Fuels Market News Magazine Fall 2018 by Fuels Market News

FALL 2018

Your Source for News and Information

The Art of the Gas War Upselling in C-Stores To EMV or Not to EMV

Profits Begin at the Pump The Fight over CAFE Standards

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

CAFE Standards by Keith Reid

Page 22 Prices at the Pump:

The Consumer’s Price Signal

by Nancy Yamaguchi, Ph.D.

Page 48 To EMV or Not to EMV:

features

Page 12 The Fight over

The Fuel Merchant’s Question by Glenda Preen

Page 56 Upselling

in C-Stores—

Leaving the Comfort Zone by Tom Bandy

Page 62 Profits Begin at

the Pump—In More Ways Than One by Dwight Rutledge

Page 76 Pros and Cons of

Alternative Fuel Vehicles

by Glen Sokolis

Page 83 The Art of

the Gas War

by Brian Reynolds

contents by Department

PUBLISHER'S NOTE

FUELS & SUPPLY

A Review of Midstream Threats, Needs, Opportunities by Joe Petrowski

How to Add Lubricity, Improve Fleet Performance and Reduce Emissions by Troy Shoen

Pitching Propane Home Appliances to Residential Remodelers by Jesse Marcus

RETAIL OPERATIONS

Strasburger Retail: Leave the Management (and Headaches) to Us by Keith Reid

The Fight Against Human Trafficking by Keith Reid

It’s Time We Had a Talk by Joe O’Brien

3 Reasons Fuel-Site Water Intrusion Is Increasing by Ed Kammerer

How Can New Carwash Technology Improve Your Profitability? by David Dougherty

WHOLESALE & FLEET OPERATIONS

Premium Propane— Is That a Market for You? by Keith Reid

Maximizing Fleet Fueling Delivery Efficiency by John Coyle

COMMERCIAL FUELS

Demand for Diesel Trucks at All-Time High by Ezra Finkin

BUSINESS OPERATIONS

The Collapse in Alternate Land Use for Retail Gasoline Stations by Joe Petrowski

87 96

INDUSTRY NEWS ADVERTISER’S INDEX

How to Add Lubricity, Improve Fleet Performance and Reduce Emissions 18 Strasburger Retail:

Leave the Management

(and Headaches)

to Us

The Fight Against Human Trafficking How Can Carwash Technology Improve Your Profitability?

Maximizing Fleet Fueling Delivery Efficiency

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PUBLISHER’S NOTE

A note from

Gary Bevers, Group Publisher 2018 began with a very optimistic outlook for the U.S. economy and particularly for our sector: the fuel business. In my note in the Winter Issue of FMN Magazine, I predicted we would have a very strong economic growth year for all sectors of the fuel industry: oil and gas, refining, distribution, wholesale marketing and retailing. I am happy to say, as I write this column, that prediction has proven true. • Oil and Gas restrictions are down, so permits, drilling rig counts, fracing wells and refinery production are all up, and the U.S. is now a “net exporter” of refined products exports. • For the first time in decades, with a change of an outdated law, the U.S. is exporting crude oil—and according to the EPA became the #1 crude producer in the world! • EPA regulations have been rolled back and the RFS requirements and CAFE standards are being adjusted and brought in line with more realistic targets. • Thousands of onerous business regulations regarding land usage, labor, financial reporting and so on have also been eliminated, encouraging business investing. • And, taxes on businesses and individuals have been substantially reduced, creating an environment of business and consumer optimism we have not seen in decades—freeing up massive amounts of investment capital and consumer spending. The compounding effect of these changes is as the philosopher Aristotle put forth so eloquently and simply: “The whole is greater than the sum of its parts.” We’re seeing a U.S. business climate that is steadily building, growing and generating results and shows no signs of slowing! We achieved a 4.1% GDP growth and record unemployment of 3.8% in September 2018. As Americans have returned to work at record levels, fuel sales and in-store sales at convenience stores continue strong as consumer optimism is up, spending is up, the stock market is up and the health of Main Street is up as well! Finally, fuel prices are up from last year, and purchasing demand is also up as gasoline consumption has returned to pre-recession levels. Please read Dr. Yamaguchi’s article Prices at the Pump on page 22 for more encouraging statistics and consumer purchasing trends. As always, our goal at FMN is to provide you with valuable information, education and analysis, from the seismic shifts in crude production to the nuances of motor fuels retailing and forecourt technology. In this and every issue of FMN, our energy-expert columnists strive to deliver objective analyses of the facts, changes and trends in our industry and what that means to you as a fuels marketer.

EDITORIAL STAFF CEO & Group Publisher Gary D. Bevers GBevers@FMNweb.com Editorial Director & Digital Publisher Keith Reid KReid@FMNweb.com Director of Production & Managing Editor Kathy Bevers KBevers@FMNweb.com Digital Editor Scott A. Croom SCroom@FMNweb.com Industry Analysts/Editors Frank M. Hunter FHunter@FMNweb.com Nancy Yamaguchi, Ph.D. NYamaguchi@FMNweb.com Columnists and Contributors Greg Cushard Vladimir Collak Shane Dyer John Eichberger Doug Haugh Corey Henriksen Maura Keller Alan H. Levine Joseph H. Petrowski W. Brian Reynolds Fred M. Whitaker Editorial Board Ed Burke Lisa Calhoun George A. Overstreet, Jr. Joseph H. Petrowski Art Director Jeff Beene JBeene@FMNweb.com Marketing Director Joe A. Martinez JMartinez@FMNweb.com Advertising Representative Bill Kaprelian 262-729-2629 BKaprelian@FMNweb.com Mailing Address 15201 Mason Road, Suite 1000-288 Cypress, TX 77433

Gary Bevers CEO & Group Publisher

FMNMagazine

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by Joe Petrowski

A Review of

Midstream Threats, Needs, Opportunities In the petroleum supply and revenue chain, the ends get all the attention—what OPEC is doing or not doing, growth and shrink in demand, the price of transport fuel to an agitated consumer, etc. However, the transport, reﬁning and distribution, blending and storage of over 100 separate sub-products in a four-million square mile country is often more important than whether we import less, produce more or dampen demand.

Reﬁning

So where are we in midstream capabilities—reﬁning, bulk transport, terminals and truck distribution? We currently have 140 operating refineries in the U.S. with capacity of 18.6 million barrels/day. The current average of 132,000 b/d per refinery has been going up and will continue to go up, tripling in the next three years as smaller non-integrated refineries close (efficiency and RIN obligations for the non-integrated) and capacity creep occurs at existing refineries. With domestic demand at around 200 billion gallons of refined products and an export market for refined products of 110 billion gallons, U.S. refinery capacity will need to reach 19.6 million barrels per day (mb/d), which can be satisfied by the 90 remaining refineries averaging 240,000 b/d. The big problem for the markets, policy makers and those concerned with human and weather-related security is that the tremendous concentration of refining capacity is in four market areas: Northeast, Chicago, Gulf Coast and California (69% today, but could grow to 75%). That will increase the need for the bulk infrastructure to source crude and get refined products to market (domestic or export), which brings us to transportation and distribution.

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FUELS & SUPPLY

Pipelines

“” In the United States, we currently have 2.3 million miles of petroleum products pipelines (including natural gas). Today, our annual crude pipeline capacity is 10.9 billion barrels—according to the Association of Oil Pipe Lines (AOPL)—while we refine 7.2 billion barrels per year. While this will be increasingly challenged as production increases from 10.5 mb/d to 15 mb/d over the next seven years, there are significant constraints in areas like the Permian Basin, which are seeing the greatest production gains. According to Bloomberg Intelligence, the pipeline capacity in the region is about 3.1 million barrels per day compared to production of 3.3 million barrels per day. New pipeline projects are underway but they will take time to complete.

Waterborne transport alleviates the need for pipeline capacity as do refinery truck loadouts and the major refined products exports that come from California, Gulf Coast and East Coast. Refined products should remain in overcapacity for the next decade.

Our refined products pipeline capacity of 7.3 billion barrels is much less constrained than crude. Waterborne crude alleviates the need for pipeline capacity as do refinery truck loadouts and the major refined products exports that come from California, Gulf Coast and East Coast. Refined products should remain in overcapacity for the next decade. Interestingly, in petroleum and petroleum products the United States handles:

• 70% through pipes • 23% by barges and tankers • 4% by trucks • 3% by rail Canada, by contrast, moves 97% by pipeline and is currently building a pipeline going west from the tar sands to British Columbia to feed the growing Asian export market and/or the U.S. West Coast refineries, having been frustrated by U.S. politics in trying to move product south. If we continue to encourage movement by pipe in lieu of other transport for petroleum products, we will:

• Decrease overall transport costs by 10% • Be more secure (spread our refining risk geographically)

• Reduce risk for environment (waterborne and rail much more risky)

FMNMagazine

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“”

A Review of Midstream Threats, Needs, Opportunities

Terminals

Trucks

FUELS & SUPPLY

The United States has 1,650 terminals with 500 million barrels of shell capacity and throughput capacity of 6 million barrels (250 billion gallons). With demand for crude and refined product storage and throughput at 290 billion gallons, capacity is sufficient and terminals can be quickly expanded by adding tankage to existing terminals and debottlenecking constraints. The geographic diversity of terminals with one terminal per 43 radial miles is very comfortable. Throughput and storage charges will remain a commodity and flat, with advantages to terminal operators who are origination merchants and marketers and not simply toll collectors begging for business.

The trucking industry is operating at 90% capacity and there is pressure on freight rates. The biggest problem here is qualiﬁed drivers and the issue of slip seating.

Class 8 fuel trucks are carrying 686 billion gallons per year, or 1.9 billion gallons per day, or 222,000 loads/ day through 37,000 trucks averaging 6 trips/day. The trucking industry is operating at 90% capacity and there is pressure on freight rates. The biggest problem here is qualified drivers and the issue of slip seating.

Ultimately, the need for infrastructure is driven by the origin of the feedstock and the demand for the output. We are becoming a signiﬁcant producer on the world stage—much of that production is within the shale formations and our export markets are growing faster than our domestic markets. Midstream plays a critical role in getting the right product to the right place at the right time. n

READ MORE at FuelsMarketNews.com

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

by Keith Reid

The Fight over CAFE Standards

We have regularly covered the Trump EPAâ&#x20AC;&#x2122;s intention to revisit Obama-era Corporate Average Fuel Economy standards. In fact, I noted in a post-election (but pre-swearing in) Policy Brief that Trump might very well address CAFE even though that was not a stated goal at the time. This was not just due to the current administrationâ&#x20AC;&#x2122;s ideological differences with the previous administration, but also for practical issues related to the challenges and impact of the original standards on the auto industry. The 2012 Obama administrationâ&#x20AC;&#x2122;s regulation would require a 54-miles-per-gallon fleet average for passenger cars and light trucks by 2025. Considering that the current mileage average comes in at 25 mpg the challenges to the auto industry are enormous, stretching both current combustion technology and the lagging adoption patterns for electric vehicles and other alternatives. A Mid-Term Evaluation Final Determination review allowed the regulation to be modified before implementation. The EPA undertook that evaluation. The formal announcement of intent relative to CAFE came on August 2 when the EPA announced it would lock in the 2020 standards (37 miles per gallon) until 2025. FMNMagazine

FuelsMarketNews.com

“” FUELS & SUPPLY

“Our proposal aims to strike the right “Our proposal aims to strike the right regulatory balance regulatory balance based on the basedrecent on theinformation most recent information most and create and create a 50-state will enable moreenable Americans to afford newer, a solution 50-statethat solution that will safer vehicles that pollute less.”newer, more Americans to afford safer vehicles that pollute less.”

EPA Acting Administrator Andrew Wheeler

“Our proposal aims to strike the right regulatory balance based on the most recent information and create a 50-state solution that will enable more Americans to afford newer, safer vehicles that pollute less,” said EPA Acting Administrator Andrew Wheeler in the announcement release. “More realistic standards can save lives while continuing to improve the environment. We value the public’s input as we engage in this process in an open, transparent manner.”

The announcement release noted that 2012 requirements would add $2,340 to the cost of owning a new car and impose more than $500 billion in societal costs on the U.S. economy over the next 50 years. Additionally, a 2018 government study by the National Highway Traffic Safety Administration (NHTSA) shows new model year vehicles are safer, and the claim is that the higher cost of new vehicles would prevent a more rapid turnover of older, less safe and also less environmentally friendly vehicles. This has, of course, generated significant blowback from environmental groups.

“Only the oil industry benefits from weaker standards. The public gets betrayed with more pollution and higher gasoline bills,” said Luke Tonachel, NRDC’s director of clean vehicles and fuels. “Our nation increases its dependence on oil. Innovation by the U.S. auto industry stalls, and carmakers cede automotive technology leadership to other countries and risk American jobs.”

California Roadblock The mileage adjustments were, if anything, the least controversial part of the review. A federal waiver dating back to the 1970 Clean Air Act has uniquely allowed California to set its own pollution regulations that can be more stringent than federal standards. The rationale was that California had special needs as its geography helps trap and concentrate smog in areas like the Los Angeles basin. The Trump administration wants to sidestep that waiver, at least as it pertains to the regulation of mileage.

Because of the size of California’s market and the desire of automakers to keep models and inventory simplified, the tendency has been (at least in more recent years) to have a “one size fits all” approach, which has meant following California’s standards. A recent article in the LA Times by Evan Halper, Tony Barboza and David Lauter stated the following: “The rollback would undermine those states’ efforts to meet commitments the U.S. made in the Paris agreement on climate change. It would also worsen air quality problems in Southern California and other areas where

FMNMagazine

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“” FUELS & SUPPLY

Policy Brief: The Fight over CAFE Standards

What Do the Automakers Want?

“Our proposal aims to strike the right Federalism (states’ rights) has long been a cornerstone regulatory balance based on the of conservative ideology, and now seemingly, among most recent information and create progressives, on this issue at least. But Federalism was a 50-state solution that will enable designed to have states serve as test markets for ideas more Americans to afford newer, and as a protector of regional sensitivities, and not as safer vehicles that pollute less.” a means to dictate national policies.

Automakers initially voiced strong support for a revisiting of the 2012 CAFE standards. In February 2017, 18 automakers as part of the Auto Alliance wrote President Trump a six-page letter where they were united in their support for “putting ‘the process back on track’ without predetermining any outcome. Checking prior assumptions against new market realities. Driven by current data.” It included the following paragraph: Based on the projections in the 2012 rule, manufacturers must meet an average of 54.4 miles-per-gallon equivalent across their new vehicle fleet by 2025. Even today, no visual vehicle today meets that target, and conventional vehicles comprise 96.5 percent of the new light duty vehicle fleet. Only some nonconventional vehicles (i.e., hybrid, plug-in electric and fuelcell vehicles), which comprise fewer than 3.5 percent of today’s new vehicles, currently can do so. Even under EPA’s optimistic estimates, the automotive industry will have to spend a staggering $200 billion between 2012 and 2025 to comply, making the standards many times more expensive than the clean power plan.Automakers have been seen to publicly back off of this position as it moved closer to becoming a reality. It has been speculated among the punditry that while the automakers privately still want a freeze or rollback, they do not want to be publicly associated with such a move given the mainstream media’s support for environmental action. The ability of social media to orchestrate vicious, negative publicity campaigns (beyond their actual community size) is another major factor in their public reticence.

officials are already struggling to clean smog and ease rates of asthma and other illnesses.”

The second part is related to the original mandate, but the first effectively gives the state (and a handful of others mainly in the Northeast that support its environmental activism) the ability to set national policy in a manner that bypasses the federal legislature and the wishes of citizens in other states that might not be so inclined.

Federalism (states’ rights) has long been a cornerstone of conservative ideology, and now seemingly, among progressives, on this issue at least. But Federalism was designed to have states serve as test markets for ideas and as a protector of regional sensitivities, and not as a means to dictate national policies. California and 16 like-minded states proactively filed suit against the EPA in May to counter the Mid-Term adjustments.

Overturning the entire waiver would require Congressional action and that outcome is hardly assured. In addition, in 2014 the U.S. Supreme Court found that carbon can be regulated as a pollutant by EPA. However, separating mileage requirements from pollution reduction is not as big a challenge. The Harvard Environmental Law Program noted online in a discussion of the legal factors around the issue that mileage standards are not necessarily linked to pollution standards, and there is case law promoting that position.

FMNMagazine

Further, if the Trump administration fails at disconnecting mileage from California’s waiver, the auto industry would rather have one national market to serve than address a separate California standard.

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“” FUELS & SUPPLY

Policy Brief: The Fight over CAFE Standards

“Our proposal argument aims to strike thehigher right CAFE A significant for the regulatory balance based on savings the standards has been the money for most recent information and create consumers. However, as helpful as some groups a 50-state solution that will enable want to be for their fellow citizens, American more Americans to afford newer, consumers are not necessarily driven in their safer vehicles that pollute less.”

purchasing choices by the cost of motor fuels.

What Does the Driving Public Want?

A significant argument for the higher CAFE standards has been the money savings for consumers. However, as helpful as some groups want to be for their fellow citizens, American consumers are not necessarily driven in their purchasing choices by the cost of motor fuels.

According to Kelly Blue Book, the most popular vehicle in America in 2017 was the Ford F-Series pickup, followed by the similar Chevrolet Silverado and Dodge Ram. Crossover platforms are eclipsing sedans and SUVs, and while they are smaller and more efficient than SUVs, they tend to be less efficient than comparably-sized sedans. Among the KBB top 20 there were only a handful of true economy platforms in the mix. This trend is most certainly supported by recent low fuel prices and the improved fuel economy with a range of options in today’s vehicles, admittedly due in no small part to both the Bush and Obama administrations’ heightening of CAFE standards. The ramping up of the global economy as well as the regulatory approach of low sulfur bunker fuel have put pressure on fuel prices in recent months with some long-term

price concerns. This could certainly impact consumer habits, but even the high fuel prices in 2008 failed to see draconian shifts in consumer behavior. The Ford F-Series was still the top selling vehicle followed by the Silverado with the RAM in the top 10. And while SUVs were fairly rare in the mix that year, mid-sized and larger sedans were not. When all is said and done, CAFE standards represent another point of friction between groups that want to push ideologically driven solutions on society (whether or not they personally have to abide by their actions) and whether or not those concerns are national in nature. Arnold Schwarzenegger, former California governor, is a fine example of this mindset along with many of his showbiz peers. For all of Schwarzenegger’s environmental passion his favorite vehicle (to this day, apparently) is a fullsized Hummer. It gets roughly one-fifth of the proposed Obama-era mileage standard and one-fourth of the revised standard. Leonardo DiCaprio, another fierce environmentalist, has yet to lose sleep over the time he regularly spends in private jets and luxury yachts. If consumers really desire those super-high-mileage solutions, whether in California for ideological reasons or in Alabama to meet a tight household budget, then the auto industry will act accordingly under free market pressures. Given the governmental focus on high mileage in Europe and parts of Asia, the auto industry will certainly continue to bring such vehicles to market. California is a large market, and when combined with the equally progressive Northeast they represent a huge market—if the citizens truly are as zealous about environmental concerns as their leadership. The auto industry could easily decide to voluntarily produce a vehicle mix that would meet the far more stringent standards that were proposed if that’s what the market dictates. n

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DEFINING

by Troy Shoen

How to Add Lubricity, Biodiesel not only adds lubricity Improve Fleet lacking in ULSD, it also does a Performance and better job reducing Reduce Emissions harmful emissions A dozen years since ultra-low sulfur diesel (ULSD)

started being phased into on-road diesel usage in the United States, the move has proved to be a good thing for the environment. Less sulfur means less harmful emissions in the air.

But the shift to ULSD has not come without some undesirable side effects for diesel vehicles. Chief among them is the loss of lubricity. Sulfur, which is a chemical element, is what gives petroleum diesel its lubricating properties. With ULSD, petroleum diesel has significantly less of the component that helped with lubricity. As a result, many fleets are spending money on lubricity additives or seeing increased wear on their engines. But there is another answer. Biodiesel has great lubricity characteristics. And biodiesel can be easily blended with petroleum diesel. Adding as little as 2 percent biodiesel (a B2 blend) provides the necessary lubricity required in the fuelâ&#x20AC;&#x201D;and higher blends help add even more lubrication.

FMNMagazine

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FUELS & SUPPLY

The Importance of Lubricity

“

A lubricating agent like biodiesel also helps an engine

From 2006 to 2010, the U.S. Environmental Protection Agency (EPA) phased in ULSD for on-road diesel. Since 2010, all diesel fuel sold in the U.S. must be ULSD. The goal is to reduce emissions—ULSD allows for the engines to be fitted with improved pollution control systems that can be damaged by sulfur, according to the U.S. Department of Energy. Low sulfur diesel could have up to 500 parts per million (ppm). ULSD allows for just 15 ppm. That’s a 97 percent reduction.

run smoother and quieter by reducing the friction caused by coating metal parts. The temperature of the lubricated part of the engine is also cooler because of the lack of heat buildup due to friction.

Reducing wear is not the only benefit. A lubricating agent like biodiesel also helps an engine run smoother and quieter by reducing the friction caused by coating metal parts. The temperature of the lubricated part of the engine is also cooler because of the lack of heat buildup due to friction. Lubrication also helps to preserve the longevity of the engine—meaning the fleet can get more miles out of the vehicle. This can be through less maintenance downtime or even a longer engine life. Biodiesel is easy for fleets to add to their operations. No vehicle or infrastructure modifications are required. Some fleets blend biodiesel with petroleum diesel themselves, and some buy blended fuel from their supplier.

Without enough lubrications, parts will generate excess heat when they rub together, causing pitting (wear scars) and will start to break down. Adding a lubricity agent helps reduce friction between parts, which lessens the impact of the moving parts.

Fleets Turn to Additives

Lower Emissions Too

In the absence of sulfur, diesel fuel must get its lubricity from elsewhere. ASTM D975, the fuel specification for diesel, has a lubricity requirement on diesel fuel. The test is performed on a High-Frequency Reciprocating Rig (HFRR), which ultimately gives a wear scar of a fuel. ASTM requires diesel to have a wear scar of less than 520 microns. Diesel without a lubricity additive (or biodiesel) generally does not meet this limit, so an additive is needed.

How Biodiesel Helps

Also, let’s consider the primary reason ULSD exists: to reduce harmful emissions. Biodiesel outperforms it here, too. Biodiesel offers significant reductions in greenhouse gas and engine head emissions. A B20 blend reduces particulate matter by 18 percent, total hydrocarbons by 11 percent and carbon monoxide by 4 percent compared with ULSD. n

Total Hydrocarbons (THC) 70%

60%

40% 30% 20% 10% 0%

25.0% % Reduction from ULSD

70% 50%

Carbon Monoxide (C0)

Particulate Matter (PM)

% Reduction from ULSD

Lubricity additives are not allowed in the pipeline, so they must be added downstream of the pipe. Most of the time, it is added at the terminal when a customer picks up their fuel, just like other additives. Sometimes, however, a company may want to use a specific additive package that they put in their fuel later. So, it is very common for a fleet to have lubricity additive in their fuel—whether they know it or not. That also means that one way or another, they are paying for that additive.

”

The use of biodiesel can eliminate the need for lubricity additives. In fact, a B2 blend supplies the amount of lubricity needed to meet the ASTM D975 spec. Using higher blends of biodiesel—as many fleets are increasingly doing, including up to B20—aids in the lubrication process even more.

While the reduced sulfur is good for the environment, it’s also a 97 percent reduction in the element that gives petroleum diesel its lubricating properties. And lubricity is critical to fleet performance because it helps protect the engine from damage. More specifically, diesel fuel lubricates the fuel injection system, which includes the fuel pump and injectors. These are moving parts with extremely tight tolerances and in order to withstand the high pressures and temperatures they’re exposed to, they need a lubricating agent to help prevent unnecessary wear and damage.

50% 40% 30% 20% 10%

20.0% 15.0% 10.0% 5.0% 0.0%

B20

B100

Note: All emissions data taken from 2006 Cummins ISM 370 on Federal Test Procedure driving cycle, as reported in Durbin, Thomas D., et al. "CARB Assessment of the Emissions from the Use of Biodiesel as a Motor Vehicle Fuel in California “Biodiesel Characterization and NOx Mitigation Study”." California Air Resources Board: Sacramento, CA (2011). Comparisons with Federal ULSD were conducted based on a linear comparison with CARB ULSD data. All biodiesel data shown is taken as an average of the means of high and low cloud point biodiesel emissions results, where available

Unlike petroleum diesel, biodiesel does not rely on sulfur for lubrication. Instead, it’s the oxygen in biodiesel that gives the fuel its lubricity characteristics. (It also gives biodiesel a higher Cetane number and aids in more complete combustion compared with petroleum diesel.) And biodiesel doesn’t just do an adequate job at lubricating engines—it excels. A 2007 study found that a B2 blend outperformed 18 other products on the market when it came to lubricity.

FMNMagazine

Troy is senior manager, marketing, at REG. Headquartered in Ames, Iowa, REG is an international producer of biomass-based diesel, including biodiesel and renewable diesel, and is North America’s largest producer of advanced biofuel. Contact Troy at 515-239-8166 or Troy.Shoen@regi.com. For more information about REG, visit Regi.com.

FuelsMarketNews.com

Pitching Propane Home Appliances to Residential Remodelers

“”

Home remodeling projects are surging in the United States and fuel providers should be capitalizing on the opportunity. by Jesse Marcus Propane appliances are safe, convenient, costeffective and energy efficient. As the Harvard data indicates, it’s an opportune time for fuel providers to engage with the local construction professionals who influence the purchase decisions of the growing number of home remodel projects

A ccording to a report from the Harvard University

Joint Center for Housing Studies, in 2015—the most recent year in which data has been compiled—home remodeling activity in the U.S. reached levels not seen since pre-recession years. Older homeowners are choosing to age in place and incorporate new technologies into existing homes, while new home buyers are selecting less-expensive, older homes to remodel rather than purchasing higher-priced new homes. Most importantly for fuel providers, the Harvard study found that a third of homeowners reporting remodel projects in 2014 – 15 indicated that energy efficiency was a motivation for their expenditures.

Propane appliances are safe, convenient, cost-effective and energy efficient. As the Harvard data indicates, it’s an opportune time for fuel providers to engage with the local construction professionals who influence the purchase decisions of the growing number of home remodel projects. Best of all, there is an abundance of messages, information and resources about propane appliances that you can share with this influential group. FMNMagazine

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FUELS & SUPPLY

A new offer level was added to the program, bringing the total to four levels of incentive packages. The newest “basic package” offers construction professionals $500 for including any new propane water heating system and two additional propane applications into a project. Incentive packages increase in level up to $1,500 per home for builders or remodelers installing more propane applications.

An energy-efficient fuel for many residential applications

It’s important for construction professionals to know exactly what propane can do in and around a home. Propane appliances can actually be included in more home remodel projects than many realize. Propane can give homeowners professional-quality cooking with kitchen ranges and ovens. Propane furnaces deliver a more comfortable and consistent heat, even on the coldest days, while propane water heaters provide unmatched efficiency and lower energy costs compared to electric. It also offers faster and more efficient clothes drying and the comfort of a warm fireplace at the flip of a switch. Outdoors on the patio, gas lanterns can provide a unique aesthetic, and fire pits and propane heaters can extend the use of outdoor living spaces into the cooler fall months.

Building resilient homes

Builders can also use propane to make homes more resilient, an important factor when considering the powerful storms that hit across the United States over the past few years. Installing a propane-powered backup generator will allow homeowners to have uninterrupted power—and year-round peace-of-mind—if utility lines are knocked out. Another advantage to using propane is that it doesn’t degrade, so it’s ready for use even if it has been stored in a tank for lengthy periods. Tanks can be installed above ground or below. Underground tanks leave only small domes visible above the ground to preserve the aesthetics of the property. Plus, new technology makes it convenient for homeowners and fuel providers to make sure tanks never fall below a certain fill.

Propane incentive expanded for remodelers

So, whether a builder or remodeler is using propane in a few specific areas of the home or utilizing propane throughout, this expanded incentive program offers construction professionals of any size a competitive advantage so their customers can enjoy better performance and lower energy costs.

How fuel providers can connect with builders

Propane has long been used for residential homes in suburban and rural areas beyond the reach of natural gas utilities, and the fuel can be an asset for homeowners looking for efficiency and resiliency in urban areas as well. It’s important that fuel providers make connections with local construction professionals who are on the front lines with homeowners asking about energy efficient projects.

There are actually several ways marketers can reach out to builders to educate them about propane’s benefits to their homeowner customers. One of the simplest ways is to join your local builders association and see what opportunities there may be to get involved. Fuel providers may also consider setting up booths at local home shows or search online for a list of builders in your area. Construction professionals are primed to be receptive to using propane in remodeling projects as more homeowners are deciding to upgrade their existing home rather than move or build new. With the technology and resources already available, it’s an opportunity for growth that fuel providers should strongly consider. Those interested in learning more about how propane can be used in residential building and remodeling projects can visit buildwithpropane.com. For questions regarding specific scenarios or what qualifies for PERC’s incentive program, call PERC at 202-452-8975 or email constructionincentive@propane.com. n

Jesse Marcus

We at PERC (Propane Education & Research Council) are especially excited to share a recent change to our popular Propane Construction Incentive Program that was announced earlier this year. The changes have expanded the program to include remodelers as well as builders, and eased eligibility to help construction professionals turn to propane appliances as their go-to solution for projects. It’s a program that fuel providers can promote when talking with construction professionals. FMNMagazine

Jesse is the director of Residential & Commercial Business Development for the Propane Education & Research Council. PERC is a nonprofit that provides leading propane safety and training programs and invests in research and development of new propane-powered technologies. PERC is operated and funded by the propane industry. For more information, visit propane.com. Jesse can be reached Jesse.Marcus@propane.com.

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PRICES AT THE PUMP FUELS & SUPPLY

by Dr. Nancy Yamaguchi

The Consumer’s Price Signal

Prices at the pump. Prices at the pump. Consumers see this first as the

most visible, tangible oil price signal. Sometimes it is the only price that seems to matter. It is viewed as a proxy for the oil market as a whole, even though a retail fuel price in a local market may be many steps removed from the global crude oil market. Gasoline prices at the pump also have an emotional content that few other commodities do. Imagine a driver who sees a station with gasoline at $3.70/gallon. He knows that there is another station two miles away with gasoline at $3.50/gallon. He needs 10 gallons, so he would save $2.00 if he went to the other station. What if the journey took him an extra fifteen minutes? His “wage” would equal only $8/hour, and he would burn some extra gasoline getting to the other station. It does not sound economically rational, but he might do it, because it is gasoline. He would not drive to another grocery store to save $2.00 on, say, a jar of pasta sauce. But the idea of saving money on gasoline may set off an internal debate on costs and benefits that pasta sauce simply cannot match.

Have consumers softened their stance on gasoline prices? Most consumers make their purchase decision based on price, yet other elements are coming more into play. The National Association of Convenience Stores (NACS) recently released survey results on “How Consumers React to Gas Prices,”1 revealing some fascinating metrics about consumer decisions. NACS found that 58% of consumers make their fuel purchase decision based on price, but that this characteristic has fallen from 71% in 2015. Price was most important (62%) for people who never shopped inside the store and least important (48%) for people who identified themselves as daily shoppers. NACS added a new metric in the 2018 survey: “Quality of in-store items.” This new item scored 3% in 2018. Each of the other four survey characteristics also gained in importance in 2018 relative to 2015: Location of store/station, brand and ease of entrance or exit.

1 National Association of Convenience Stores, “How Consumers React to

Gas Prices: Insights from NACS Consumer Fuels Surveys on consumer perceptions related to gas prices and the economy overall,” May 2018

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FUELS & SUPPLY

Prices at the Pump: The Consumer’s Price Signal

There is also a psychological component: a built-in suspicion of Greedy Big Oil that makes even an indifferent consumer pay attention to prices at the pump.

Figure 1:

Characteristics Most Important in Purchase Decisions

Gasoline Retail Price Trend: Now at Five-Year Average If retail fuel prices seem higher lately, it is because they are. Retail gasoline prices have been creeping up. They are not abnormally high, however. As Figure 2 illustrates, year-2018 gasoline prices have risen, but only back to their five-year average price. Prices in 2016 were at the lowest edge of the five-year range. In 2017, prices began to move up, and they received a boost at the end of the year when crude oil prices rose in response to the production cut agreement between eleven OPEC countries and eleven nonOPEC crude producing countries. The high end of the five-year price range was a function of prices in 2013 and 2014 before Saudi Arabia launched an oil price war that drove crude oil prices down.

Source: NACS

Consumers also seem to be more sensitive to the rate of a price increase when gasoline is the commodity. Imagine that a global event causes crude oil to jump by $42/barrel, or $1/gallon. It is possible that a seller would raise gasoline prices quickly, because s/he would worry that the next shipment would cost $1/gallon more—or even more if crude prices continue to soar. It is a virtual certainty that motorists will object to having gasoline prices jump by $1/gallon overnight. Some may suspect price gouging or price fixing and collusion if all stations do it at the same time. But if gasoline prices creep up by $1/gallon over the course of several months, the increase may be borne with more equanimity. As before, however, pasta sauce may go up by $1/jar overnight, and it might not be noticed.

Figure 2:

Trend in Weekly U.S. Retail Gasoline Prices ($/gallon)

Consumers weigh many factors about fuel prices, including the absolute price, the price relative to nearby stations or stores, the rate of change over time, convenience, and the perceived value for money. There is also a psychological component: a built-in suspicion of Greedy Big Oil that makes even an indifferent consumer pay attention to prices at the pump. Thankfully, governments have responded, and there is a wealth of data available on pump prices, their components and long-term trends. Most State Attorneys-General have laws in place against price gouging, particularly during states of emergency. There are also multiple sources of on-the-road information showing realtime retail prices and outlets plus directions to the closest retail outlets. Prices at the pump are the consumer’s main price signal, and they receive special scrutiny. Because of this, price information is more plentiful, and it flows in both directions. In this article, we explore the latest trends in gasoline and diesel pump prices, how they compare to recent prices and what components contribute to the built-up retail price. FMNMagazine

Jan

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Source: Energy Information Administration (EIA)

Gasoline prices at the pump are significantly higher than they were a year ago. Figure 3 compares average retail prices at the national level and at the PADD level (Petroleum Administration Defense District), August 2018 versus August 2017. U.S. pump prices were 14.5 cents/gallon higher on average. The price change varied widely from PADD to PADD. The East Coast PADD 1 averaged a price increase of 5.2 cents/gallon year-on-year (YOY). The Gulf Coast PADD 3 saw pump prices rise by only 4.3 cents/gallon YOY. Other regions have experienced much larger price increases. Pump prices in the Midwest PADD 2 were 19.2 May Jun Jul Aug Sep Oct Nov Dec cents/gallon higher YOY.Apr Prices in the West Coast PADD 5 were 31.2 cents/gallon higher. And prices in the Rocky Mountains PADD 4 rose steeply by 40.2/gallon YOY. 24

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FUELS & SUPPLY

Prices at the Pump: The Consumerâ&#x20AC;&#x2122;s Price Signal

Figure 3:

Change in Gasoline Prices

(

Year-on-Year, August 2018 vs. August 2017 ($/gallon)

Prices in 2013 and 2014 form the high end of the range. Recall that in 2012 and 2013, it was common to see diesel pump prices exceed $4/gallon. The average pump price in 2012 was $3.922/ gallon, whereas in 2016, it had dropped to $2.304/gallon. Feb

Mar

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Figure 4:

Trend in Weekly U.S. Retail Diesel Prices ($/gallon)

Source: Energy Information Administration (EIA)

Diesel Retail Price Trend: Now Above Five-Year Average

Diesel pump prices rose even more strongly than gasoline pump prices over the past year. As Figure 4 illustrates, diesel prices this year to date have risen above their five-year average price, and they are now substantially higher than they were in 2016 and 2017.

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Jan

Feb

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Source: Energy Information Administration (EIA)

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FUELS & SUPPLY

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Prices at the Pump: The Consumer’s Price Signal

Figure 5 shows the rise in diesel retail prices year-on-year. At the national level, diesel prices at the pump in August 2018 were 49.4 cents/gallon higher than they were in August 2017. As was the case with gasoline, the Gulf Coast PADD 3 and the East Coast PADD 1 had the lowest price increases, but unlike gasoline, the increases were significant. In PADD 3, diesel pump prices were up 42 cents/gallon YOY—nearly ten times the 4.3 cents/gallon increase seen in the PADD 3 gasoline market. East Coast PADD 1 prices rose 45 cents/gallon YOY. Prices in the Midwest PADD 2 rose 48.4 cents/gallon YOY. Rocky Mountains PADD 4 prices rose 56.6 cents/gallon. And diesel pump prices in the West Coast PADD 5 shot up by 69.8 cents/gallon YOY as California’s new fuel taxes kicked in

The components that ultimately find their way into a finished product may come from a variety of refinery units with widely varying capital and operating costs.

Yet the EIA manages to calculate these numbers and publish them monthly. Figure 6 shows the EIA’s assessment of the cost components going into the retail gasoline price on a percentage basis. The cost of crude oil is the single largest cost component, typically accounting for over half of the final retail price. In July 2018, the cost components in the retail price of gasoline were: Crude Oil 57.5%, Refining 15.3%, Distribution and Marketing 10.7%, and Taxes 16.5%.

Figure 5:

Change in Diesel Prices

Year-on-Year, August 2018 vs. August 2017

Figure 6:

($/gallon)

Retail Gasoline Price Cost Buildup, % 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%

Source: Energy Information Administration (EIA)

Figure 7 presents the cost buildup for diesel prices. The pattern resembles the one seen in the gasoline price buildup, with crude accounting for a somewhat lower share and distribution and marketing contributing a larger share.

Source: Energy Information Administration (EIA)

Components of Retail Prices: Crude, Refining, Distribution/ Marketing and Taxes

In July 2018, the cost components in the retail price of diesel were: Crude Oil 50.7%, Refining 13.7%, Distribution and Marketing 18.7%, and Taxes 16.9%.

Figure 7:

Retail Diesel Price Cost Buildup, %

The U.S. EIA undertakes an ambitious exercise: estimating the components that go into the final retail price of gasoline and diesel. Some of these cost components are difficult to estimate. The cost of refining, notably, is tricky to apportion, since the finished products at a refinery are jointly produced. That is, it is impossible to produce only gasoline, or only jet fuel, at any given U.S. refinery. The components that ultimately find their way into a finished product may come from a variety of refinery units with widely varying capital and operating costs. A catalytic cracking unit, for example, produces gasoline blending components, diesel-range material and olefins that often are used in alkylation units that provide more gasoline blending material. Distribution and marketing costs also may be difficult to untangle and assign to individual products, since marketing divisions may oversee all product sales, and storage and distribution centers may handle multiple products. FMNMagazine

100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%

Source: Energy Information Administration (EIA)

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Prices at the Pump: The Consumer’s Price Signal

The tax component varies widely by state. Figure 8 presents the total state plus federal tax charged per gallon of gasoline by state, sorted from highest to lowest. Pennsylvania has the highest gasoline tax rate at $0.771/gallon. California has the secondhighest rate at $0.6826/gallon. California’s excise tax rate on gasoline went up by 12 cents per gallon in November 2017. Washington State has the third-highest rate at $0.6792/gallon. Alaska has the lowest tax rate, at only $0.2735/gallon.

Diesel has a slightly higher tax rate than gasoline. Figure 9 presents the total state plus federal tax charged per gallon of diesel by state, sorted from highest to lowest. As was the case with gasoline, the three states with the highest taxes are Pennsylvania, California and Washington. Pennsylvania’s diesel tax rate is nearly one dollar per gallon ($0.996/gallon). California’s tax rate is $0.9356/gallon, followed more distantly by Washington state at $0.7392/gallon. California’s excise tax rate on diesel went up by 20 cents per gallon in November 2017. The sales tax rate was raised from 9% to 13%. Once again, Alaska had the lowest tax rate at only $0.3335/gallon.

Figure 8:

Figure 9:

State and Federal Taxes on Gasoline, $/gal

State and Federal Taxes on Diesel, $/gal

Source: Energy Information Administration (EIA)

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Source: Energy Information Administration (EIA)

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FUELS & SUPPLY

Prices at the Pump: The Consumerâ&#x20AC;&#x2122;s Price Signal

Because the cost of crude oil is the main component in the cost buildup of both gasoline and diesel, the volatility in global crude prices is quickly felt in retail fuel markets. Figure 10 presents the trend in WTI crude spot prices ($/b) with crude cost as a percentage of gasoline retail prices from 2000 through July 2018. A little over ten years ago, in July 2008, crude oil prices spiked, and the percentage of crude oil in the cost buildup of gasoline prices hit a peak of 75.8%. When crude prices fell in early 2016, crude oilâ&#x20AC;&#x2122;s share of the gasoline retail cost buildup fell below 40%. A similar correlation can be seen between crude prices and diesel retail prices, presented in Figure 11.

Figure 10:

Figure 11:

Crude Spot Prices and Crude as % of Retail Gasoline Price

Crude Spot Prices and Crude as % of Retail Diesel Price

Source: Energy Information Administration (EIA)

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Source: Energy Information Administration (EIA)

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Prices at the Pump: The Consumer’s Price Signal

Conclusion Prices at the pump remain the key oil price signal seen by consumers. As such, they are a key signal to essentially all participants in the fuel market. Events in the global crude oil market may seem far removed from local retail markets, but crude oil is the single-largest contributor to retail fuel prices, and an increase in the price of crude will be reflected in retail prices. High prices for oil may also influence the cost of other components of retail prices: refining, distribution and marketing, and taxes.

bottom in 2012, over half a million barrels per day lower than it had been in 2007. By 2015 – 2016, oil prices had collapsed, and unemployment rates were below 6%. Gasoline demand roared back to its preRecession level. Unemployment rates are now at extraordinarily low levels. During the first half of 2018, unemployment averaged 4.0%. According to the BLS, the unemployment rate in August was only 3.9%. Some experts believe that this is essentially full employment. Yet despite the decline in unemployment between 2016 and 2018, gasoline demand growth has tapered off. The economic recovery and expansion restored gasoline demand, but that phase is over, and a continued boom in demand is not to be expected.

The oil price war, led by Saudi Arabia partly to defend market share against U.S. shale producers, caused a crude price collapse extending from the end of 2014 through late 2016. In the U.S., retail prices for gasoline and diesel dropped significantly. Between 2015 and 2017, gasoline prices were typically in the range of $2.25 – $2.55/gallon. Diesel prices were typically in the range of $2.30 – $2.70/gallon.

Figure 12:

Inverse Relationship Between Gasoline Demand and Unemployment Rate

The OPEC-led oil production cut agreement took effect in 2017, and crude prices began to climb. During the January – July period of 2018, retail gasoline prices averaged approximately $2.84/gallon, while retail diesel prices have risen to around $3.14/gallon. Crude prices are in a volatile phase, but they appear to be normalizing at a significantly higher level than they were two years ago. Companies and governments around the world are reworking their forecasts. On the bear market side, there are concerns over the health of the global economy. Weak economic activity and slow growth can cut into demand, which could depress prices. Economists are attempting to gauge the impacts of macro issues including the U.S.-China trade war, the weakened NAFTA agreement, Brexit and the devaluation of emerging market currencies. There are also great strides being made in alternative and renewable energy sources, which ultimately may place a permanent cap on how high oil prices can go, especially if governments continue to pursue policies fighting global climate change.

Source: Energy Information Administration (EIA)

Consumers may not be expanding their gasoline purchases, but they remain price-conscious, and they seek value for their money. The recent work by NACS suggests that the definition of value for the money has broadened to include branding, location, ease of access to stations and stores, and quality of in-store items. It should be noted, however, that these characteristics rose in importance during a time when retail fuel prices were relatively low. Price remained the most important factor determining a fuel purchase decision. It remains to be seen if the future will bring higher retail prices and whether consumers will place renewed emphasis on bottom-line pricing. In all cases, prices at the pump are likely to remain the key price signal. n

On the bull market side, the OPEC and non-OPEC production cut agreements have reduced the supply overhang, and prices have risen. Some analysts believe that the years of low oil prices have stifled necessary investment and that supply disruptions and oil price spikes of over $100/barrel are again a possibility. As sanctions against Iran come into play once again, unplanned outages in other producing areas can have a larger price impact. In the U.S., domestic production from shale plays remains on an upward trajectory, but growth has slowed considerably, and infrastructure constraints may discourage additional exploration.

READ MORE at FuelsMarketNews.com

Demand will also influence prices. However, the recent growth in gasoline demand cannot wholly be attributed to low prices. Figure 12 shows the inverse relationship between gasoline demand and the unemployment rate since 2006. Oil prices were rising in 2006 and 2007 before spiking in 2008. Gasoline demand was shrinking. It dropped sharply as the Great Recession gripped the economy, and people found themselves out of work. Unemployment surged in 2009 – 2011. The U.S. unemployment rate peaked at 9.7% in 2010, according to the U.S. Bureau of Labor Statistics (BLS). Gasoline demand hit FMNMagazine

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

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The United States likely surpassed Russia and Saudi Arabia earlier this year to become the worldâ&#x20AC;&#x2122;s largest crude oil producer, based on preliminary estimates in EIAâ&#x20AC;&#x2122;s Short-Term Energy Outlook (STEO). In February, U.S. crude oil production exceeded that of Saudi Arabia for the first time in more than two decades. In June and August, the United States surpassed Russia in crude oil production for the first time since February 1999. Source: U.S. Energy Information Administration, Short-Term Energy Outlook

Bottom Line:

Just two decades ago the settled science held that peak oil had arrived and the future of combustion was an increasingly expensive decline. Never count out technology and capitalist drive.

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Strasburger Retail

Leave the Management (and Headaches) to Us

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RETAIL OPERATIONS

by Keith Reid

There are more business models for the integration and management of the fuel and retail operations than most people would ever imagine. Similarly, each side of the business brings with it the requirement for unique skill sets. It was generally considered that traditional fuel wholesalers moving into retail often failed to execute at a top level on the store side, and traditional store-focused operations found themselves distracted by the myriad of regulatory requirements and the challenge of efficiency in a pennies-per-gallon business with fuel procurement and distribution.

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As the years have passed since the great convergence began in the 1970s, the largest operations (and many smaller ones as well) are typically excellent at executing both sides of the operation. But, not all fuel distributors with retail are interested in managing those sites or their dealer tenants. The same applies to a range of less traditional and often far more temporary operators (retail investment trusts, distressed asset managers, private equity investors, etc.) who see retail sites as more of a financial investment play than a vocation. For these operations, Strasburger Retail offers services ranging from turn-key retail management to consulting on specific aspects of retail operations. After 20 years running U.S. based Quix convenience stores, and developing and growing Convenience Management Services (CMSI) in the U.S. and around the world, Roy Strasburger bought CMSI from his family in 2012 to focus on small format retail management services in the U.S. The company rebranded as Strasburger Retail this year. FMN interviewed Roy Strasburger to discuss this interesting business model, the challenges involved and the opportunities for marketers.

FMN:

You seem to oﬀer a very broad range of services, to a broad range of clients that includes full turn-key retail management.

Strasburger: That’s exactly what we’re trying to do—provide a solution for whoever needs one. And, we are also trying to take the unpleasant parts of the business off the table for people who would rather just get an income or run the business from a higher level. We do the dirty work of running it, staffing it and making sure everything’s taken care of on a day-today basis. It’s very interesting and it can be very exciting sometimes.

FMN:

With such a broad client base, is there any group that you would consider to be more typical?

Strasburger:

Historically, our clients have been major oil companies or fuel wholesalers. People who own the dirt but either don’t want to run it or they have a situation where they are transitioning between dealers or transitioning between some other type of operator and they need us to come in as a bridge to keep the business going.

FMN:

Nontraditional players are also part of your client base.

Strasburger:

Our first big job is to go in, do a deep clean on the store, make sure they’re fully stocked and stocked with the right products. Then we look at right sizing the staffing requirements for the opportunity.

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When we got into this business originally, we were doing a lot of work during the late eighties and nineties for financial institutions. We would go in and run stores for banks and lenders who got the stores in a foreclosure or bankruptcy. For this approach, we focus on providing a temporary operations solution for people who don’t have the operating capacity to handle the sites. We go in, we operate it for 60 days to six months, then we turn it over to the new operator.

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RETAIL OPERATIONS

Strasburger Retail—Leave the Management (and Headaches) to Us

I think many operators take a “one size fits all” approach. What we try to do is to create a marketing program that’s very specific to that neighborhood so we’ve got the right products and we’ve got right pricing.

We’re now working with more private investors. There seems to be a bit of cash floating around in people’s bank accounts and we’re getting calls from people who want to buy sites. It could be part of a real estate play—they find some property and they want to do something else with it but there is a convenience store on it and they want us to run it for them for a while. That might be two to four years until they do the redevelopment. Or, there are people with the idea of rolling up a number of sites to maybe sell them to a 7-Eleven or Circle K at a later date. And that’s also on a three- to five-year horizon for how long we’re going to stay in those sites until they can get them up to a critical mass and get the multiples up so that they can sell them to somebody else.

FMN:

I would imagine there are business opportunities with succession planning.

Strasburger: It’s interesting that you’re bringing it up because I’ve been getting a lot of calls lately from people who have one or two stores and the parents are getting on in age and they’re tired. They’ve done a really good job with the stores, they’ve educated their kids who have become doctors and lawyers or tech people and they don’t want to sell the business because they’re making money from it. But they don’t want to run it anymore themselves. So, they call us up to see if we can help.

FMN: While the caretaker functions are important, I understand that you do more than just a basic maintenance of the sites.

Strasburger: Typically, when we come into a store, there’s a reason for us to be there. Back in the old days, if a dealer was going out, he ran the store down. If a financial institution called us, it’s because they went into bankruptcy. Even now, with these investors, people start to kind of let them go a little bit when they are being sold. So, our first big job is to go in, do a deep clean on the store, make sure they’re fully stocked and stocked with the right products. Then we look at right sizing the staffing requirements for the opportunity. Beyond that, we’re really good with environmental compliance issues. We know how to take care of the inventory, make sure the readings are done correctly, get the inspections taken care of and all this stuff that goes with that. And more proactively, we can implement our marketing and merchandising programs to try to maximize gross profit numbers. We try to use the buying power we have running stores around the nation to help that happen.

FMN: How does your fee structure work?

Strasburger:

Our fees basically just cover our cost of doing business. The FMNMagazine

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way that Strasburger Retail is profitable is that we are based on a performance incentive in which we get paid if we improve the performance over the previous year. We are highly motivated to improve the performance of the stores because of our compensation structure. Typically, we almost always get an increase in sales and an increase in gross profit dollars when we take over a site.

FMN: What are some of the more notable management problems you encounter with operations?

Strasburger:

A top one is the relationship with their staff, especially on compensation. I think that most people are trying to squeeze their labor budget as much as possible and that just provides people that are not happy. It’s hard to attract really good people if you’re just paying minimum wage. The other point on the management side is that owners are very reluctant to move their product selection more towards items that reflect their neighborhood and their local demographics.

FMN:

That’s interesting because you typically assume the smaller operator has more of a handle on that, and this aspect might be more of a challenge from your end.

Strasburger:

: I think many operators take a “one size fits all”

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RETAIL OPERATIONS approach. What we try to do is to create a marketing program that’s very specific to that neighborhood so we’ve got the right products and we’ve got right pricing.

FMN: What size operations will you work with?

Strasburger: We will do between one and a thousand stores or more. We give everybody our fee structure upfront and then we have to make sure that it fits into their financial model. The biggest challenge with small operators is that we provide a professional office approach, but that comes with some overhead compared to an operation that might have been running along on QuickBooks. But we will work with them if it works for them.

FMN: How do you work with the existing store personnel in what would certainly be an unnerving environment, at least at first.

Strasburger: Well, the first thing we do is that we’re very upfront with everybody about what our company does and who we are. We want everybody to know that based upon that relationship, we may only be in there for a few months. The second thing is to provide an organizational structure so that those team members can feel that they are part of larger enterprise and we treat them with respect and just as we would like to be treated ourselves. And I think that does a lot to calm people down. The third thing that we try to do is provide training for everyone, even if they’ve been there for a while, in all the basic aspects of convenience store retailing. They can improve their skill sets if they want to go somewhere else. We want to make it a value add for them being here. And fourth, we tell people that if you stick through it with us and everything goes well, we will do our best to try and get everybody who’s in the store hired by the new operators. We try to make sure that they all have a place to land.

FMN: Describe how you work with a marketer operation that already has a dealer network.

“ ”

Strasburger Retail—Leave the Management (and Headaches) to Us

What we’ve discovered is that if you take care of the dealers and maximize their opportunities, the gallons go up because you get better customer satisfaction.

Strasburger: We can help marketers manage their dealer networks. We’ll provide the supervision and the tools to help manage their dealers so they can try to maximize and optimize what is going on in their site. Usually the fuel distributors are really just concerned about the fuel side of the business and as long as the gallons are going through, they’re happy. But what we’ve discovered is that if you take care of the dealers and maximize their opportunities, the gallons go up because you get better customer satisfaction. The dealers are happy because they’re given some help and guidance on how to run an efficient and productive store. Therefore your churn factor is less and you don’t have this continuing problem of hassling with your dealers all the time. And if you’re branded, the oil company’s happy because we work with them to maintain the site’s standards—cleanliness and mystery shops, inspections—making sure everything’s done where it needs to be done.

FMN: From a pure consulting perspective, I would assume a client can be a top operator and still need some advice or a second opinion, now and then.

Strasburger:

An extra set of eyes or an outside perspective can be very valuable. I’ve been in the convenience store business for over 40 years. Everybody who works with me on the operational side of it has been in business for at least 25 FMNMagazine

FuelsMarketNews.com

years and we all have national experience running all types of stores across the country. And most of us also have experience running stores internationally. My family company, Strasburger Enterprises, was involved with operating retail sites in 33 countries, helping people like Shell and Mobil develop their retail programs overseas. I was responsible for that development. So, we can bring in ideas that we see everywhere.

FMN: We’ve discussed more temporary management solutions. Are you in a position to basically take over a marketer’s retail operations long term?

Strasburger:

We will operate them for as long as anybody would like. When we go in to operate a site, there is no fixed term. And our arrangement can be terminated with 30 days’ notice for no cause. However, anything over a three-year commitment gets a discount on our rates. I’m always looking for five- and seven-yearhorizons to be operating sites for people. And, the more we do that, the more benefit I think we can bring to the client.

FMN: How do you assist with the technology aspects of retail operations?

Strasburger:

The technology that we usually find is rudimentary at best. It’ll be whatever the fuel controller that the oil company or the pump manufacturer needed to operate the site, and that’s kind of where it stops. We provide the PDI back office. We can run all of the PDI reports and information that they generate for the client. It’s a very robust accounting platform. We can also handle most of the IT support that is necessary to run our programs so the client doesn’t have to worry about that. And if you consider ATMs and things like that to be technology, we bring those in with us if there’s not already something in place. Whenever we find new ideas or programs that are more technology related, we suggest them to our clients and if there’s any cost involved, they have to sign off on it before we do anything. Then we move forward. n

by Keith Reid

The Fight Against Human Trafficking “

The Department of Homeland Security defines Human trafficking as: “… modern-day slavery and involves the use of force, fraud, or coercion to obtain some type of labor or commercial sex act.”

According to DHS, approximately 18,000 persons are trafficked into the United States from over 50 countries every year. More than 300,000 children are trafficked within the United States annually. DHS noted that traffickers use force, fraud or coercion to lure their victims and force them into labor or commercial sexual exploitation. The department notes traffickers look for people who are susceptible for a variety of reasons, including psychological or emotional vulnerability, economic hardship, lack of a social safety net, natural disasters or political instability. The trauma caused by the traffickers can be so great that many may not identify themselves as victims or ask for help, even in highly public settings. A growing movement is underway to fight human trafficking, and it’s one many businesses can take an active role in fighting that has little impact on their operations but an extreme impact in saving victims and bringing exploiters to justice.

The Role of Convenience Stores

Juliana Williams, IOB CAST, a program of the nonprofit IN OUR BACKYARD (IOB), partners with c-store retailers, petroleum marketers, state associations and industry suppliers in more than 40 states. The program has been featured in the NACS Community Toolkit. Among many materials, they have developed stickers that can be posted in restrooms with hotline information for victims and training for store employees and managers. “Convenience stores are not primary locations where human trafficking is occurring, though obviously it can occur anywhere,” said IOB Program Director Juliana Williams. “Half of the U.S. population uses a convenience store every day. So, they are in our communities and represent a prime target for awareness.” Williams noted that human trafficking victims are using convenience stores daily, sometimes multiple times per day, to get their essentials because they move around more on a day-today basis. If they are involved in prostitution, they have multiple customers and they’ll often go to a convenience store in between to use the restroom to clean up.

Convenience stores have become the local “corner” community stores that were once a feature of many residential neighborhoods. This provides an excellent opportunity to support the fight against human trafficking, which the National Association of Convenience Stores (NACS) has embraced. “We’re doing this because we feel there’s a connection with communities that we can deepen,” said Jeff Lenard, NACS’ V.P., Strategic Industry Initiatives. “We’ve worked with the DHS’s Blue Campaign to help tell the story around trafficking. We have multilingual materials available on our website that people can use and we coordinate with other groups such as Convenience Stores Against Trafficking (CAST) on how we can be part of the solution.” FMNMagazine

” “

Convenience stores are not primary locations where human trafficking is occurring, though obviously it can occur anywhere. Half of the U.S. population uses a convenience store every day. So, they are in our communities and represent a prime target for awareness.

“That might be the only moment that they’re even alone and away from their trafficker,” Williams said. “So, that’s why our Freedom Stickers are so essential because they give them that hotline to call to escape—a beacon of hope out of the life that they’re in. And, we’ve had cases of victims recovered because of the sticker in a convenience store restroom.” 42

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RETAIL OPERATIONS

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The 3.5 million professional truck drivers on the highways see a lot. And our drivers who live and deliver in every community every day know when something’s a little bit off or a little different.

said Barna who also sits on the TAT board. “Trafficking is very harmful for those being trafficked. If you are involved consider that, and if you have friends who are involved, ask them not to because then the demand goes away.”

Get Involved

To get involved, owners and employees are not expected to take on law enforcement responsibilities. The posting of materials like stickers that allow a victim to start the process of leaving servitude is an easy step. Beyond that, observing and passing along tips to authorities is important.

“We’re asking someone who suspects trafficking is occurring to write down a physical description and a description of any vehicles if they are present,” said Williams. “Note the time of day because you can then go back and search the video. You do not confront a suspected trafficker or alert the victim to your suspicions. It’s up to law enforcement to investigate. And, you can call the National Human Trafficking Hotline. They are experts in human trafficking specifically, so they will be able to help sort out whether what was observed might have been human trafficking.”

Elisabeth Barna, ATA

The Role of Travel Plazas

Travel plazas and truckstops have a more transient customer base than the typical convenience store, but they provide other opportunities to play an intervention role in human trafficking. It is not uncommon for human traffickers to travel the highways with their victims. Prostitution can also be attracted to these locations. “Our truckstops tend to be family-run businesses,” said Tiffany Wlazlowski Neuman, NATSO’s Vice President, Public Affairs . “We have a lot of third-generation family members taking over these businesses. They are like their homes and they don’t want any crime at their locations so they are really focused on how they can help. The NATSO Foundation has focused on training truckstop employees to understand what human trafficking is, the signs and what steps to take.” NATSO launched an online learning tool designed to help teach truckstop owners, operators and employees how to respond if they suspect human trafficking. The course is available free of charge to any member of the truckstop and travel plaza community. It also provides the DHS Blue Campaign’s training and awareness materials—including posters, handouts and other materials.

The Role of Truckers

Truck drivers are another key vector in the fight against human trafficking, as they also represent a community that can keep its eyes open for potential signs that the practice is occurring. “The 3.5 million professional truck drivers on the highways see a lot,” said Elisabeth Barna, Chief Operating Officer and Executive Vice President of Industry Affairs for the American Trucking Associations. ATA focuses on its anti-trafficking campaign through its safety-focused America’s Road Team and alliances with such groups as Truckers Against Trafficking (TAT). “And our drivers who live and deliver in every community every day know when something’s a little bit off or a little different.” “Unfortunately, some of our drivers are approached while they are resting in their trucks,” Barna said. “They can intervene and save lives. A lot of people see something and they want to make that call but they don’t want to wait around for the police to come or they don’t want to be in the middle of an investigation. We show them you can make that call and do it anonymously and the authorities will take over after that.” The temptations with prostitution that arise are also a focus. Truckers Against Trafficking recently launched its “Man to Man” campaign. “It’s basically saying, man to man, don’t engage in it,”

To get involved, you can contact any of the organizations listed in this article to see how your operations fit in with their programs or the programs they support. More immediately, anyone who suspects human trafficking should call local authorities or the toll-free 24-hour hotline for the National Human Trafficking Resource Center: 8883737-888, or text BeFree (233733). You can also leave a tip on their website at https://humantraffickinghotline.org/report-trafficking. n

How to Identify a Human Trafficking Victim Ordinary citizens can be trained to recognize the signs and what they can do to stop it, particularly at crowded events like the Super Bowl. Possible situations to look for include: • A young girl who is with someone who is older, partying and/or romantically involved and that person seems to be in charge of where she goes, what she does and who she talks to • Someone who appears to be soliciting for prostitution—the majority are sex trafficked, even though they may claim to be on their own • Those dressed in a provocative way, are exceptionally flirty and repeatedly check-in with someone else on a cell phone or in person • Someone who seems to have a bodyguard or friends watching from a distance • Someone who is avoiding normal eye contact with others, unless soliciting • Someone who acts a bit skittish, fearful or appears drugged or drunk • Teens who are trying to appear as adults and carry and present fake ID • Physical appearance shows signs of injuries, abuse or torture • Someone who is not free to leave or come and go as he/she wishes • Someone who works long hours with no breaks or unusual restrictions • Someone who is unable to clearly explain where they live Source: IN OUR BACKYARD

conversion on the forecourt may be technically complex, but the consequences of failing to convert are pretty straight-forward—every day fuel retailers don’t take action to begin upgrades at the dispenser, they are putting their operations at increased risk for fraud liabilities and higher upgrade costs. The good news? “Action” doesn’t mean installing your upgrades in the next three months. It means getting a plan together.

EMV

by Joe O’Brien

It’s Time We Had a Talk Outdoor EMV for Independent Fuel Retailers

“ ”

Most chains have begun—and in some cases completed— outdoor EMV implementation. But EMV for single-store operators is a little more daunting.

FMNMagazine

Most chains have begun—and in some cases completed—outdoor EMV implementation. But EMV for single-store operators is a little more daunting. Most independent fuel site operators don’t have the in-house resources that a major chain has, such as a dedicated IT department or “task force” for shepherding the implementation. Further, understanding EMV isn’t always particularly easy for the uninitiated—one glossary of EMV technology and acronyms contains over 100 highly technical terms!

Nevertheless, there’s more good news. Automated fuel dispenser (AFD) distributors and manufacturers are here to help guide fuel marketers, not only with the EMV conversion but with secondary upgrades that will promote a competitive advantage.

FuelsMarketNews.com

RETAIL OPERATIONS

“ ”

Retailers who get in front of their EMV upgrades are more likely to avoid less-than-ideal installation and certiﬁcation circumstances.

Why the Steady Drumbeat for EMV Persists

Delays are expensive. Retailers who get in front of their EMV upgrades are more likely to avoid less-than-ideal installation and certiﬁcation circumstances.

Although AFD upgrade timetables will vary by dispenser manufacturer and/or distributor, a 2017 presentation by the U.S. Payments Forum and Conexxus estimated that installation of upgraded dispensers and point of sale (POS) software could take two to four months. There is a limited pool of resources to draw from. The closer we get to the 2020 conversion deadline, demand for equipment, distributor expertise and technical support will increase. Further, some installation scenarios may require technicians who have been certiﬁed by the automated fuel dispenser manufacturers and/or POS vendors. Fuel sites that plan ahead are more likely to avoid downtime during a potentially lucrative high-volume month of traﬃc.

But getting the equipment installed is only part of the objective. To accept chip-card transactions, EMV payment terminals must be tested and certified as EMV-compliant by the companies and card networks that process the transactions. Under the terms of the liability shift, if a retailer has EMV equipment installed but is waiting for certification in order to process transactions, the retailer could be responsible for fraud chargeback costs until the terminals are certified.

Getting EMV Upgrades Started in Two Steps

To begin making your plan for EMV equipment acquisition and deployment, divide your plan into two strategic objectives: Determine what your site needs to accomplish by 2020 to avoid being liable for fraudulent transactions. Identify what other upgrades you should complete simultaneously to promote a stronger future.

Make an appointment with your AFD distributor, technician or manufacturer as soon as possible to discuss the following:

Step 1:

Audit your outdoor equipment for EMV needs.

Payment application: Petroleum retailers need to update their site payment application and processor connection to handle EMV cards, magnetic stripe cards, ﬂeet cards and corresponding message speciﬁcations.

Dispenser payment terminals: If your dispensers are 10 years old or older, then you are probably looking at replacement. If they are less than 10 years old, you are looking at dispenser replacement or retrofit kits. Retrofit kits may cost less in the short-term, but sites that lack the latest in-dispenser technologies, such as video monitors or contactless payment capabilities, will struggle to remain competitive in the future. Something to keep in mind: your outdoor payment terminals may be from a different supplier than your indoor terminals/PIN pads.

“ ”

If your dispensers are 10 years old or older, then you are probably looking at replacement. If they are less than 10 years old, you are looking at dispenser replacement or retroﬁt kits.

Communications: What kind of communications lines does your site have between forecourt devices and the indoor payment server? According to the U.S. Payments Forum, magnetic stripe outdoor payment terminals can communicate with in-store components using low-speed communication protocols. But dial-up connections are not recommended for EMV transactions because the EMV messages are longer, and longer EMV messages mean longer transaction times, and maybe even time-outs at the terminals depending on terminal settings. If you are re-plumbing wiring, the U.S. Payments Forum and Conexxus recommend separating communication and payments wiring from electrical lines by using two separate conduits.

Terminal management systems: How sophisticated are your terminal management systems? According to the U.S. Payments Forum, EMV terminals contain more logic than magnetic stripe reading PIN pads. Sophisticated support and remote management systems that keep the logic current will result in improved performance. FMNMagazine

FuelsMarketNews.com

RETAIL OPERATIONS

It’s Time We Had a Talk

Step 2:

Audit your AFDs for capabilities that will help grow the bottom line.

Identify additional AFD options that would further enhance security, provide a return on investment or boost your bottom line.

Remember, fuel dispensers are the ﬁrst point of engagement for most customers. And for others, it is the only point of engagement. A strong media platform creates opportunities for up-selling, enticing fuel-only customers to make in-store or car wash purchases. (Important note: multimedia capabilities also require higher speed communication.) 2D barcode scanners support mobile applications, streamline payments and enhance loyalty and promotional programs.

Understanding EMV—3 Things Every Retailer Should Know

1. What About Fleet Cards?

The U.S. Payments Forum reports that fleet card issuers are not required to migrate to EMV. However, some fleet card issuers have announced plans to adopt EMV standards. Fleet card EMV implementation is likely to continue to evolve in the months to come. Retailers, contractors and technicians should keep an eye on this.

And what about future fuel compatibility? As engine designs become more eﬃcient and/or demand for higher ethanol blends increases, will your dispenser be able to support a “super premium” or mid-level ethanol fuel blend such as E15?

Sticker Shock vs. Long-Term Cost Savings

When it comes to card fraud at the pump, it’s important for fuel retailers to understand what kind of criminals they are dealing with. The majority of credit card fraudsters are part of a crime syndicate. Most skimming incidents are not a mischievous pursuit by a solitary criminal to generate a little extra cash; they are the work of a professional crime group organizing its resources Most skimming to identify and exploit vulnerable payment incidents are not a terminals. There is evimischievous pursuit dence to support that by a solitary criminal vulnerable terminals will to generate a little be targeted for fraud. In extra cash; they are Gilbarco Veeder-Root’s the work of a video “Risks of Not Upprofessional crime grading for EMV Compliance,” Gilbarco reports group organizing its that European sites that resources to identify waited to convert to EMV and exploit vulnerable standards until after the payment terminals. deadline passed experienced an increase in fraudulent charges until they made the necessary upgrades. They also saw a drop in fuel sales as customers accustomed to EMV standards took their business elsewhere.

“ ”

2. When Being “In the Clear” Isn’t a Good Thing EMV cards contain a chip that improves payment security through card authentication, cardholder verification and transaction authorization. It is virtually impossible to create a counterfeit EMV card. But, EMV is not a data encryption standard. That means cardholder information on an EMV card is sent the same way (“in the clear”) that it is sent on a magnetic stripe card and is vulnerable to hackers. Therefore, Payment Card Industry (PCI) compliance is still essential. Conexxus and the U.S. Payments Forum recommend Point-to-Point Encryption (P2PE), End-to-End Encryption (E2EE) or tokenization for maximum security. However, the U.S. Payments Forum reports that encryption approaches can impact the payment application’s ability to process the discretionary data required for fleet card transactions. Therefore, this needs to be discussed with individual P2PE and/or E2EE solution providers.

3. Fallback Transactions— Vulnerabilities to Watch Out For A fallback transaction occurs when a chip card cannot be read due to a technical issue with the chip or terminal reader. This causes the technology to process the transaction as a magnetic stripe transaction. The U.S. Payments Forum says that legitimate fallback transactions will be uncommon because the chips on the cards rarely fail. However, automated fuel dispenser card readers that are exposed to the elements may be more susceptible to problems, which can lead to elevated fallback transactions. Fraudsters may exploit this scenario by creating counterfeit cards with intentionally damaged chips. The card issuer holds liability on fallback transactions and as such, the issuer may choose to decline fallback transactions.

While full dispenser replacement may seem cost-prohibitive in the short-term, it’s important for c-store operators to look at it as a longterm investment that will position them for a competitive future. Fuel retailers who get a jump on EMV upgrades will not only be in a better position to avoid installation delays, they may be able to spread the costs over a longer period of time and future-proof their technology in the process. Visit the Conexxus website at www.conexxus.org for much more information about the outdoor EMV conversion. n FMNMagazine

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READ MORE at FuelsMarketNews.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 fuel industry. Contact him at jobrien@sourcena.com.

To EMVor not to EMV:

by Glenda Preen

The Fuel Merchant’s Question As more and more U.S. retailers

are adopting EMV terminals, consumers are becoming increasingly familiar with, and supportive of, paying with chip cards. Though many convenience stores have installed in-store EMV-enabled terminals, many of those same merchants have yet to install EMV-enabled payment terminals at their fuel pumps. While there is a significant cost associated with upgrading these devices—in terms of both money and time—the fast-approaching liability shift in October 2020 for Automated Fuel Dispensers (AFDs) makes addressing this gap critical for fuel merchants.

“

”

There are certainly reasons to delay or avoid taking on this huge expense and hardship. However, fuel merchants need to understand that in the end, there is more to gain than lose with the upgrade to EMV enabled pumps.

FMNMagazine

FuelsMarketNews.com

“

”

As consumers become savvier to the

huge risk of card fraud, they are

also more likely to look to buy

goods and services from merchants

who can offer them added

protection against fraud.

The convenience and retail petroleum industry has more than 150,000 merchant locations in the U.S. with approximately 124,000 selling fuel. These locations account for 80 percent of gasoline sold in the U.S. Over 59 percent of retail petroleum sites in the U.S. are single-store operations owned by independent merchants. A typical gas pump forecourt has an average of six dispensers (with a fueling station on each side of the dispenser) which could require wholesale replacement of the physical payments infrastructure. The average cost per store to become EMVcompliant is about $30,000. Each site may also have multiple types of outdoor terminals, multiple types of Fuel Forecourt Controllers (FFC) and one or more Electronic Payment Server (EPS) applications. If the pump cannot accept an EMV upgrade kit, replacement—including new machines, infrastructure changes and labor—can cost more than the average profit an independent fuel merchant will see in a year. What’s more, the evolving specification for fleet card processing in an EMV and encryption-enabled landscape compounds the complexity of system upgrades. All of this has led many fuel retailers to take a “wait-andsee” approach.

globally. Payment card fraud is a growing problem. A recent Nilson report projects card fraud will cost merchants worldwide a total of nearly $33 billion in 2021, with the U.S. comprising 35 percent of that figure. The adoption of EMV is designed and proven to reduce counterfeit card fraud, saving fuel merchants significant dollars in counterfeit fraud chargebacks. Any merchant who isn’t EMV-capable at the pump by the October 2020 deadline assumes the liability associated with counterfeit fraud activity. As merchants in other industry verticals continue to roll out chip card acceptance, counterfeit fraud will become more and more concentrated in those verticals and those individual merchants that haven’t migrated. Fuel merchants should also consider PCI Security Standards. These are standards set by the PCI Security Standards Council, which aim to establish and promote the security of cardholder data across the globe. The council is composed of major card brands including Visa, Mastercard and American Express. The individual card brands could impose significant fines on any merchant not compliant with PCI standards in the event of a breach.

Glenda Preen

Consumers welcome the use of EMV. Recent Worldpay data shows that support for EMV has steadily increased since 2016—three-quarters of people reported not having any difficulties with EMV-enabled cards in the past year. What’s more, both men and women are increasingly trusting of the security associated with EMV—72 percent of people feel that EMV-enabled cards have higher security than non-EMV enabled cards. As consumers become savvier to the huge risk of card fraud, they are also more likely to look to buy goods and services from merchants who can offer them added protection against fraud. While the short-term costs can seem overwhelming, it’s the long-term costs of not converting that could hurt merchants most. Further, most payment terminals being deployed today have advanced features, like support for contactless payments, preparing merchants for future changes in consumer behaviors and expectations.

It’s understandable that fuel merchants would seek to postpone or altogether avoid taking on these costs, but the long-term cost of not being capable of chip card acceptance has the potential to be significantly higher than the cost of the upgrade itself. Chip payments are the foundation and the future of payment acceptance. n

READ MORE at FuelsMarketNews.com

With nearly 24 years of experience in payments and compliance, Worldpay’s Enterprise Relationship Manager Glenda Preen manages existing petro/c-store merchants, helping them increase profitability and reduce operating costs in addition to offering new products and retaining merchants by providing superior customer service. Preen has also participated in standards organizations for eight years, including: the PCI Security Standards Council, ANSI X.9 and TR39.

FMNMagazine

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5 Reasons Fuel-Site Water Intrusion Is Increasing

3 Ways Retailers Can Keep It From Happening A

ccording to the U.S. Geological Survey, 71% of the Earth’s surface is covered by water. The mission of fuel retailers is ensuring that not a single drop of that water invades the underground storage tank (UST) systems that they use to store and dispense their motor fuels (and of course, keep a single drop of fuel from entering the water on the earth…).

by Ed Kammerer

That is a daunting task and, quite frankly, easier said than done. That is because of water’s insidiousness, or its ability to find its way into any crack, crevice or deformation in a fueling system and take up residence in the motor fuel, where it can cause—if it reaches a high enough percentage—irreparable damage. This creates a double-edged cost sword that hangs over the head of retailers: the cost of potential damage to vehicle fueling systems and retailer reputation if water-fouled fuel is dispensed, coupled with the cost to remove and replace waterlogged fuel. Knowing that water intrusion is an ever-present threat, fuel retailers must take great pains to guarantee that their UST systems do not become susceptible to water invasion. Thankfully, the developers and manufacturers of the UST equipment that is used to store and dispense fuel have recognized the dangers of excessive water levels in fuel and have responded with a series of USTequipment solutions that can make the harmful effects of water intrusion a thing of the past.

FMNMagazine

FuelsMarketNews.com

“”

RETAIL OPERATIONS

Why the Increase in Water Intrusion? Theoretically, water intrusion has been a concern for fuel retailers since the first petroleum-product-powered vehicles began to take to the world’s roads more than a century ago. However, in recent years there has been a documented increase in water-intrusion incidents. In fact, a June 2017 report by automobile insurance quote aggregator CheapCarInsurance.net noted that in 2016 as many as 20 percent of the 100,000-plus gasoline stations in the United States were victims of elevated water levels in their fuel. But why is water intrusion—a century-old concern for fuel retailers— becoming a much more prevalent problem today? The Steel Tank Institute (STI) offers three possible explanations in its “How Water Enters A Storage System” report. The explanations are:

Changes in fuel chemistry: With additives like ethanol and biodiesel required to be mixed in with neat gasoline or diesel, fuel chemistry has undergone a series of significant changes over the past 30 years. While these new fuel formulations reduce the level of harmful emissions that can be released to the atmosphere, they are more susceptible to water-caused moisture accumulation, separation and biodegradation. For example, today’s lead-free fuels have removed the one fuel component—the actual lead itself—that is a natural poison to the microbes that will flourish in a moist environment, leading to an increased risk of higher levels of microbial growth.

Changes in the distribution infrastructure: More and more fuel is moving faster and faster through the delivery network, from refinery to pipeline to bulk-storage rack to retail fueling facility. Today’s hyper-speed distribution system allows less time for water to settle to the bottom of USTs before it is moved forward to the next stage in the delivery process. Additionally, a noteworthy shift from proprietary to shared delivery infrastructures within the industry eliminates much of the control that individual producers and shippers used to have over their product and delivery processes and schedules.

Installation procedures: As fuel chemistry and distribution networks have evolved, so have the accepted installation methods that are used to get the UST system and its components into the ground. Some things such as open vents, low fill areas and sloped tank installations that were previously considered unacceptable construction techniques are now commonplace. The tradeoff is that there is now an expanded range of ways that water can invade the UST system. In analyzing these probable reasons for increased water-intrusion instances, changes in fuel chemistry are the most significant. Specifically, the mandate in the 1990 Clean Air Act that all gasoline formulations sold in the U.S. consist of at least 10 percent ethanol has opened the door for water intrusion to become the current conundrum that is has for fuel retailers. FMNMagazine

Knowing that water intrusion is an ever-present threat, fuel retailers must take great pains to guarantee that their UST systems do not become susceptible to water invasion.

Water that enters a UST storing gasoline that is laced with an ethanol component is susceptible to “phase separation,” a condition that will cause the fuel to separate into two distinct layers: an ethanol-free, gasoline-only layer at the top and an ethanol/water-rich mixture along the bottom. When phase separation occurs, the effects can be detrimental for the retailer:

• Damage to vehicle components, including fuel injectors and engines • Damage to fuel-storage and fuel-dispensing equipment

• The creation of out-of-spec fuel that cannot be sold and must be removed from the UST and disposed of, oftentimes at considerable cost and inconvenience to the retailer • Word-of-mouth damage from affected drivers regarding the retailer that can be hard to mitigate or overcome • Potential liability for damage to customers’ vehicles

With the identification of the reasons that the number of instances and levels of water intrusion have increased, it’s time to consider the ways that water can enter a UST. Some of the most common are: • Fuel delivered with water already present • Deliver cap not replaced properly • Accumulated water in spill bucket drains or leaks into UST • Hole in vent cap or line • UST leak that allows entry of groundwater • Cracked, degraded or ill-fitting seals on the tank-sump lid • Loose fittings or plugs • Condensation caused by fuel-temperature swings Some of these causes are easier to eliminate than others, but fuel-site operators should know that, if unchecked, all of them will lead to water-fouled fuel and the associated cleanup and replacement costs. Therefore, appropriate due diligence must be performed to ensure that none of these causes are allowed to occur or fester. FuelsMarketNews.com

RETAIL OPERATIONS

3 Reasons Fuel-Site Water Intrusion Is Increasing—5 Ways Retailers Can Keep It From Happening

Waging War On Water Intrusion

As mentioned, the developers and manufacturers of the equipment and components that make up a UST system have created numerous ways that can contribute to halting the flood of unwanted water intrusion. In recent years, five notable solutions have been introduced to the market, all of them possessing the capability to optimize the prevention of water intrusion:

Composite Multiports with Watertight Lids and Covers:

These next-generation components offer corrosion-resistant construction that is engineered in conjunction with fiberglass containment sumps and specially designed covers, which provide watertight spill containment for UST fill pipes and vapor-recovery risers.

Composite Manhole Covers:

These watertight, lightweight, metal-free non-bolted covers feature a sealing gasket that adds an extra layer of protection against water intrusion.

Sealable Cover Spill Containers:

Conclusion

An integral “plumber’s plug” sealable design prevents water from penetrating the spill container at the surface and entering the UST. Additionally, the design prohibits spilled products from entering the soil near the fill and vapor-return riser connections on USTs during normal tank-filling operation, or in the event of a tank-overfill occurrence.

While it may be an erroneous extrapolation to assume that since water covers 71% of the Earth’s surface that there’s a 7-in10 chance a fuel retailer will suffer water intrusion in his USTs, there is no questioning the severity of unchecked water invasion. Ranging from damage to the fuel site’s UST system, the operator’s reputation and the customer’s vehicle, excessive water levels due to water intrusion in fuel—no matter the source—is a constant, and growing, concern for fuel retailers. To eliminate water intrusion and the harmful and costly effects that it can have on the operation of fuel-storage systems and the vehicles that receive damaged fuel, retailers should look into upgrading to any of the many different watertight UST storage-system components that have been made available to the market in recent years. n

No-Drill Dispenser Loop Sumps:

These are prefabricated sumps that eliminate improper entryfitting installation and ensure proper pipe alignment. The shallow bury “loop” design keeps entry penetrations above the water table. Factory-installed dual-sided, rigid entry fittings provide double protection by sealing on the pipe inside and outside of the sump, which prevents groundwater intrusion into the sump and keeps all of the fluid that is collected in the sump from entering the access pipe. Rigid composite material eliminates entry-fitting degradation that can result in water intrusion.

READ MORE at FuelsMarketNews.com

No-Drill Tank Sumps:

These feature integrated factory-installed conduit ports and an electrical wiring junction box, which eliminates the need for any drilling that can create tank-sump leak points. Also, they have consistent wall thicknesses and smooth sealing surfaces inside and out for watertight entry-fitting security.

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

The overriding takeaway is that fuel retailers who introduce any or all of these components into their fuel-storage systems will significantly increase the likelihood that their USTs will not be subject to harmful and costly levels of water intrusion. FMNMagazine

FuelsMarketNews.com

Join ATA’s Technology & Maintenance Council Join the trucking industry’s THOUGHT LEADERS on equipment and technology, backed by more than 60 years of experience developing maintenance and engineering best practices to improve your fleet’s operation. Join TMC’s 2,600 maintenance professionals representing more than 500,000 power units and trailers across North America who have increased their company’s profitability and enjoy a wealth of knowledge. Visit JOINTMC.TRUCKING.ORG or contact Caasi Brim at cbrim@trucking.org or 703-838-8845.

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RETAIL OPERATIONS

Getting over reluctance is an important part of training and practice. Most managers will agree that if you know a customer well, you will know how to upsell.

by Tom Bandy

Upselling in C-Stores Leaving the Comfort Zone The biggest obstacle to consistent

upselling is cashier reluctance or discomfort. Store managers consistently state that upselling works when done well. Many, however, argue that getting consistent upselling from cashiers is not an easy task. Just like most things, building a habit takes time and practice. Managers must be consistent with expectations and make sure the staff knows how to do it. Once trained, it’s the job of the manager to ensure it’s executed. Many argue that having a tool to measure upselling is a key. Such a tool can measure the results of upselling by looking at:

1 2 3 4 5

Average sale Sales of promotional items Sales with multiple items Sales with discounts Customer traffic— upselling a return trip

Total Sales Getting over reluctance is an important part of training and practice. Most managers will agree that if you know a customer well, you will know how to upsell. For some, it is just having their regular item available or calling them by name. For others, they might just be too rushed or distracted to bother. Sometimes, a friendly smile is all you can do.

Despite all the valid reasons to hold back on an offer, there are so many valid reasons to provide an upsell. Making sure the customer knows you care and want their business is important. Making them feel respected and valued is critical.

Managers that drive upselling lead by example and patiently show their staff how to do it. There are some easy things that make upselling a little less stressful. For example, saving a customer money or offering a free item with the purchase can seem much less uncomfortable for a new cashier. Based on store manager feedback, here is a list of tips they suggest to make it easier for even the most reluctant c-store cashier to have success with upselling.

How C-Store Managers Get More Upselling:

1 Implement cigarette multipack and loyalty discounts

2 Provide promotions 3 Include healthy snack choices 4 Have dispenser toppers to drive traffic inside

5 Provide good food options 6 Make sure bathrooms are clean and refurbished

7 Family owners should visit stores and meet staff FMNMagazine

FuelsMarketNews.com

Reducing the Stress of Up-Selling

Having pride in your company and its offerings makes upselling an easier “ask.” Making it a team effort and using results to acknowledge (and sometimes reward) good efforts reinforces the desired behavior. Feeling respected and part of the team improves morale and makes a tough task just a little bit easier.

The best operators measure success. The big winners know accountability for expectations are key. The managers with low turnover and high sales master the delivery of training and oversight with patient persistence. They work within their supervision to provide the environment for successful c-store upselling. n

READ MORE at FuelsMarketNews.com

Tom Bandy Tom is CEO of Bandy Works, the creator of the product Quik Data - C-Store Performance Software. It is used to prioritize, track and verify operations. It is a training tool for best practices. Quik Data offers modules that address: scorecards, alert resolution, store maintenance, shift duties, store inspections, customer surveys, cigarette scan data, product sales management and 3rd party data integration.

When fuel additive performance really matters

ANTIOXIDANTS • BIOCIDES • CONDUCTIVITY IMPROVERS • CORROSION INHIBITORS • COLDFLOW IMPROVERS CETANE NUMBER IMPROVERS • DE-ICERS • DYES & MARKERS • FUEL OIL ADDITIVES • HOME HEATING ADDITIVES HPCR & PERFORMANCE • LUBRICITY IMPROVERS • MARINE FUEL ADDITIVES

Joe O’Brien To find out more about our Fuel Additives, call (800) 441-9547 or visit us at www.innospecinc.com

by David Dougherty

How Can New Carwash Technology Improve Your Profitability? T

he race for the newest and best technology is often the catalyst for the creation of newer, even better technology. The examples are around us everywhere, from cell phones to microwave ovens, personal computers to televisions. These common appliances clearly outdistance their predecessors in operational capability and performance, and often represent a huge savings for their user, whether in time spent, effort or cost savings.

â&#x20AC;&#x153;â&#x20AC;?

While many retailers have grown used to and comfortable with the wash systems they have been relying on for decades, carwash manufacturers have been consistently improving their products during that time, creating everything from entirely new systems and accessories to finding ways to more efficiently power the wash.

Carwash within the convenience-store/petroleum retail industry is not immune to the phenomenon of new technology begetting new technology. In many ways, the engineers and designers employed by carwash manufacturers are always being pushed to develop new technologies for actual washes, as well as their component parts and operating systems.

FMNMagazine

FuelsMarketNews.com

RETAIL OPERATIONS There are, though, some carwash manufacturers who try to resist the changes and advances in wash technology, taking a “don’t fix what isn’t broken” approach to wash system operation. These manufacturers appeal to a certain type of customer: the one who shares the same mindset and thinks an upgrade is nothing more than a waste of time and money. Perpetuating this school of thought can be harmful to the customer and prove a disservice to wash operators as well. While many retailers have grown used to and comfortable with the wash systems they have been relying on for decades, carwash manufacturers have been consistently improving their products during that time, creating everything from entirely new systems and accessories to finding ways to more efficiently power the wash. This proves advantageous for the customer (as their car will be cleaner), but also to the retailer, through a variety of ways to improve on wash profits.

The Best for Both Worlds

There are many product preferences that people hold throughout life—Pepsi vs. Coca-Cola, Ford vs. Chevrolet, Folgers vs. Maxwell House. People find a product they like, and they stick with it. It is no different among carwash operators. There are operators who will only install a friction wash system and swear they consider it a superior wash quality. But there are also those who wouldn’t be caught dead with anything but a touch-free system on their lot, and state it is the modern—and correct—choice for their customers. Luckily, technological advancements in wash system design and operation can be found in both friction and touch-free washes.

Friction Washes:

Next-generation friction washes can benefit from improvements in the construction of the system’s brushes. Traditional systems use cloths that sweep over the vehicle. Unfortunately, they are sponges for the dirt and grime, meaning a lower quality wash for customers and more downtime cleaning the system for your employees. New-age brushes are constructed of a closed-cell foam material, usually neoprene, that is softer, quieter and more efficient during the cycle, resulting in lower operating costs for the wash operator and a cleaner car for each customer. Additionally, advancements in the design of friction-wash bays have eliminated the floor-mounted treadles that must be negotiated by the driver. Virtual treadles keep the bay floor unobstructed, eliminating the possibility for damages to the vehicle as well as the wash itself.

Touch-Free Washes: New touch-free wash systems feature a

simple design that results in easy operation and lower equipment and maintenance costs for the operator. Touch-free technology has also advanced to the point that the wash bridges contain sensors that can “see” how the vehicle has been positioned in the wash bay and then have the capability to adjust the way the bridge travels so that a clean vehicle is produced in the most efficient manner possible. Targeted coverage also means less waste, as chemicals are no longer sprayed on the floor, decreasing lost costs in cleaning supplies. Advanced touchfree systems also feature a treadle-free, open-bay design that makes it easier and less stressful for the driver to enter and position the vehicle in the wash. Along with the technological advancements listed above, there are three important areas where new-age friction and touch-free wash technologies can improve the bottom line for the wash operator, if implemented correctly. FMNMagazine

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RETAIL OPERATIONS

How Can New Carwash Technology Improve Your Profitability?

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Throughput Rates

Revenue Enhancement

The lifeblood of any carwash is the number of vehicles that can actually be cleaned during the course of the day. What is known as the wash’s “car-per-hour throughput rate” will always be a key decision driver for the wash operator when choosing a system. With that in mind, the operator’s choice of system should always take into consideration the wash manufacturer’s capability to deliver a product that can meet desired wash speed and throughput rates, all without sacrificing cleanability. Advancements in arch controls allow for quicker throughput and create customer confidence and comfort throughout the entire wash process. These arches are able to rotate 360 degrees, optimizing the productivity of the wash process and resulting in a consistent, high quality vehicle wash.

The days of a driver entering a wash and having the vehicle simply soaked down before being rinsed and dried are long gone. Nowadays, drivers are looking for added benefits and features when having their vehicles washed—with the end goal being a vehicle that really sparkles when it drives away from the wash. Complete coverage and specific application advancements, such as front bug prep, ensure that each customer’s car, regardless of design, will receive a targeted, tactical approach in the most hard-to-clean areas, while wash upgrades from 3X colored foams to super sealants and hi-gloss applications help separate operators from their competitors, leaving customers with the feeling that the wash system is unique in its wash offerings.

Wash operators can also take advantage of the enhanced reporting systems that are available in modern wash systems. These computer systems create a report from compiled operational information that is produced during the wash process, informing the operator of how well the system is operating and where there might be areas for improvement. This capability allows operators to change wash packages, monitor system function and track performance, allowing them to fine tune the wash parameters and anticipate when a certain piece of equipment may be due for a maintenance checkup. Historical throughput rate information can also help operators anticipate when the wash might experience a spike in use or wash trends, giving them proper information to prepare for rushes in service, and also keep up with demands of their customer base.

It’s not just enough, however, to make new revenue-generating features available on new wash systems. All revenue enhancers should be designed to be part of a retrofit kit that can be installed on existing legacy systems without forcing the operator to purchase an entirely new system. Think of it as the ability to update existing apps on an iPhone without being required to buy a new one each time.

FMNMagazine

Improved Operating Costs Most older wash systems rely on hydraulics, air cylinders and programmable logic controllers (PLCs) to actuate the movement of the equipment that is used to wash, rinse and dry the vehicle. While these technologies served their purpose 30 or 40 years ago, operators that are using this technology in the 60

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RETAIL OPERATIONS

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In addition to making the wash system safer, variablefrequency drives (VFDs) more accurately contour the vehicle, which also reduces chemical and water consumption use and related costs.

modern age are lagging hopelessly behind their competitors, with serious concerns in the operating costs associated with these older systems. Technologically advanced wash manufacturers have started outfitting systems with electronic variablefrequency drives (VFDs). VFDs have proven to be a reliable replacement for old hydraulically powered systems. Due to the older technology—and high number of moving parts—in these older systems, hydraulically powered systems are more prone to leaks and breakdowns resulting in higher maintenance costs, downtime and possible environmental damage leading to excessive cleanup and remediation costs. In addition to making the wash system safer, VFDs more accurately contour the vehicle, which also reduces chemical and water consumption use and related costs. In friction systems, VFDs can better control the movement and impact of the brushes on the vehicle, which reduces the chance that the vehicle will be damaged during the wash process. While also eliminating the need for hydraulics in car wash systems, they can also benefit them by optimizing energy consumption since only the proper amount of power is required to operate the system’s various components.

Conclusion The best technological advancements are those which were developed after looking backward, while also keeping an eye forward on the goal of overall betterment for the customer and user. While it may be an uncertain transition from a tried and true method, such as hydraulic or PLC-controlled wash systems that played a major role in making the carwash industry what it is today,

How Can New Carwash Technology Improve Your Profitability? stepping forward into a technology driven world has proven beneficial for all parties involved. Wash operators who want to stay ahead of the curve and find the nirvana of optimized throughput rates, revenue enhancement and operating costs must partner with a wash manufacturer that is constantly developing new products and not relying on equipment that was designed more than three decades ago. And while it is true that new technology comes with a cost, often spending a dollar upfront will save twice as much money in the long run. n

David Dougherty David is the Senior Product Manager for In-Bay Automatics at PDQ Manufacturing, Inc., De Pere, WI. PDQ Manufacturing, part of OPW, a Dover company, is recognized as the technological leader in vehicle wash systems, providing superior quality, outstanding support and products that contribute to its customers’ profitability. For more information, visit www.pdqinc.com or call 800-227-3373. David can be reached at David.Dougherty@pdqinc.com.

Equipment Financing Solutions for the Gas & C-Store Industries Meet the October 1, 2020 EMV Deadline!

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*Financing and instant decisions subject to credit parameters. Loans made or arranged pursuant to a California Finaning Law License.

FMNMagazine

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Profits Begin at the Pump In More Ways Than One by Dwight Rutledge

Fuel site operators are keenly aware of the difference

between what they sell at the forecourt and what they sell inside the c-store—especially with regard to profit margins. While many consumers assume that fuel sites rake in big profits of a dollar or more per gallon at the pump, industry sources have confirmed what fuel retailers already know: gross margins on gasoline (the markup before expenses are factored in) have averaged 20 cents per gallon (7 percent) over the past five years. After expenses, profits are pennies per gallon, and a fuel site usually makes an average of about 30 cents total on a typical fill-up. Those low-margin sales, however, are the drivers for highermargin sales inside the c-store. According to industry data, 58 percent of a store’s total sales on average are motor fuels, but those sales only account for 34 percent of profit dollars. Retailers know that if they can attract a consumer to the fueling island, they have a much better chance to convince that consumer to go inside the store and make additional purchases.

The High Cost of Contaminated Fuel Because gas consumers are extremely price sensitive, cutting profit margins even closer to the bone on fuel is one way to draw business away from the competition. But what about the ways a fuel site operator can drive business away? A big one has nothing to do with the price of the fuel and everything to do with the quality of the fuel. News reports about a few recent incidents that have occurred at fuel sites across the United States illustrate the importance of taking steps to avoid dispensing contaminated gas. Customers at a gas station in Rome, Georgia, claimed they got bad gas that was contaminated with water. One of them missed a day of work, spent another two days draining his vehicle’s fuel tank and eventually had to spend thousands of dollars to replace the entire fuel system. An investigator confirmed the contamination claims and the Georgia Department of Agriculture shut down the station’s pumps until all of the tanks and lines could be drained and cleaned or replaced. Source: WSB-TV Atlanta An alderman in Milwaukee, Wisconsin, alerted his constituents about the shutdown of a fuel station that was selling gas mixed with water. Consumer complaints prompted state officials to send an inspector to the site and stop the fuel operation until faulty tanks could be repaired and tested. One customer who bought bad gas had to have her spark plugs replaced and her fuel system cleaned, which cost about $800. Source: FOX6 Milwaukee A gas station in Gallatin, Tennessee, had to stop selling fuel after the Department of Agriculture responded to a series of customer complaints about bad gas. One complaint came from a woman who said she was a loyal customer until she incurred over $1,000 in auto repair bills. A lab analysis found that the station’s fuel “failed the phase separation test and workmanship test, which usually indicates water in the fuel.” Inspectors ordered the station to cease its fuel operation for several weeks until they could reassess the situation. Source: WKRN Nashville The fact that all of these situations attracted the attention of state inspectors as well as local news outlets should be a major cause of concern for fuel site operators everywhere. That’s because reputation is playing a bigger role in why people buy gas and c-store items at certain stations.

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RETAIL OPERATIONS

The Many Benefits of Dispenser Filtration

Imagine the damage to a fuel site’s reputation when consumers show up to fill their tanks and are greeted with roped-off fuel islands and notices of a state-mandated shutdown of the fueling operation—or worse, if hundreds or thousands of consumers learn about it on the local news.

Water intrusion can happen at various points in the distribution cycle, from refining and delivery to condensation within the storage tank. Phase separation is a condition that occurs when the presence of water causes the alcohol to separate from the gasoline solution in a fuel tank. When alcohol in the fuel absorbs the water and becomes oversaturated, it drops to the bottom of the tank and closer to the pump intake tube, which increases the likelihood that it will be distributed to consumers. Serious engine damage can result from this type of fuel contamination as well as from the presence of particulates. Even the smallest particulates can create abrasion in an engine’s components and lead to longterm performance problems that a mechanic can trace back to contaminated gas. Quality fuel dispenser filters that are changed at recommended intervals are a cost-effective way to mitigate the risk of customers experiencing costly engine problems due to fuel contamination. In addition to preventing water and particulates from damaging customers’ vehicles, a regular dispenser filter maintenance program can offer retailers an early warning about potential trouble in their site’s fueling system. Corrosion within the storage tank is likely when debris that resembles coffee grinds appears in the filter media. Frequent filter clogging is another indication of a problem—either with the fuel or the tank—and filters with specific functionality will slow the flow of fuel when they detect phase separation, sense the presence of water or collect an excessive amount of particulate.

Brand Reputation Matters—A Lot The results of one industry survey indicate that while most consumers still say they buy gas based on price, they are almost twice as likely as they were just six years ago (57 percent vs. 31 percent) to seek out a fueling station based on brand. According to another survey, more than two in three Americans (71 percent) believe that convenience stores share their community’s values and do business the right way. Imagine the damage to a fuel site’s reputation when consumers show up to fill their tanks and are greeted with roped-off fuel islands and notices of a state-mandated shutdown of the fueling operation—or worse, if hundreds or thousands of consumers learn about it on the local news. Obviously, fuel purchases are impossible during these nightmare scenarios, but as the numbers indicate, high-margin c-store purchases can be in serious jeopardy as well—for the duration of the shutdown and even well after the situation has been resolved. The best way to avoid an interruption in fueling operations caused by contaminated gas is to put the highest priority on a strong quality assurance program at the pump. At the core of any such program is dispenser filtration. The basic function of fuel dispenser filters is to prevent a variety of contaminants from being pumped into your customers’ vehicles, including water, which was the culprit in all three fuel-site shutdowns referenced earlier. FMNMagazine

If there’s anything that keeps a fuel site operator awake at night, it’s the possibility of being the subject of a state regulatory inspection or a local news report initiated by an accusation of selling contaminated gas. A prolonged fuel island shutdown is bad enough, but much worse are the resulting consequences that include diminished sales of high-margin c-store items and long-term damage to the fuel site’s reputation in the community. Given the increased levels of competition in today’s retail fueling industry, it could be difficult if not impossible to recover from even one contamination incident. Establishing and maintaining a regular dispenser filter maintenance program is a comparatively small investment that brings big rewards: peace of mind for you and your customers as well as no disruption to your high-margin c-store sales. n

READ MORE at FuelsMarketNews.com

Dwight Rutledge Dwight is Business Development Manager at PetroClear, a Champion Laboratories brand dedicated to manufacturing fuel dispenser filters. He has over 35 years of experience in the petroleum-equipment industry. For more information, please visit www.petroclear.com. FuelsMarketNews.com

The convenience and fuel retailing industryâ&#x20AC;&#x2122;s total sales reached $601.1 billion in 2017, a 9.3% year-over-year increase. Inside sales generated 1.7% growth at $237.0 billion, while fuel sales grew 14.9%. Motor fuels experienced a rare combination of increased gallon volume (1.9%) and a considerable rise in retail fuel prices (12.8%). The result was total motor fuels sales of $364.1 billion, the largest amount since 2014. Source: NACS State of the Industry ReportÂŽ of 2017 Data

Bottom Line:

The ongoing economic boom is broad and deep, and the convenience and fuel retailing industry is riding that wave.

at FuelsMarketNews.com

PREMIUM

PROPANE Is That a Market for You?

WHOLESALE & FLEET OPERATIONS

“You have the same problems with propane as you do with the other fuels. Maybe not as bad, but you still have exhaust emissions, you still have particulates and maintenance issues, especially in propane vaporizers and things like that.”

by Keith Reid

David Grochocki ValvTect

Motor fuel additives are as old as the

fuels themselves and are common components of gasoline and diesel today. They solve a range of issues from helping the fuel perform better in an engine to reducing pollutants to protecting the engine itself from the combustion process. Of all of the more common fuels, propane/autogas has seen little emphasis on post-production additization. It has generally been delivered as a ready-to-use liquid fuel that leaves the tank in gaseous form. ValvTect Petroleum Products, based in Buffalo Grove, Illinois, has been an exception. It began offering propane additive solutions in late 2015 with the acquisition of Energy Additives Inc. These solutions provide a range of benefits to both the customer and, potentially, to the savvy fuel marketer.

The company offers three different products under its Lumin line.

• CGX-4®

“We had the opportunity to purchase a company a few years ago from an older gentleman who was a developer and marketer of propane additives for over 20 years,” said David Grochocki, Vice President of Operations for ValvTect. “He wanted to get out of the business, so we spent a couple of years redeveloping it and going through the engineering. We’re part of Republic Powder Metals so we had a lot more dollars behind this than he had and we were able to make it a modern, everyday product.”

Provides detergent and stabilizing technology to reduce heavy end buildup and improve combustion in propane-powered motor equipment (trucks, cars, forklifts, lawn equipment).

• Vapo-Kleen™ Removes deposits, reduces emissions and helps keep tanks and industrial equipment clean and maintenance-free in all propane-powered stationary equipment (grain dryers, pumps, agricultural and industrial heaters).

Although propane is currently a commodity product widely used in unadditized form, that does not mean there is no room for improvement.

• HGX-3® Designed for cutting applications: it promotes rapid heat transfer, faster cutting and reduced slag formation versus acetylene and propylene applications.

“You have the same problems with propane as you do with the other fuels,” said Grochocki. “Maybe not as bad, but you still have exhaust emissions, you still have particulates and maintenance issues, especially in propane vaporizers and things like that. You always have the cutting and welding market with acetylene and propylene, and there are a variety of areas in those processes that can be improved.”

FMNMagazine

While not unique, such propane additives are not commonplace. According to Grochocki, the challenge is getting an additive to remain in solution as the product shifts between liquid and gaseous forms. All Lumin products contain CH25X technology, which is the process that keeps the products in solution through all the phases. “That’s an important feature because there are other products out there that we know of that do not do not hold up well going through the different phases,” he said. “And we’ve had customers that we’ve gotten because their previous product didn’t stay in solution all the time or it fell out after a couple of months.”

In addition, ValvTect offers BlueMoon® Filters, which are propane filtration for individual units, delivery trucks, transports, storage tanks and bulk plants.

FuelsMarketNews.com

WHOLESALE & FLEET OPERATIONS

Premium Propane—Is That a Market for You?

David Grochocki ValvTect

Customer Needs

“We think about 25 to 35 percent of motor fuel distributors selling gasoline and diesel also sell propane,” said Grochocki. “They’ve been in the business awhile and they know how to sell a premium product. Some people want premium and this is the very same concept. Fuel distributors have welcomed it pretty well, though it has tended to be a new concept for traditional propane distributors.”

Autogas is commonly promoted as being a cleaner-burning alternative fuel, which it is. However, autogas, in large part because of that performance, is used in equipment that operates in confined spaces where clean-burning takes on new meanings. “There’s an armory in Joliet, Illinois. This is an enclosed system— you can’t have any moisture in the air and it has to be locked down for security,” said Grochocki. “So, the environment for forklift trucks is very limited because of the exhaust emissions. We were able to increase the amount of forklift trucks from eight trucks to twelve trucks. So, they were able to increase their productivity by 50 percent by using the additive because it cuts the emissions.”

Although premium propane would be a niche, Grochocki noted that the solutions are inexpensive. A fuel distributor can reach a point where all of the fuel can be additized and the distributor markets premium propane as part of their brand identity. “Picking up 25 accounts by offering an additized fuel might be the break-even point on additizing the entire propane product offering,” Grochocki said. “Then when you go to market you can say my product is filtered, it’s additized—it’s the best propane you can buy out there. And when people shop price, if you’re two or three cents higher and you’re a good service provider, it’s not going to be an issue.”

Grochocki also noted that the propane vaporizers commonly used in applications like powder coating can benefit from a “cleaner” clean fuel. “These big furnaces have to be cleaned maybe an average of three times a year so you can get the gunk out,” he said. “There are still particulates, there are still water problems, and there are still icing issues. What would happen if you only had to do that once a year?”

The concept should also be viable in existing and more traditional business opportunities.

For the Propane Marketer

“We were talking about service contracts with one distributor and he says, ‘Why should I put in the additive if I have a service contract? That guy’s paying for it,’ ” Grochocki said. “I agreed, but you now have to go out three times a year to service the contract. With additization, that drops to once a year. Plus, you sell him a better fuel and you have a happier customer because the equipment’s not breaking down. It’s a win-win situation for everyone.”

While the Lumin additives can solve specific performance challenges, ValvTect hopes that the product line additionally helps marketers solve some of their challenges—like increased profitability. The additized fuel can be sold as a “premium” product in what is today a commodity market.

According to Grochocki the primary premium market would be commercial and industrial customers. However, as with Bioheat, it would not be surprising to see some residential propane heat customers favoring a lower emissions propane product in “green” regions like the Northeast and West Coast.

“You always want to differentiate yourself with a commodity if you can, because then all you have left is your service and everybody’s always striving for the best service or better service or that kind of thing,” said Grochocki. The best analogy can likely be found with Bioheat premium heating oil. This product is a mixture of ultra-low sulfur heating oil and biodiesel. It provides a range of performance benefits such as reduced furnace maintenance while at the same time being seen as renewable and clean-burning. These performance parameters have strong customer appeal in the Northeast where oil heat remains a solid heating solution. FMNMagazine

From an operational standpoint, the additives can be added anywhere from the rack on down, though it would typically be applied at the distributor’s bulk facility. The process can be as simple as a separate pipe section with a shutoff and fill port or a pressurized injection system. The distributor can additize all the propane on the site or per load. n 68

FuelsMarketNews.com

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

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Improves fuel handling Reduces risk of plugged filters & fuel lines Improves low temperature operability Less down time--keeps drivers safely on the road

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www.mcchemical.com | 877.862.2436

IMPROVING YOUR PERFORMANCE

Maximizing Fleet Fueling Delivery Efficiency

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byJohn Coyle

As a fuel company currently

by John Coyle

With today’s technology, you can automate nearly all of your manual processes. No more printed tickets, no more manual, hand-written notes about how many gallons were delivered to each piece of equipment, no extra person in the cab to help keep track of gallons and no manual posting back in the home office.

involved in fleet fueling deliveries (or considering it for the future), you know efficiency makes all the difference to your bottom line. Without efficiency, you can find yourself chasing profit, but with it, you can not only increase your profit, but reclaim valuable man-hours you can use to grow your business. The definition of efficiency is simple— productive without waste. What this means in fleet fueling is a process that takes you from start to finish with no duplication of work and no wasted effort. It sounds simple, but it won’t happen on its own. Taking a closer look at your entire process can reveal a clear picture of the opportunities for improvement that are available to you.

FMNMagazine

FuelsMarketNews.com

“”

WHOLESALE & FLEET OPERATIONS

Automate Manual Processes With today’s technology, you can automate nearly all of your manual processes. No more printed tickets, no more manual, hand-written notes about how many gallons were delivered to each piece of equipment, no extra person in the cab to help keep track of gallons and no manual posting back in the home office. The entire cycle can be automated, with the tickets wirelessly transmitted to the mobile device and all the information about the delivery automatically captured in the field and wirelessly sent back to the home office, including a customer signature. Manual processes are eliminated! And, what about the invoicing? That can be streamlined, too. Invoices can be electronically created in the back office and emailed directly to the customer. With same-day invoicing and immediate invoice delivery, you will see great improvements in your accounts receivable ageing, not to mention a savings in postage. And the invoice is automatically saved on the customer’s account for easy CSR access.

Immediate Information Because of the wireless communication with the field, CSRs have accurate, timely information to answer calls and give excellent customer service. They can see whether a delivery has been made and how much was delivered, and this can be instantaneous. Even customers can have access to realtime information via a web portal. This means no extra time is needed for CSRs to field their questions, so CSRs are available to give great service to other customers and handle other important tasks. Take real-time communication one step further with automatic texts or emails sent directly to customers. Proactive communications saying that a delivery has been made can eliminate a call to a CSR. Problems can also be quickly rectified, with texts about an impediment to the delivery, such as a locked gate. All this and more—automatically.

Efficient Routing with Site Validation

Wireless technology in the field also enables the driver to take the most efficient route and avoid delivery mistakes. Mapping and routing, with access to current conditions and hazmat regulations, can ensure the driver gets to the right place, with the fewest miles. Avoiding costly location mistakes is also important and, with today’s GPS technology, this is easily done. Things like simple voice navigation can help avoid wrong turns. The addition of GPS on-site validation and fill location validation can doubly ensure a driver is at the right site, filling the right tank. For fleet fueling operations, it is possible to go one step further with quick response (QR) code scanning on each tank, vehicle or other fill location, to guarantee the right tank is filled and, not to mention, to accurately capture gallons delivered to each piece of equipment. It can be such a simple process that a driver can even bring an extra handful of labels to affix to new pieces of equipment on the fly. This can virtually eliminate the possibility of filling the wrong tank—an often expensive and time-consuming mistake.

On-Site Driver Movement Efficiency With today’s mobile technology, driver activity can be streamlined while on-site. Jumping in and out of the truck and walking back and forth with the hose to start and stop the meter is not efficient (and may lead to driver injuries!). Instead, a pocket-sized, mobile device can stay with the driver during the entire delivery. The meter can be started and stopped from the device so the driver never has to double back to the truck.

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And, there are more step-saving short cuts a small mobile device can offer. Avoid having a driver climb back up into the cab to print. Start printing from outside the truck instead. Capture a signature on the device, then begin printing the invoice and just reach up in the cab to grab it off the printer.

Analysis Will Tell the Story With all the delivery data being captured, it will be easy to see efficiency gains. A simple driver-gallons-per-hour will show an increase. Average stops per hour will increase as well, due to the time savings on site. You may also see a decrease in payroll with fewer overtime hours and even the elimination of the hours for an extra employee in the truck. Most importantly, there will be improved customer satisfaction and an increasing fleet fueling business.

Efficiency Realized You’re good at what you do. That’s why you have fleet fueling customers who trust you to keep their businesses running smoothly. Wireless mobile computing can help ensure it is profitable by making your processes as streamlined as possible. You will increase your customer retention by giving your clients what they expect, and increase the health of your company by keeping your costs under control. n READ MORE

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John Coyle John is the vice president of sales for ADD Systems, a leading supplier of back office and mobile software solutions for the petroleum and convenience store industries. With over 20 years of sales, marketing, manufacturing and product development experience, Coyle has a passion for process efficiency management and customer satisfaction. Today Coyle is able to align his passions through supporting ADD customers across North America, helping them become more profitable while enhancing their customer experience.

U.S. fuel ethanol production capacity continues to increase. Fuel ethanol production capacity in the United States reached more than 16 billion gallons per year, or 1.06 million barrels per day (b/d), at the beginning of 2018, according to EIA’s most recent U.S. Fuel Ethanol Plant Production Capacity report. Total listed, or nameplate capacity, of operable ethanol plants increased by 5%—more than 700 million gallons per year—between January 2017 and January 2018. Source: EIA U.S. Fuel Ethanol Plant Production Capacity report

Bottom Line:

The Trump Administration supports an “all of the above” energy policy, but one notably more favorable to fossil fuels and less favorable to alternatives. This has raised the ire of groups accustomed to the reverse, but so far there are no signs the alternatives—including ethanol—are on their way out.

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DEMAND FOR DIESEL TRUCKS AT ALL-TIME HIGH FMNMagazine

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COMMERCIAL FUELS

by Ezra Finkin

You probably didn’t know it, but we are experiencing a trucking

boom. According to recent sales data, June 2018 was the biggest month for Class 8 big rig truck sales—ever! And this is a good thing. Booming truck sales mean a very healthy economy and emission reductions.

According to commercial vehicle truck sales, June 2018 was a banner month for Class 8 truck sales. June sales are 140 percent above June 2017. In June, 41,800 Class 8 trucks were sold while the 12-month period saw about 411,000 Class 8 trucks sold. Unlike passenger cars, the prime driver for truck sales is the business climate, and the U.S. economy has been growing at a healthy clip. An expanding economy means demand for freight transportation including over the road trucking driven mostly by Class 8 trucks. Over $10 trillion worth of goods were shipped by truck, according to the most recent data collected by the U.S. Census Bureau. While these new trucks are delivering for America, they are also hard at work reducing emissions and saving fuel. Thanks to decades of innovation and research, technologies capable of reducing truck emission to near-zero levels are now out on the road. A Class 8 truck that comes with these technologies developed to meet stringent U.S. EPA tailpipe emissions standards can reduce emissions of NOx (an ozone forming compound) by 2.3 tons per year, relative to previous generations of technology. A growing fleet of these clean diesel trucks will greatly contribute to further emission reductions. New trucks are near-zero in emissions and are also much more fuel efficient. Today, 98 percent of Class 8 trucks are powered by a diesel engine and more than 95 percent of trucks will still be powered by diesel into the future, according to recent research. Between 2014 and 2018, the first-ever fuel economy rules for commercial vehicles are expected to save over 500 million gallons of fuel and reduce 270 million tons of greenhouse gas emissions. These are benefits provided by a variety of technologies developed to make new technology diesel-powered trucks save more fuel. Manufacturers are hard at work to continue to develop advanced technologies to reduce emissions and save fuel. As the economy expands, it takes ever more trucks to deliver for America. If current trends continue, more new Class 8 trucks will enter service at the fastest rate recorded. Thanks to decades of innovation and research, these trucks will get the job done while reducing emission, saving fuel and eliminating greenhouse gas emissions. n

Ezra Finkin Ezra is the policy director for the Diesel Technology Forum. The Diesel Technology Forum is a non-profit organization dedicated to raising awareness about the importance of diesel engines, fuel and technology. Diesel Technology Forum members are global leaders in clean diesel technology and represent the three key elements of the modern clean-diesel system: advanced engines, vehicles and equipment, cleaner diesel fuel and emissions-control systems. FMNMagazine

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“

An expanding economy means demand for freight transportation including over the road trucking driven mostly by Class 8 trucks.

”

“

New trucks are nearzero in emissions and are also much more fuel efficient. Today, 98 percent of Class 8 trucks are powered by a diesel engine and more than 95 percent of trucks will still be powered by diesel into the future, according to recent research.

”

Pros Cons and

by Glen Sokolis

of Alternative Fuel Vehicles

â&#x20AC;&#x153;â&#x20AC;?

COMMERCIAL FUELS

Moving away from oil is something being promoted in

many areas. One of the debates is the use and production of alternative fuels. For fleet managers, the decision of whether to purchase alternative fuel vehicles means weighing up cost, reliability and environmental concern. There are both advantages and disadvantages to alternative fuels, and some things fleet managers should consider:

Biodiesel is one of the best alternative fuels available, and all diesel powered vehicles can run on it without special equipment (in fact, many large farms now make their own biodiesel to power farm equipment). Therefore, fleet managers may be able to make use of biodiesel without purchasing new equipment. However, this does mean finding a source for the fuel itself, and biodiesel cannot always be purchased at the pump.

Compressed natural gas is extremely cheap and burns 7 clean but is hard to find and has a limited range. It has been used by some bus companies and may be a good option for short range delivery. fuel is even harder to find and the fuel cells 8 Hydrogen are expensive. Also, hydrogen is made from natural

Technology is moving so quickly right now that a fleet 9 manager who rushes to buy a new fleet may miss out

Alternative fuels can be more expensive. The traditionally greater price of ethanol is one reason why few vehicles are made to run on it entirely—instead, it is mixed with gasoline at the pump. Biodiesel is also more expensive.

Electric vehicles can still have a more limited range than gasoline vehicles and charging takes longer than refueling. This is becoming less and less of a concern with significant improvements to battery technology, but a traditional diesel heavy truck has a range of 900 miles, while the Tesla Semi has a range of 500 miles, which is considerably longer than other all-electric heavy trucks. Range is definitely a concern if your vehicles are routinely driven on long hauls, but may not be an issue if you are, for example, focusing primarily on last mile delivery. Electric vehicles also require fast charging stations, which are easier to find in some regions than others. On the other hand, electric vehicles need less maintenance and may last longer than traditional internal combustion vehicles, given they have far fewer moving parts. Combined with the fact that the electricity they use costs less than diesel or gasoline, going all-electric could significantly reduce fleet expenses and downtime caused by maintenance.

FMNMagazine

Some manufacturers of diesel vehicles consider the 6 use of biodiesel to void the warranty.

gas and is thus not actually sustainable at all, at least without a great increase in technology.

Both biodiesel and ethanol are plant-based, however, they are made from plants that are also used as food. Therefore, there are some arguments against them from a sustainability perspective, especially as the plants are often grown using petroleum-based fertilizers.

“”

On the other hand, electric vehicles need less maintenance and may last longer than traditional internal combustion vehicles, given they have far fewer moving parts.

on a key development that could make things cheaper and easier, or completely change the equation concerning which alternative fuel is best. Alternative fuels may be a no-brainer in some circumstances. For example, as range increases, new all-electric semi-trucks with higher pickup and speed are likely to start to push diesel trucks out of the market, especially with the lower maintenance cost. Electric vehicles are also great for last-mile delivery in urban areas (as British milk delivery companies knew back in the sixties and seventies). Biodiesel has a lot of promise to replace regular diesel once the kinks can be worked out. However, gasoline and regular diesel are still easier to find, refueling is still faster than charging, and fleet managers considering making a switch need to consider whether they will be making the lives of their drivers more difficult for what can be a minimal gain. n

READ MORE at FuelsMarketNews.com

Glen Sokolis Glen Sokolis is the Founder and President of Sokolis Group, a nationwide fuel management and fuel consulting company. He has more than 25 years of experience with fleet fuel and founded Sokolis Group in 2003. Sokolis Group’s mission is to reduce and control their clients’ fuel spend through tightly managed, customized programs. Sokolis can be reached at GSokolis@SokolisGroup.com or 267-482-6160

FuelsMarketNews.com

On the Horizon... The Industryâ&#x20AC;&#x2122;s First Collaborative Fuel Procurement Network

Tr a n s p a r e n t

Scalable

E ff i c i e n t

Optimized

Automated

Digital

Connecting Fuel Buyers and Sellers Through a Digital eMarketPlace

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

Earlier this year, the congressionally-mandated electronic logging device (ELD) rule, which required most FMCSAregulated motor carriers to convert their records from paper to an electronic format, became effective. While compliance with the ELD rule has reached nearly 99% across the trucking industry, it has also brought focus to HOS regulations, especially with regard to certain regulations having a significant impact on agriculture and other sectors of trucking. Source: The U.S. Department of Transportationâ&#x20AC;&#x2122;s Federal Motor Carrier Safety Administration when seeking public comment on revising four specific areas of current hours-of-service (HOS) regulations.

Bottom Line:

The concerns with the HOS regulations were numerous and well documented. Letâ&#x20AC;&#x2122;s hope there is continued flexibility to make adjustments as the process moves forward.

at FuelsMarketNews.com

SAVE THE DATE! The

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The Collapse in Alternate Land Use for Retail Gasoline Stations

â&#x20AC;&#x153;â&#x20AC;?

In the past, retail bank branches looking for sites for expansion were a salvation for retail fuel and convenience merchants who were unable to generate site cash flow that provided a suitable return on invested capital.

All retail is under enormous pressure primarily driven by by Joe Petrowski

on-line purchases, but some industries have been especially hard hitâ&#x20AC;&#x201D;none more so than retail banking. In the past, retail bank branches looking for sites for expansion were a salvation for retail fuel and convenience merchants who were unable to generate site cash flow that provided a suitable return on invested capital. That was because, very often, marketers had secured the exceptional corner lot with parking, egress and smaller remediation costs to turn that site from fuel marketing to a money center.

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“”

BUSINESS OPERATIONS

The Collapse in Alternate Land Use for Retail Gasoline Stations

Simply put, the demand for that failed gas station is over.

But, over the past 10 years, the number of retail bank branches has declined from 110,000 to 57,000 today, and with more on-line banking, ATMs and supermarket financial kiosks that trend should continue. A banking association projects another 10,000 decline in 10 years, and two-thirds of all Americans now bank online. The breakdown of retail branches by bank is as follows:

Wells Fargo

6,600

JPMorgan/Chase

5,900

Bank of America

5,700

US Bancorp

3,800

PNC

3,700

BB&T

2,800

Regional Financial

2,300

TD Bank

2,000

Sun Trust

1,700

Fifth/Third

1,500

Other regionals

21,000

Total

57,000

Should the major banks decide to expand their retail banking (unlikely given their public statements), that expansion will happen through acquiring regional banks, expanding and consolidating existing sites and using kiosks and ATMs in convenience stores, malls and supermarkets. Simply put, the demand for that failed gas station is over. The same banking association believes we can live with 50,000 sites serving 320 million Americans, or 6,400 people per site. And, the pharmacy segment in the U.S. has grown from 50,000 sites 10 years ago to 64,000 today, but that has stalled over the last four years with the advent of script mail order delivery. The stark reality on fueling sites is that industry-wide in the U.S. we have: • Built an average of 1,500 stations/year over the last 20 years (mostly truck stops, and in Florida, the Southwest and other retirement enclaves) • Sold an average of 1,100 stations/year for higher and better use with the rate now down to 500 stations/year with the satiated appetite of banks and chain pharmacies • Closed 4,600 stations/year on average over the last 20 years, though that rate is slowing to approximately 500 stations/year after the fulfillment of EPA requirements What this means is a retail fuel and convenience operator must look to his or her current operation to survive. The real estate cavalry of banks and pharmacies is not arriving any time soon. There will be great consolidation and acquisition opportunities for chain retailers no longer facing competition from the alternate use crowd, but long-term site viability will depend upon operational excellence and that always translates to fuel volume and an inside offering of food and beverages along with cost control. n See Joe’s bio, page 10

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by Brian Reynolds

The Art of the Gas War

Some 2500 years ago, Chinese general, brilliant strategist and

writer Sun Tzu authored the “Art of War.” For centuries generals, including Sam Houston and George Patton, who have stuck to Sun Tzu’s common-sense strategies credit his genius. New England Patriots’ Bill Belichick says, “Football games are won before players ever take the field. An opponent’s weakness should be exploited. Preparation can make victory a self-fulfilling prophecy.” That is straight-out Sun. So, why not use these winning concepts and apply them to the petroleum marketing world and apply a strategy for what I will call—Sun Tzu’s “The Art of the Gas War”!

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BUSINESS OPERATIONS

The Art of the Gas War

“Generally, in war, the best policy is to take a state intact: to ruin it is inferior to this . . . For to win one hundred victories in one hundred battles is not the acme of skill. To subdue the enemy without fighting is the ace of skill.” —Sun Tzu

I have yet to figure out the willingness by some operators to focus on being the lowest-priced fuel. I get the concept of loss-leader. I am more than happy to debate one and all on pricing. (Yes, I know, I have dropped my fair share of pump prices, too.) But for crying out loud, dropping the price for the sake of dropping the price is something I never understood. Profit margin, especially fuel profit margin, should be treated like a precious newborn baby. You wrap the baby up, you hold it tightly to your chest, you cradle it, you feed it, you sing to it and you for sure love it. But, if you drop the baby/profit margin—Adiós Baby, it’s gone! There’s more than one way to skin a cat! Loyalty technology if properly promoted and clearly understood by the store team provides a unique

method to keep the excitement going at the pump. Understanding that “millennials” is not just a catch phrase is important, too. I get shamed constantly by my sons for not knowing how to send them money over my cell phone. (I do know how, but sometimes it pays to act like an old guy.) What doesn’t pay is to not cater to an entire generation of people who buy gas, and they pay using their cell phones. Treating your forecourt like a true profit center instead of just the gas island is a strategic investment that pays fast dividends. Attacking the market with pricing should be avoided. Attacking with fuel pricing is the quickest way to get a response from the competition. “OK, now what, great! We’re all losing money!”

“An Army may be likened to water, for just as flowing water avoids the heights and hastens to the lowlands, so an army avoids strength and strikes weakness.” —Sun Tzu Instead of waiting around to get clobbered by the competition and complaining about how unfairly fuel is being sold by a larger competitor, do something about it. Anybody ever heard of Buc-ee’s! Oh, by the way, where is their price sign? Buc-ee’s has been around since 1982, but instead of settling for mediocrity, they experimented and discovered that by being uniquely superb and totally different, they positioned themselves into being a true leader. Their first locations didn’t have 100+ fueling positions. They started out with a much smaller foot print. Buc-ee’s operations are everything from extremely clean, extremely fresh and for sure extremely unique. Just going to the restroom at a Buc-ee’s is a good experience. Their restrooms are so clean you could have minor surgery in one! They have less than 40 locations and marketers from all over the world travel to understand what is going on down in Texas.

“Know the enemy and know yourself; in a hundred battles you will never be in peril.” —Sun Tzu It’s okay to go inside your competitor’s stores and look around! Even an untrained eye can see what somebody is good at and what somebody is bad at! (HINT—If a nearby competitor’s store looks busy, go there first.) Don’t stop at the store level. If you don’t know who the competition’s top executives are, troll the internet and figure it out. Look up your competitor’s names on websites, LinkedIn, Facebook and other places. Ask the clerk behind the counter, “Who runs this place?” Then you can say, “Hey, look this guy came from XYZ Company! No wonder they are marketing this way!” Being able to read minds and predict the future may be as simple as doing a little research.

“To rely on rustics and not prepare is the greatest of crimes; to be prepared beforehand for any contingency is the greatest of virtues.” —Sun Tzu Clint Eastwood says it best in his portrayal of Gunnery Sergeant Highway in the movie Heartbreak Ridge, “Improvise, Overcome, Adapt!” Use speed to overcome the competition; prepare both tactically and strategically. Little things like showcasing windshieldwashing fluid during Monarch Butterfly migration season, electronic price signs and great fresh foods add up to great tactical preparation. Sun Tzu teaches that you must be able to act with blinding speed. This does not mean to act hastily, but to be prepared. To act fast requires preparation. Utilizing tools such as ClearView to monitor for slow-flowing and out of order dispensers and embracing competitive information technology such as Gas Buddy and Axxis for fuel pricing is how to stay ahead of the curve.

“Therefore, those skilled in war bring the enemy to the field of battle and are not brought there by him.” —Sun Tzu If you can’t beat them, join them— WRONG. That is the worst advice ever conceived. If you can’t beat them, change the rules! The goal is to beat the competition! Playing a different game doesn’t mean throwing in the towel! You snooze, you lose! Never stop learning. Never stop training. Anyone who is a selfprofessed know-it-all is probably the last one in line at the knowledge trough! There are many great organizations in our industry for seminars, workshops, field trips and networking. If you are a retailer, learn from others, pass on knowledge and train. Find out what works in other places. Don’t be afraid to step outside your comfort zone and try things that are working for other retailers. Build an alliance with others within the industry.

“When one treats people with benevolence, justice and righteousness, and reposes confidence in them, the army will be united in mind and all will be happy to serve their leaders.” —Sun Tzu Lead by example. Treat others the way you want to be treated. Employees will take their jobs as seriously as the leaders of the organization do. A winning organization will put the needs of their employees in front of their needs. You can’t fake character, honor or integrity. These are traits that successful leaders have that get the most out of their employees. FMNMagazine

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“If words of command are not clear and distinct, if orders are not thoroughly understood, then the general is to blame. But, if orders are clear and the soldiers nevertheless disobey, then it is the fault of their officers.” —Sun Tzu Communication. This concept works from every direction. How bad would it be to invest in the greatest loyalty program in the world only for it to fail because not only were the customers unaware of it but so was the store team? What about the fact that for the past three days the reason why you were selling four times more fuel than normal was because everybody else in town raised theirs by 15 cents! My alltime favorite: “Oh, really? Pump 4 has been down for a month!”

It has been said that no war was ever lost by using Sun Tzu’s strategies. If Sun Tzu was alive today, he could very well be the greatest marketer in our business because he would no doubt be the first winner of an actual Gas War! n

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

Shell Oil Company and General Motors announced that Shellbranded stations across the United States now accept the automotive industry’s first-ever embedded, in-dash fuel payment and loyalty experience. Customers who look to fuel their eligible Chevrolet, Buick, GMC and Cadillac vehicles at Shell stations will be able to use Shell Pay & Save within GM Marketplace to pay for their fuel directly from their vehicle's infotainment screen and earn and redeem valuable Fuel Rewards® savings in the process. Source: Shell Press Release

Bottom Line:

The appreciation and adoption of new technology has, at times, moved at a snail’s pace for industry marketers and retailers. While the last decade has seen that impulse fade, there are daily reminders of how critically important it is to be looking at the cutting edge with an eye to your customers and profitability.

at FuelsMarketNews.com

FUELS MARKET NEWS

INDUSTRY

NEWS TACenergy Acquires New Mexico-Based Wholesale Fuel Distributor, Desert Fuels TACenergy, a division of The Arnold Companies (TAC), has acquired petroleum commodity supply and logistics company Desert Fuels effective August 27, 2018. TACenergy will maintain all key sales and customer service associates along with establishing a new sales office in Albuquerque. The shared expertise and resources of TACenergy will help the local team continue to provide the service expected, along with the competitive fuel prices and reliable supply the TACenergy network provides. The acquisition will help TACenergy strengthen its footprint in the southwest with the majority coming from local and regional business throughout New Mexico, Arizona, Colorado, and Oklahoma. Fred Sloan, Vice President and Chief Operating Officer of TACenergy, stated, “The Desert Fuels’ customers, along with our existing customers, will benefit from the additional supply resources.” Sloan also added, “Enhancing our existing technology offerings with Desert Fuels’ refreshing approach to incorporate technology in the buying and delivery of wholesale fuel will be easily accomplished.” n

TravelCenters of America Launches First TA Express Units TravelCenters of America LLC, operator of TA® and Petro Stopping Centers® full service travel center brands, has announced the opening of the first four travel centers under its new TA Express brand. TA Express travel centers will offer a majority of the fuel, merchandise, food and other services that professional drivers familiar with the TA and Petro brands have come to know and prefer. For professional drivers, TA Express offers smaller, more nimble facilities allowing drivers to fuel faster, fulfill basic travel needs and return to the road. Professional drivers are able to earn and redeem UltraONE loyalty points at TA Express sites. For motorists, TA Express will provide branded gasoline options, national food offerings, convenience items and clean restrooms. TravelCenters will soon develop the TA Express network across the nation’s interstates and other heavily traveled highways. Franchising TA Express units will be one avenue of growth. n

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Leighton O’Brien Partners with TSG Ireland to Deliver Fuel Cleaning Solution Leading fuel analytics and field technologies company Leighton O’Brien has expanded its global fuel cleaning operations into Ireland following an agreement with retail petroleum solutions provider, TSG Ireland. TSG’s fully trained and safety-certified technicians will deliver Leighton O’Brien’s patented tank cleaning and fuel restoration technology, supported by expert fuel data analysis and reporting by highly qualified analysts. n

Pilot Thomas Logistics Deploys Trinium’s Cardlock Software Pilot Thomas Logistics, the premier provider of fuel, lubricants and chemicals to the energy, marine, mining and industrial markets, has recently implemented Trinium’s cardlock management system. Trinium is a leading provider of business software for fuel marketers and distributors in the U.S. and Canada. Pilot Thomas Logistics markets fuel cards from various networks including CFN, Voyager, Fuelman and

INDUSTRY NEWS WEX across numerous sites in 12 states in the U.S. The company has grown through a series of acquisitions of various cardlock and fleet fueling businesses. The company chose Trinium’s Cardlock Management System to replace the disparate systems that currently managed the various cardlock operations. The goal was to implement a single modern, scalable software-as-a-service offering to meet a broad scope of functional needs across various cardlock networks and to implement quickly. n

Meijer Unveils AllNew Convenience Store and Gas Station Design Meijer announced it will open a newlydesigned convenience store and gas station adjacent to the retailer’s Grand Rapids, Michigan-based headquarters. The new 5,500 square-foot convenience store will be the first Meijer gas station to include a separate full-service Starbucks. The store will also include an

expanded assortment of fresh produce and protein-based snacks, wraps, fruit and organic items, as well as grab-and-go meals prepared locally by Superior Foods. The new convenience store features a large seating area with free Wi-Fi and phone charging stations. The location also offers a self-serve coffee station and large fountain bar with cold-brew coffee, frozen coffee and F’real Shakes selections. The retailer also added a “beer cave” that features popular craft and national brews and an expansive cold and on-shelf wine assortment. The new gas station includes 18 fuel pumps, a 50 percent increase over the retailer’s previous gas station format. The fuel pumps feature an expanded pumping capacity, with several including Diesel and an E85 selection to accommodate flex fuel vehicles. All pumps are equipped with “Fast Tap” technology for fast and secure payment on the go. The location will also offer Tesla and other electric car-charging stations set to open later this year. n READ MORE at FuelsMarketNews.com

Innospec Fuel Specialties Raises $100,000 at Annual Golf Fundraiser for the PenFed Foundation’s Military Heroes Fund Innospec Fuel Specialties raised $100,000 for the PenFed Foundation’s Military Heroes Fund at its annual golf tournament. The Military Heroes Fund provides emergency financial assistance to veterans in need and to wounded, ill and injured service members. Innospec’s annual golf fundraiser attracts dozens of golfers and raises thousands of dollars for the PenFed Military Heroes Fund each year. This year, the event drew 160 golfers to the Lone Tree Golf Club in Lone Tree, Colorado. The $100,000 donation raises Innospec Fuel Specialties’ total contribution to PenFed Foundation’s Military Heroes Fund to $710,000 since 2007. All proceeds from the fundraiser go directly to programs for military members and their families, as PenFed Credit Union covers all operating costs for the Foundation. Such programs address a wide array of needs and issues from family and caregiver support to home buying assistance and veteran entrepreneurial investment. n

Atlas Oil Named “Excellence in Health and Safety” Award Winner at 2018 Rocky Mountain Oil and Gas Awards Atlas Oil Company was named the Excellence in Health and Safety award winner and a finalist in the Trucking Company of the Year and Oilfield Services Company of the Year award categories at the 2018 Rocky Mountain Oil and Gas Awards for their outstanding work and impressive safety record in the region. “When we entered the oil field in 2014, we knew we had to do so with the ‘Safety First’ mentality FMNMagazine

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INDUSTRY NEWS that has guided Atlas since our founding in 1985,” said Atlas President Bob Kenyon, who attended the award ceremony along with key members of Atlas’ leadership team. “By leveraging strategic business model innovation, new technologies and best-in-class training, we’ve drastically improved the safety of oil field workers. There’s no better feeling than knowing your work may have saved lives in the field.” Atlas’ safety initiatives were all accomplished while adding 160 field employees from January 2017 to June 2018. n

STUZO Launches Consumer Insights Platform for the Fuel Retail and Convenience Industry Stuzo, a leading provider of personalized and predictive commerce solutions for retailers, powered by software products, software services and insights, announced the launch of its fuel retail

and convenience Consumer Insights Platform. Building on the work of its Market Insight Platform, where Stuzo focuses on gaining a deep understanding the digital capabilities (mobile commerce, loyalty, website, social media, etc.) of the top 100 fuel retail and convenience brands in the U.S., Stuzo set out to gain a deep understanding of the aggregate wants and needs of fuel retail and convenience consumers across the U.S. relating to technology, mobile apps, loyalty and mobile payments. This led to Stuzo sending ethnographic researchers and filmmakers on a five-plus week road trip across the United States to visit leading fuel retail and convenience brands and gather exclusive consumer insights. Stuzo started in Philadelphia, headed north to New England, down through Southern U.S., traveled west through Central U.S., all the way out to the far Midwest and back. Stuzo visited over 70 of the largest fuel retail and convenience brands where researchers asked consumers a set of 22 questions and compiled over 240 hours of video interview footage. This footage was

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turned into 70 unique video vignettes, one each for 70 leading fuel retail and convenience brands, showcasing exclusive insights that Stuzo surfaced via conversations with consumers while on-site at each brand location. In addition, Stuzo created several video compilations of key learnings, summing up consumer reactions to researcher questions relating to subjects such as retailer mobile app awareness and brand preference. n

Chevron Introduces Techron® Protection Plus Marine Fuel System Treatment Chevron Products Company, a leading provider of premium aftermarket fuel additives, engine oils, lubricants, coolants and related products, today introduced its new Techron Marine Fuel System Treatment formulated specifically for gasoline-powered boats and the harsh marine environment.

INDUSTRY NEWS Following extended development and testing, newTechron®Protection Plus Marine Fuel System Treatment is now available for wholesale orders and will be offered to the boating public August 2018. Contact your Chevron representative for order details. Its proprietary alcohol and emulsifier-free formula does not contribute to water uptake and provides boaters with superior protection and performance, along with enhanced fuel stabilization and the proven cleaning power of the Techron brand. Techron Marine delivers worry-free boating enjoyment all season long and maximum confidence during extended periods of non-use. Techron Marine can be used in boats powered by all inboard, outboard and sterndrive gasoline engines, including two-stroke, four-stroke, carbureted, port or electronic fuel-injected and direct-injected engines. It is ideal for use with ethanol-free gasoline or a wide range of ethanolblended fuels from E10 to E85. n READ MORE at FuelsMarketNews.com

Shell and General Motors Deliver Nationwide In-Dash Fuel Payment Shell Oil Company (Shell) and General Motors (GM) announced today that Shellbranded stations across the United States now accept the automotive industry’s first-ever embedded, in-dash fuel payment and loyalty experience. Customers who look to fuel their eligible Chevrolet, Buick, GMC and Cadillac vehicles at Shell stations will be able to use Shell Pay & Save within GM Marketplace to pay for their fuel directly from their vehicles’ infotainment screen, and earn and redeem valuable Fuel Rewards® savings in the process. Customers using this payment option will simply make a few selections on the vehicle’s touchscreen and a three-digit code will be generated that allows the user to activate a specific pump and start fueling. The amount due is then automatically charged to the customer’s

payment method of choice, be that credit or debit or directly to their checking account. All of this is done without swiping a credit card or using a mobile device and Fuel Rewards® savings are automatically applied without the need to use a loyalty card. As part of the launch of in-dash fuel payment, customers driving eligible Chevrolet, Buick, GMC and Cadillac vehicles can earn a one-time discount of 25c/gallon in Fuel Rewards® savings, up to 20 gallons, on their next single fueling transaction after they sign up and use Shell Pay & Save within Marketplace and make a purchase of at least five gallons. Plus, these customers can earn an extra 5¢/gallon in Fuel Rewards® savings, up to 20 gallons, after each fuel purchase of at least five gallons on every fill-up through December 31, 2018. n

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INDUSTRY NEWS

Empire Petroleum Announces Acquisition of Certain Assets of B&M Oil Company Empire Petroleum Partners, LLC announced that it has acquired the retail fuel distribution business of B&M Oil Company (“B&M”), a Tulsa, Oklahomabased distributor that supplies branded and unbranded motor fuels throughout Oklahoma. The addition of B&M increases Empire’s market presence in the State of Oklahoma, and continues to strengthen its business partnership with Phillips 66 and Sinclair. Empire entered the Oklahoma market in a meaningful way in 2016 with its purchase of the fuel distribution business of Arkansas Valley Petroleum. The B&M transaction marks the third acquisition in Oklahoma in two years, and Empire is continuing to pursue new acquisition opportunities in the market. Empire Petroleum is a leading motor fuels distributor of top brands including BP, Chevron, CITGO, Conoco, Exxon, Gulf, Marathon, Mobil, Phillips 66, Shell, Sinclair, Sunoco, Texaco and Valero. Headquartered in Dallas, Texas, Empire distributes motor fuel products in the Mid-Atlantic, Southeastern, Southwestern and Midwestern states. n

Dover Fueling Solutions Chosen as Wetstock Management Provider of Petroleum Wholesale Dover Fueling Solutions, a part of Dover Corporation that delivers advanced fuel dispensing equipment, electronic systems and payment, fleet systems, automatic tank gauging and wetstock management, is pleased to announce that it has entered into an agreement to provide wetstock management services to Petroleum Wholesale L.P., headquartered in The Woodlands, Texas. Founded in 1973, Petroleum Wholesale is a full-service petroleum company, offering retail-branded and wholesale

gasoline, diesel, biodiesel and services to retail locations across nine states in the USA. Petroleum Wholesale signed a threeyear contract to receive the ClearView™ solution, powered by Dover Fueling Solutions, in order to combat issues of fuel inventory shrinkage and help them to increase forecourt operational efficiencies. Through careful monitoring of fuel inventory, the ClearView solution is able to determine fuel loss caused by a wide variety of factors, including those caused by tank and line leaks, delivery shortages, theft or fraud and fuel meter error. In addition, the solution is also able to identify preventative maintenance issues, such as slow flow rates or blocked filters, helping retailers to improve the service provided to their customers. n

Choctaw Nation of Oklahoma Selects PriceAdvantage Fuel Price Management and Execution Software to Streamline Fuel Pricing Process PriceAdvantage, a fuel price management and price execution software company and division of Skyline Products, announced that the Choctaw Nation of Oklahoma has selected PriceAdvantage software to streamline their fuel pricing processes and remove the burden of fuel price changes from store personnel. Choctaw Nation of Oklahoma operates seventeen Choctaw Travel Plazas throughout Oklahoma and Texas— providing friendly service and a clean, safe store experience for people on the go. Choctaw store clerks can now easily use their mobile device to upload competitor surveys to PriceAdvantage. Additionally, Choctaw fuel pricing analysts can now easily review those competitor prices and replacement costs against volume and margin goals to make rapid, informed price changes. They can then instantly push those new prices to the store point of sale (POS), pumps and price signs with just one click. Choctaw selected the PriceAdvantage SaaS solution to leverage FMNMagazine

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the benefits of a cloud service model including the low upfront cost, ease of implementation, and the maintenance and infrastructure cost benefits. To learn how PriceAdvantage can help your fuel marketing team, request a PriceAdvantage software demo.n

Texas Fuel Retailer Jumps at Early EMV Opportunity with Passport Version 11.02 Gilbarco Veeder-Root announced today that Passport Version 11.02 is now available to ExxonMobil branded retailers. One of the earliest adopters of Gilbarco’s EMV technology to drive EMV “chip” transactions at the fuel island is Houston-based Landmark Industries, an owner of 240 convenience stores under various major oil brands. Landmark is currently transitioning all its ExxonMobil branded stores to enable chip card transactions at the front counter and at the fuel dispenser. Being first to market means Gilbarco has a head start in honing the EMV transition process— further aided by Gilbarco’s ability to leverage learnings from broad global EMV implementation experience. Landmark is now reaping the benefits of Gilbarco’s proven EMV “best practices” including features that ensure no bank card is left behind by consumers. Landmark is just one of the ExxonMobil brands eager to get up and running with chip card technology ahead of the fastapproaching 2020 deadline. n

Marathon Again Taps WEX to Operate Its Customer Card Program WEX has renewed and expanded its agreement with Marathon Petroleum Corporation to operate its commercial fuel card program. The multi-year agreement, which specifies WEX will provide Marathon Petroleum Corp. with sales and marketing resources to further drive Marathon’s retail growth, follows an initial five-year deal between the companies. Marathon Petroleum Corp. is

INDUSTRY NEWS a major oil refining, marketing and transportation company headquartered in Findlay, Ohio. Since WEX took over Marathon’s fleet card program in 2012, its fuel card portfolio has experienced consistent double-digit year-over-year growth and decreased attrition. Marathon Petroleum Corporation is the nation’s second-largest refiner, with a refining capacity of 1.9 million barrels per calendar day in its six-refinery system. Marathon-brand gasoline is sold through approximately 5,800 independently-owned retail outlets across 20 states and the District of Columbia. n

Mansfield Energy Corp Announces the Acquisition of FUELTRAC Mansfield Energy Corp, a leading North American energy supply and logistics provider, announced the acquisition of FUELTRAC, headquartered in Baton Rouge, Louisiana. “We are excited to welcome FUELTRAC to our growing

Mansfield family,” said Michael F. Mansfield Sr., CEO of Mansfield Energy. “FUELTRAC has established itself as an impressive leader in the state of Louisiana with its broad range of bundled fleet services. This acquisition expands Mansfield’s delivery capability as well as bolsters our ability to respond to customers in the face of hurricanes or other emergency situations.” FUELTRAC owner, Troy Sullivan, explained, “We are pleased to join the Mansfield team. With over fifty years of combined experience in the fleet fuel industry, we are proud of the long-lasting relationships we’ve developed with our customers across government and commercial fleet organizations. We anticipate broad benefits with this new partnership and are excited to now offer Mansfield’s extensive products and services to our customers.” The FUELTRAC acquisition includes tank wagon and transport truck assets as well as FUELTRAC’s extensive customer base across Louisiana. n

READ MORE at FuelsMarketNews.com

Clean Energy Launches Zero Now Financing to Put Fleets in New Natural Gas Trucks Clean Energy Fuels Corp. introduced Zero Now Financing, a program that makes the cost of leasing or purchasing a new natural gas heavy-duty truck equipped with the cleanest engine in the world equal to the price or even lower than that of the same truck equipped with a diesel engine. In addition, trucks financed or purchased through the Zero Now Financing program will be able to purchase natural gas fuel at a fixed price significantly discounted to diesel for the term of the financing/lease through a unique hedging program. Never before have private carriers, for-hire carriers and shippers enjoyed the benefits of moving their goods in trucks that can substantially reduce their emissions for the price of a diesel truck. And if the trucks qualify for grants that are offered in states around the country, the cost could be considerably less than a diesel truck. The new natural gas trucks will take to highways equipped with a Cummins Westport ISX12N engine that has been certified by California Air Resources Board and the U.S. Environmental Protection Agency (EPA) at 0.02 g-NOx/bhp-hr and tested at 0.01 g-NOx/bhp-hr, which is at least 90 percent lower NOx emissions than current EPA NOx standards, making it the cleanest engine available today. Clean Energy is launching Zero Now Financing with $100 million in credit support from its new strategic partner Total S.A. (CAC: TOTF. PA), a global energy giant seeking to become the Responsible Energy Major, to cover the incremental portion of the truck value. Also, Clean Energy is partnering with multiple well-known financial institutions to make the process as seamless as possible. n

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INDUSTRY NEWS

Tanknology Names David Edens Southeast Operations Manager

CEO. “His experience in the field and his time as a Quality Control Manager adds intrinsic value—both internally and externally. We couldn’t be more excited about this move.” n

Tanknology Inc., a leading provider of environmental compliance testing and inspection services, announced today that David Edens has been promoted to Operations Manager for the Southeast Region. In this capacity, Edens will oversee the daily execution of Tanknology’s core services, including scheduling and dispatching in Mississippi, Alabama, Georgia, Tennessee, South Carolina and North Carolina. Edens will also provide technical and customer support. Edens came to Tanknology in 2012 as a Service Technician in the Western Plains Region. Since 2015 he has served as the Quality Control Manager for the Northeast Region. Edens is Marine Corps veteran and has a degree in Criminal Justice. “David is a great addition to the Southeast team,” said Allen Porter, Tanknology President and

Matrix Announces the Successful Sale of Champlain Oil Company, Inc. and Coco Mart, Inc. Matrix Capital Markets Group, Inc., a leading, independent middle-market investment bank, announces the successful closing on the sale of Champlain Oil Company, Inc. and Coco Mart, Inc. to Global Partners LP. The acquired assets include 37 company operated convenience stores with gas, trading as Jiffy Mart, and approximately 24 fuel sites that are either owned or leased including lessee dealer and commission agent locations. The transaction also includes fuel supply

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agreements for approximately 65 gas stations, primarily in Vermont and New Hampshire. Headquartered in Burlington, Vermont, Champlain is one of the largest petroleum wholesale distribution and convenience retail marketers in the Northeast. For over 70 years, the company has built a well-regarded reputation by maintaining rigorous quality standards of a major national chain while upholding customer-centric values. Champlain was founded in 1949 by C. Douglas Cairns. Several decades later, in 1990, the Company acquired the Jiffy Mart brand along with 13 companyoperated locations from Jiffy Mart, Inc. Under the leadership of Tony Cairns, President, and his son Bryan Cairns, Vice President, the company has grown both its retail and wholesale channels of trade by offering high quality merchandise, food offerings and service at its Jiffy Mart stores and value-added services to ensure a competitive and sustainable business model for its wholesale customers. n

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INDUSTRY NEWS

ExxonMobil Launches New Exxon Mobil Rewards+ Loyalty Program ExxonMobil today launched Exxon Mobil Rewards+™, a new loyalty program that will enable customers to earn and redeem points on fuel, car washes and convenience store purchases at participating Exxon and Mobil stations across the United States. The Exxon Mobil Rewards+ program is unique because it includes convenience store purchases, further enhancing customers’ benefits and experiences beyond the offerings of competing programs. Exxon and Mobil customers who participated in the previous Plenti program and meet the eligibility criteria will receive a new Exxon Mobil Rewards+ card in the mail. Unused Plenti points will be matched by the new program after registration. ExxonMobil has also integrated its popular Speedpass+ app with the new loyalty program. Speedpass+ customers can continue to pay for fuel and manage their rewards from their mobile device. n

PDI Acquires Inform Information Systems, Ltd. PDI, a leading global provider of enterprise software solutions to the convenience retail, wholesale petroleum, and logistics industries, today announced it has acquired Inform Information Systems, Ltd., known commercially as FuelsPricing, a leading pricing and analytics solution for the fuel distribution industry. FuelsPricing’s software provides comprehensive price management solutions for fuel distributors, helping programmatically increase both volume and margin. Its highly configurable pricing systems allow operators to better predict and adjust to fluctuations in pricing from suppliers and competitors’ posted prices, while also providing analytics capabilities to better understand prior pricing behavior and forecast future market movements. This adjacency expansion complements PDI’s enterprise software solutions for the

convenience retail and wholesale petroleum industries, where customers need to deliver competitive pricing and optimize their operations while broadening PDI’s capability to serve customers better. The acquisition will add some of the biggest, most wellknown brand names in the petroleum and fuel industry to PDI’s customer roster. It will also expand PDI’s portfolio and increase the company’s footprint around the world to include Brazil to Japan. n

arrives frozen and fully packaged for retailers to serve hot by the slice or by the 12" pizza, or the 12" pizzas can be merchandised for retail sale in the frozen section for consumers to bake at home. McLane Kitchen and CVP offer customers Fly Guys-branded packaging including pizza boxes and slice trays, equipment ranging from pizza ovens to serving utensils, and signage such as posters, menu boards and banners. n

TMC Opens Largest Ever National Technicians Skills Competition

Capital One Adds Jason Noll to Convenience and Gas Banking Team

American Trucking Associations’ Technology & Maintenance Council opened competition on the 14th annual National Technicians Skills Competitions—TMCSuperTech—at the Orlando World Center Marriott. This year, 125 technicians from around the country competed for the title of TMCSuperTech Grand Champion alongside 32 students in the TMCFutureTech National Student Technicians Skills Competition sponsored by the TechForce Foundation. In conjunction with the competition, TMC held its annual Fall Meeting and looked at important issues ranging from the industry’s readiness to handle complex modern electrical systems, recruiting and retaining technicians and a whole host of questions facing the trucking industry. n

Capital One announced today that Jason Noll has joined its Commercial Bank as a Vice President on the Convenience and Gas (“C&G”) Banking Team. Noll is based in Chicago and will report to Richard Amador, Senior Vice President and Market Manager of the C&G Banking Team. Capital One’s C&G team specializes in providing tailored banking and lending solutions to multi-site operators. Their dedication to this market is highlighted by $1.5 billion in loans made to the industry over the past 10 years. Noll joins Capital One after six years at BMO Harris Bank where he served as a relationship manager for Convenience & Gas clients. n

McLane Company Unveils New Private Label Pizza Brand

The aFANity Rewards Program Returns this Football Season

McLane Company, Inc., a leading supply chain services company providing grocery and foodservice supply chain solutions, announced the debut of a new brand: Fly Guys Pizza. The brand launched at the McLane National Tradeshow through its private label subsidiary, Consumer Value Products (CVP), in coordination with McLane’s foodservice-at-retail program, McLane Kitchen. Made with premium toppings on a self-rising crust, Fly Guys Pizza

Chevron U.S.A. Inc. announced the relaunch of its aFANity™ Rewards Program, a sports-themed rewards program available to residents of Alabama, Arizona, California, Florida, Georgia, Idaho, Louisiana, Mississippi, Nevada, New Mexico, Oregon, Tennessee, Texas, Utah, Washington and Wyoming. Eligible consumers can sign up as members to begin earning points by visiting www.afanity.com. Members can redeem points for

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INDUSTRY NEWS rewards such as football game tickets, autographed memorabilia, officially licensed team gear and unique oncein-a-lifetime experiences with their favorite teams. Members will receive 500 rewards points upon registration and can earn additional points through various activities, including visiting a Chevron or Texaco station in the participating areas and checking in through the mobile app on their phone. Members can also earn points by connecting any eligible Visa® card to their profile and making purchases using that card at participating Chevron and Texaco stations. To earn points even faster, members can connect a Chevron and Texaco Techron Advantage™ Credit Card or Chevron and Texaco Techron Advantage™ Visa® Card, issued by Synchrony, to earn double the rewards points over other eligible Visa® cards for every purchase at a participating Chevron and Texaco station. There is no purchase necessary to earn rewards points in the program. n

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FUEL & CONVENIENCE P O WE R E D BY T E X A S FO O D & FU E L A S S O CI AT I O N

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What Does That Mean? PAGE

ADD Systems........................................................7

American Coalition for Ethanol...........................93 Ascentium Capital..............................................61 BBI.....................................................................89 Biobor Fuel Additives.........................................11 Cummins & White..............................................25 Dennis K. Burke, Inc...........................................29 Dover Fueling Solutions.....................................35 Ecogreen Tank Monitor........................................88 Fuels Market News.............................................32 FPPF Chemical Company....................................64 FuelConnect 360................................................78 iGen.....................................................................3

Innospec Fuel Specialties................................... 57 Lock America......................................................92 MidContinental Chemical Company, Inc..................................................... 69 NOV Completion and Production Solutions.................. Inside Back Cover

OmegaFlex........................................................ 41 OPW Retail Fueling.............................................17 PDI Software...............................................50 – 51 Petroclear...........................................................90 RDM Industrial Electronics.................... Back Cover

Renewable Energy Group...................................46 Shields, Harper & Company................................39 SkyBitz.......................................Inside Front Cover Source North America.........................................15 Texas Food & Fuel Association.............................95

Test Your FMN Acumen The list below represents acronyms used in this issue of Fuels Market News. $/b

Dollar per Barrel

AOPL

Association of Oil Pipe Lines

AFD

ASTM ATA b/d

BLS

CAFE CAST

Automated Fuel Dispenser

American Society for Testing and Materials

American Trucking Associations

Barrels per Day

U.S. Bureau of Labor Statistics

Corporate Average Fuel Economy

Convenience Stores Against Trafficking

MPG

Miles Per Gallon

NAFTA

North American Free Trade Agreement

NACS

NHTSA National Highway Traffic Safety Administration NOx

NRDA P2PE

PADD

CSR

Customer Service Representative

DHS

U.S. Department of Homeland Security

PCI

U.S. Energy Information Administration

E2EE EIA

ELD

End-to-End Encryption

Electronic Logging Device

EMV

EuroPay Mastercard Visa

EPS

Electronic Payment Server

FFC

Fuel Forecourt Controllers

EPA

U.S. Environmental Protection Agency

National Association of Convenience Stores

PERC

PLC POS

PPM QR

RIN

Oxides of Nitrogen Natural Resources Defense Council

Point-to-Point Encryption

Petroleum Administration Defense District Payment Card Industry Propane Education & Research Council

Personal Identification Number Programmable Logic Controller Point of Sale

Parts per Million Quick Response

Renewable Identification Number

FMCSA Federal Motor Carrier Safety Administration

STEO

HFRR

High-Frequency Reciprocating Rig

TAT

HOS

Hours of Service

IOB

In Our Backyard

UST

Underground Storage Tank

Information Technology

WTI

West Texas Intermediate

GPS

mb/d

Global Positioning System

Million Barrels per Day

TMC................................................................... 55 Trinium Technologies.........................................31 ValvTect...........................................................4 – 5 WPMA................................................................80 Xerxes Corporation............................................ 27

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STI

ULSD VFD YOY

Short-Term Energy Outlook Steel Tank Institute

Truckers Against Trafficking Ultra-Low Sulfur Diesel

Variable Frequency Drive Year on Year

Some things change.

And some things don’t have to.

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