine optimal fuel prices and execute faster price changes among their growing network of over 80 stores in Hawaii.

PriceAdvantage has the ability to make rapid, automatic price changes for those stores that fall within pre-set pricing strategies, then notify the pricing team of those stores that fall outside the predefined strategies. This saves the fuel pricing team time and allows them to concentrate on those stores that might have market anomalies. Par Pacific selected the PriceAdvantage software as a service (SaaS) solution to leverage the benefits of a cloud service model, including the low upfront cost, ease of implementation and the maintenance and infrastructure cost benefits. PriceAdvantageâ&#x20AC;&#x2122;s pre-built integrations with PDI and OPIS allowed the chain to be up and running quickly. n

Chevron Signs Agreement with WEX Chevron Products Company, a division of Chevron U.S.A. Inc., has announced the signing of a long-term agreement with WEX Bank, a subsidiary of WEX Inc., a global provider of corporate payments solutions, to issue and operate Chevronand Texaco-branded commercial fleet cards commencing in January 2018. Through this agreement, WEX will manage fleet card distribution and provide related payment services to Chevron and Texaco customers. WEX will also provide Chevron and Texaco customers with a complete range of features, functionalities and solutions to manage their fleets, offering ongoing benefits to customers as well. n

Cloud-Based Fuel Monitoring System from Warren Rogers Simplifies PCI Compliance and Features Multi-Layered Security Warren Rogers, a leading provider of precision fuel monitoring for convenience stores and other fuel retailers, announced FMNMagazine

fuelmarketernews.com

INDUSTRY NEWS the availability of its Payment Card Industry (PCI)-compliant, cloud-based fuel monitoring system. The enhanced system possesses built-in, multi-layered and redundant security measures, and helps expedite PCI acceptance from corporate compliance and information technology (IT) departments.

Verifone Leads Effort to Define and Implement the Newest Conexxus Mobile Payment Global Standard for Loyalty

Integral to the system is the Warren Rogers on-site processor (OSP), a network appliance that is installed at each fuel retailer’s location. The OSP collects fuel data from a variety of on-site peripherals. The raw data is securely transmitted in real time to Warren Rogers’s highly scalable and redundant cloud infrastructure.

Verifone is the first to adopt and deploy the new Conexxus Mobile Payment Standard, creating a more consumer-centric mobile commerce environment in gas stations and convenience stores—and at the pump—by allowing tightly coordinated interaction between mobile payment and loyalty applications.

Warren Rogers can assure that the data collected and transmitted only contains the minimum amount of corporate information needed for data processing operations and does not contain customer cardholder data. n

FREE WEEKLY eNEWSLETTER

fuelmarketernews.com

Working with mobile payment early adopters to define a standard interface, Verifone was instrumental in creating an open application programming interface (API) that all mobile payment providers and point of sale (POS) manufactures can implement. Verifone and its partners are now deploying open mobile payment solutions across a wide variety of applications, including retail-

FMNMagazine

fuelmarketernews.com

branded apps and direct Automated Clearing House (ACH) payment at the pump with community banks. n

NRC Realty & Capital Advisors and Petroleum Equity Group Announce Strategic Alliance NRC Realty & Capital Advisors, LLC of Chicago and Petroleum Equity Group, Ltd. (PEG) of Chappaqua, New York, announced a strategic alliance between the two veteran companies to provide joint real estate and financial advisory, among other services, to owners and operators in the convenience store and gasoline station industry. Ken Shriber, Managing Director of Petroleum Equity Group, said, “We are excited to form this strategic alliance with NRC. Over the past few years, the companies have mutually admired the quality of work they independently

INDUSTRY NEWS produce, and we thought this was the right time to co-develop future business. By combining resources on selected projects, we believe that together we can deliver even greater opportunities and improved services to clients.â&#x20AC;? n

Penske Truck Rental Makes Collision Avoidance Systems and Air Disc Brakes Its Standard Spec to Help Fleets Boost Over-the-Road Safety Penske Truck Rental announced it is making collision avoidance systems and air disc brakes its standard spec on commercial tractors within its rental fleet. Penske has ordered more than 2,000 commercial semi-trucks from Freightliner, Volvo and Navistar with the new spec. The 2018 model year units are set to begin

going into service and will be available for rental starting as early as February. Additional rental units with this increased safety spec will continue to come into service as Penskeâ&#x20AC;&#x2122;s fleet is replenished. n

CITGO Launches the CITGO STEM Talent Pipeline Educational Program, Announces Grants to Expand Learning and Career Opportunities To increase access to educational opportunities in science, technology, engineering and math (STEM) that will open doors to rewarding careers, CITGO Petroleum Corporation is launching a new social responsibility program, the CITGO STEM Talent Pipeline, for students enrolled in elementary school through post-secondary education and beyond.

FMNMagazine

fuelmarketernews.com

CITGO is kicking off the CITGO STEM Talent Pipeline with a series of grants for schools and educational organizations near its operational areas, including Houston (where its corporate headquarters is located) and its three refineries in Corpus Christi, Texas, Lake Charles, Louisiana, and Lemont, Illinois. The company is also providing scholarships for students pursuing higher degrees in STEM fields. CITGO plans to utilize the experience of its own employees through mentoring efforts as well. To further the mission of the program, CITGO is working with the National Energy Education Development (NEED) Project to provide workshops for local educators near all three CITGO refineries. The NEED Project, which began on National Energy Education Day 35 years ago, trains teachers on how to provide comprehensive lessons on energy in the classroom with its portfolio of over 130 teacher and student guides. n

What Does That Mean

Test Your FMN Acumen The list below represents acronyms used in this issue of Fuel Marketer News.

Per Barrel

ERP

Enterprise Resource Planning

°C

Degrees Celsius

EWG

Environmental Working Group

°F

Degrees Fahrenheit

FMCSA

ACH

Automated Clearing House

Federal Motor Carrier Safety Administration

ADA

Americans with Disabilities Act of 1990

AFD

Automated Fuel Dispenser

AFPM

American Fuel & Petrochemical Manufacturers

API

American Petroleum Institute

API

Application Programming Interface

ATG

Automatic Tank Gauge

ATRI

American Transportation Research Institute

BCM

Billion Cubic Meters

BLM

Bureau of Land Management

BOL

Bill of Lading

CAFE

Corporate Average Fuel Economy

CARB

California Air Resources Board

CDL

Commercial Driver’s License

CFI

Cold Flow Improver

CFPP

Cold Filter Plugging Point

CO2

Carbon Dioxide

DEF

Diesel Exhaust Fluid

DOE

U.S. Department of Energy

DOI

U.S. Department of the Interior

DOJ

U.S. Department of Justice

DOT

U.S. Department of Transportation

eBOL

Electronic Bill of Lading

EIA

U.S. Energy Information Administration

EMEAI

Europe, Middle East, Africa, India

EMV

EuroPay MasterCard Visa

EPA

U.S. Environmental Protection Agency

g/bhp-hr Grams Per Brake Horsepower-Hour

NHTSA

National Highway Traffic Safety Administration

NOx

Nitrogen Oxides

NRDC

Natural Resources Defense Council

NRF

National Retail Federation

OEM

Original Equipment Manufacturer

OPEC

Organization of the Petroleum Exporting Countries

OSP

On-Site Processor

PCI

Payment Card Industry

Particulate Matter

GDP

Gross Domestic Product

GHG

Greenhouse Gas

HPCR

High-Pressure Common Rail

IER

Institute for Energy Research

IMF

International Monetary Fund

IoT

Internet of Things

ISIL

Islamic State of Iraq and the Levant

PNZ

Partitioned Neutral Zone

Information Technology

POS

Point of Sale

kbpd

Thousand Barrels Per Day

ppm

Parts Per Million

LNG

Liquefied Natural Gas

psi

Pounds Per Square Inch

LTO

Light Tight Oil

PST

Petroleum Storage Tank

MAP-21

Moving Ahead for Progress in the 21st Century Act

RFID

Radio Frequency Identification

RFS

Renewable Fuel Standard

MMbpd

Million Barrels of Oil Per Day

RIN

MMT

Million Metric Tons (U.S.)

Renewable Identification Number

MMT

Million Tonnes (EU)

SaaS

Software as a Service

MMTOE

Million Tonnes of Oil Equivalent (EU)

MTBE

Methyl Tertiary Butyl Ether

NAAQS

National Ambient Air Quality Standards

NACS

National Association of Convenience Stores

NBB

National Biodiesel Board

NEED

National Energy Education Development

NFC

Near-Field Communication

FMNMagazine

fuelmarketernews.com

SCAQMD South Coast Air Quality Management District SCR

Selective Catalytic Reduction

STEM

Science, Technology, Engineering and Math

UAE

United Arab Emirates

ULSD

Ultra-Low-Sulfur Diesel

US$B

Billion U.S. Dollars

UST

Underground Storage Tank

WTI

West Texas Intermediate

YOY

Year-Over-Year

ADVERTISER’S INDEX

Our Advertisers Company

Page

Company

Page

ADD Systems

Lomosoft

AIMS

American Coalition for Ethanol

National Advanced Biofuels Conference & Expo/BBI Int’l

North American Bancard

Ascentium

BASE Engineering Inc.

NPGA SE Convention & International Propane Expo

Biobor

Bioheat

CONEXPO-CON/AGG

RDM Industrial Electronics, Inc.

Back Cover

Renewable Energy Group

Cummins & White

Inside Back Cover

Eastern Energy Expo

Schaeffer’s Fuel Additives

48 – 49

FPPF

Scully

Franklin Fueling Systems

SkyBitz Petroleum Logistics

Source North America

Southeast Petro-Food Marketing Exposition

Innospec

Inside Front Cover

International Biomass Conference & Expo/BBI Int’l

International Fuel Ethanol Workshop & Expo/BBI Int’l

Trinium

Keystone Structures

ValvTect Petroleum Products

52 – 53

Lock America

Wayne Fueling Systems

Strategic Acquisition Advisors 11 Tanknology

Texas Food & Fuel Association 78

FMNMagazine

fuelmarketernews.com