Fuels Market News Magazine Fall 2022

Return of the Majors?

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COVER STORY

Return of the Majors?

After walking away from direct retail in the U.S. in the early 2000s, some oil companies are re-exploring the opportunities.

In The Lead: Taking on the EV Challenge

How Kum & Go is aggressively exploring the EV landscape.

Getting the Carbon Out With Biofuels

Advanced biofuels have the carbon performance for both the short and long haul.

OPERATIONS

Concrete

time may be right to update aging USTs

Site Security

with Invenco.

How Will Retailers Use Blockchain?

recent hits, cryptocurrency still offers

for retailers.

Times

and high fuel prices make a dangerous mix.

COMMERCIAL FUELS

Aviation’s Move to Sustainability

general and commercial aviation face

but work is progressing.

Driver Skills

drivers to avoid fixed objects doesn’t resolve the greater issue.

FUEL MARKETERS

hire great salespeople.

Release Your Potential

Modern business presents unlimited opportunities for growth. Let ADD Systems help you realize all those possibilities as we meet today’s challenges of customer experience, speed, accuracy, mobility, and ever more important, scalability.

ADD Systems has been providing solutions to the energy distribution industry –retail and wholesale fuel, propane, convenience stores and more – since 1973.

It starts with the right software

The Big Show

This year marks the 22nd time I’ve attended the NACS Show. The show has always been very much a work ing event for me—part frantic, part exhausting—and as I’ve gotten older increasingly painful to the tired feet. And yet, the sense of wonder remains only slightly diminished from my first NACS Show, which was extraordinary and unforgettable.

When I think of the NACS Show the first thing that comes to mind is a circus, but to be clear that reference is made in the most positive way possible. The show is exotic, exciting, noisy and active. There is something new around every corner. Obviously, some pavilions get all the attention with fun product samples. But for a true fueling-and-en ergy nerd, the “boring” side of the show is just as interesting.

My first NACS Show was at the end of the 10-year window retailers had to upgrade their underground storage tanks and fueling infrastructure to newer technologies designed to be safer for the environment. It was not uncom mon to see full-size 10,000-gallon underground storage tanks scattered around the floor. You don’t see that so much anymore (there were more UST providers back then and a huge drive to upgrade), and displaying a full tank is probably not as cost-effective today, even with many of those early tanks now reaching their warranty expiration dates and needing replacement.

Another interesting development that year was the initial launch of video at the dispenser marketing solutions. Gilbarco and Tokheim were out in front. It took Wayne a few years to catch up, but they didn’t lose anything from that. The hardware was great—military grade—but no one at the time could even remotely tell where the media would come from to go on those dis plays. What role would the retailer play? What role would the equipment man ufacturer play? Would there be third parties involved? Who would provide the advertising? Can retailers run their

own promotions? It took a decade before those answers started to fall into place.

There are literally dozens of such moments that have been enjoyed over the years. We are currently in a time where electrification is the buzz in the industry. What is the show floor going to offer this year for retail charging?

I’m excited to find out. That is another area where there are currently far more questions than there are answers, but the industry is working diligently with strong leadership from both NACS and the Fuels Institute to get those answers sooner rather than later. There are a couple educational sessions addressing the issue as well.

And let’s not forget alternative liquid and gaseous fuels. While some are push ing an all-EV future to meet zero-carbon initiatives, that certainly doesn’t have to be the case. Renewable alternative fuels can meet those goals, if allowed, and provide solutions that are far more efficient and effective in many applica tions. And conventional fuels are not going away anytime soon. Once again, I look forward to seeing the latest and greatest. The same goes for all the tech nology that helps bring together fueling and convenience operations and retail management under cohesive, efficient systems.

Finally, if you read this in time and you’re at the show, drop in for our 2022 FMN Fuels Innovator of the Year Award on October 3 at 8 a.m. in Pavilion 9. Find out how Kwik Trip and The Spinx Company attain efficiency and success with their energy mobility programs. Hope to see you there.

EDITORIAL

Keith Reid

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

Kim Stewart Editorial Director (703) 518-4279 kstewart@convenience.org

Lisa King Managing Editor (703) 518-4281 lking@convenience.org

CONTRIBUTORS

Ed Kammerer, John Kimmel, Dr. Vikram Mittal, Mark Murrell, Daisy-Ann Norman, Joe O'Brien, Dr. Raj Shah, Roy Strasburger, David Wilkinson

DESIGN Imagination www.imaginepub.com

Cover image by Image Source/Getty Images

ADVERTISING

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

PUBLISHING

Stephanie Sikorski Publisher (703) 518-4231 ssikorski@convenience.org

Rose Johnson Audience Development and Production Manager (703) 518-4218 rjohnson@convenience.org

EDITORIAL COUNCIL

RETAILER/MARKETER MEMBERS

Josh Asche, senior vice president, COO, Hy-Vee Fast & Fresh; Mark Fitz, president, Star Oilco; Derek Gaskins, chief marketing officer, Yesway; Kevin Smartt, CEO and president, Texas Born (TXB)

VENDOR/SUPPLIER MEMBERS

Regina Balistreri, director of marketing, ADD Systems; Gary Lackore, director of sales –Americas, MidContinental Chemical Company Inc.; Kaylie Scoles, marketing director, RDM Industrial Electronics Inc.; Jen Threlkeld, product marketing manager, Dover Fueling Solutions

Fuels

Convenience Stores

Alexandria, Virginia, USA.

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

Fuel pricing software built to optimize your profits

Know whether you can afford to follow the competition. EdgePetrol provides real-time weighted and blended margin to independent retailers.

Stop by booth 6279 to learn more

edgepetrol.com

Tap Into EV Grants

hosts for both programs depending on their locations and if they meet specified conditions.

The National Electric Vehicle Formula Program (NEVI Formula Program) provides $5 billion of funding to all 50 states, Washington, D.C. and Puerto Rico to strategically deploy publicly accessible DC fast-charging infrastructure and establish an interconnected network to facilitate data collection, as well as access and reliability.

The Discretionary Grant Program for Charging and Fueling Infrastructure (Corridor Charging Grant Program) provides competitive grants totaling $2.5 billion for the strategic deployment of EV infrastructure, hydrogen infrastructure, natural gas infrastructure and propane infrastructure along alternative fuel corridors or in certain other locations.

Want to tap into $7.5 billion that’s on its way for ZEV infra structure under the Infrastructure Investment and Jobs Act? The Fuels Institute Electric Vehicle Council has released a summary, written in partnership with the Center for Sustainable Energy, on how to leverage the NEVI Formula Program and Corridor Charging Grant Program. The sum mary helps retail businesses navigate their way through obtaining financial support. Retailers may be eligible as site

The Department of Energy and Department of Transportation are jointly overseeing the planning, funding, implementation, charger utilization data collection and eval uation of these two programs. These agencies formed the Joint Office of Energy and Transportation, which will guide and oversee the NEVI Formula Program. DOT will pro vide guidance for the Corridor Charging Grant Program by September 30, 2022, and will oversee its implementation.

What Membership Does for You

NACS benefits are designed to ensure the competitive vitality of member companies and their employees. And member benefits are not just focused on the store, but on the forecourt as well and more broadly touching on wholesale and commercial fueling benefits and activities.

Plug in to the latest insights, trends, tools and innovations from around the globe. NACS makes it easy for you to exchange knowledge and cultivate partnerships with leading retailers and experts in our industry. All employees of NACS member companies enjoy:

• Free or discounted rates to a global portfolio of events, reports and resources

• Members-only access to VIP and industry-leading events, expos and education

• Personal introductions and representation through our national advocacy

A NACS membership is something you don’t want to go without! Join or renew today

Get Global Insights

NACS has partnered with NielsenIQ on the NACS Global Convenience Store Industry Report, a unique convenience-industry-specific newsletter which launched in August.

The quarterly report features data provided by NielsenIQ, along with microtrends analysis from NACS, which combine to create an indispensable resource for forward-thinking convenience retailers and suppliers who want to stay ahead of the curve. The data presented in the report provide global, regional and country-level views of the convenience channel.

The report will be updated and released quarterly, and a consolidated annual report of 2022 will be available in the first quarter of 2023.

Look for the report at www.convenience.org/ global.

Calendar of Events

2022 OCTOBER

NACS Show

October 01–04 | Las Vegas

Convention Center | Las Vegas, NV

2023

FEBRUARY

NACS Leadership Forum

February 08–10 | Eden Roc | Miami Beach, FL

NACS Convenience Summit Asia

February 28–March 02 | Waldorf Astoria Bangkok | Bangkok, Thailand

MARCH

NACS Day on the Hill

March 07–08 | Washington, D.C.

APRIL

NACS State of the Industry Summit

April 18-20 | Hyatt Regency

DFW International Airport | Dallas, TX

NACS Leadership for Success

April 30-May 05 | Virginia Crossings Hotel & Conference Center | Glen Allen (Richmond), VA

For a full listing of events and information visit www.convenience.org/events.

Sometimes, the grass really is greener.

Invenco’s secure, open and agile pay-at-pump systems and retail software services position each business for ongoing, independently-defined success.

Come see what the hype is about. visit invenco.com/nacs for more details.

secure payment processing and customer engagement solutions

Keeping Biofuels at the Table

BY JOHN EICHBERGER

There are a lot of articles, statements, projections, pledges and policies being promoted based upon the assumption that future vehicles are critical tools to reduce carbon emissions—and they are absolutely right! New technol ogy will go a long way to helping us on a path toward carbon neutrality in the transportation sector. Unfortunately, in the enthusiasm to promote and even mandate these new vehicles, it seems we have lost sight of something very important—the 1.4 billion vehicles in operation throughout the world (approxi mately 300 million of which are in the United States) that will never benefit from this new technology and will continue to release carbon into the atmosphere for decades to come.

For more than 100 years, internal combustion engine vehicles (ICEV) and liquid fuels enabled society to thrive, improving our standard of living and pro viding opportunities previously unfathomable—and they remain the dominant source of mobility in the world. Yet, in the exuberance to usher in new battery electric and hydrogen fuel-cell vehicles (again, great technologies that are needed and can be a great benefit to society and the environment), we have irresponsibly stifled, and in some cases canceled out, discussions about these vehicles and the fuels that power them.

It is with this backdrop and understanding that the Fuels Institute released our latest report, “Assessment of Biofuels Policy: Effectiveness of Emissions Reductions,” focusing on the ability of biofuels to reduce the carbon intensity of the liquid fuel supply. According to our January 2022 report, “Life Cycle Analysis Comparison: Electric and Internal Combustion Engine Vehicles,” we found that 73% of carbon emitted during the life of an ICEV comes from the tailpipe during the vehicle’s operating cycle when fuel is being consumed. So, if you want to reduce carbon from ICEVs, guess where you should be looking? That’s right, the fuel.

KEY TAKEAWAYS

What did we learn about biofuels from our latest report? Here are a few key facts:

• Corn-based ethanol’s carbon intensity (CI) is typically about 45% lower than gasoline and reduced carbon dioxide (CO2) emissions by about 67 million met ric tons (MMT) in 2019 at its current blend rate of about 10% by volume.

• Biodiesel and renewable diesel (RD) contributed about 23 MMT of emissions reductions in 2019, and RD’s use is expected to increase substantially, owing to its ease of adoption in existing infrastructure and engines.

• Corn ethanol has seen its CI reduced through technology and efficiency, and this trend is expected to continue through more sustainable farming prac tices, as well as through carbon capture and sequestration (CCS) incentives. Application of CCS to corn fuel ethanol production would address roughly

one-third of the emissions associ ated with this biofuel, whereas the reduced application of fertilizer, herbicide and insecticide can further reduce U.S. corn ethanol CI by 15% to 20%.

• Practicality, timeline and costs should be considered when evaluat ing the best options to avert carbon emissions and their negative impact on the environment. Within this framework, fuel ethanol stands out as a promising means to achieve fur ther emission reductions in the U.S. transportation sector.

• Assuming a 2022 U.S. gasoline pool of about 144 billion gallons (17,023,445 TJ), E10 blended gas oline is expected to save over 75.5 MMT of CO2 emissions, and E15blended gasoline would save over 111 MMT of CO2 emissions.

• The U.S. diesel pool was about 63 billion gallons (8,503,585 TJ) in 2019, and biodiesel and RD com prised about a 4% market share combined, reducing emissions by about 23 MMT of CO2 Does this get us as far as we need to go? Maybe not, but progress should not be discounted and dismissed because it does not achieve 100%.

IDENTIFYING TO OVERCOME CHALLENGES

We must not lead ourselves into thinking falsely that the market and regulatory regime are set up to imme diately produce and accommodate a massive increase in biofuels. We can not convert every station to sell E15

Life Cycle Greenhouse Gas Emissions

tomorrow due to the equipment com patibility and regulatory constraints. We currently have about 3,000 stores selling E15, but the industry installs 2,000 to 3,000 new tank systems every year. Why not start there?

There are some legitimate reasons why we might not be able to go much further, including the fact that not all vehicles are manufactured to run on this fuel, and the misfuelling mitiga tion requirements to protect legacy vehicles would be significant.

And, medium- and heavy-duty vehi cles (most frequently powered by diesel engines) are critical to the decarbon ization effort, yet we have not taken full advantage of our fuel options. For example, biodiesel is already approved by most large vehicles in blends up to 20%, yet we are blending it into our fuel supply at less than 5% on average.

There is still the issue of feedstock availability. With the increased atten tion on sustainable aviation fuel, there is growing competition for feedstocks that could soon begin to impair our ability to increase biofuels production.

NO SILVER BULLET

Yes, the challenges are real and significant, but so is the challenge represented by reducing carbon from 1.4 billion vehicles worldwide. Biofuels are not the silver bullet solution, but neither are any of the other options being promoted by governments in the developed world.

This latest report is not the first time the Fuels Institute has taken a close look at the biofuels market, and it won’t be the last. It is our sincere hope that this latest contribution helps spur additional discussions and evaluations of the opportunities and challenges facing us today. If reducing carbon is truly our global objective, how can we consistently ignore the elephant in the room? (And by the way, I bet there is way to leverage elephant dung to supplement our fuel supply—just saying.)

Note: This article is condensed from the original. Read the full version at www.fuelsinstitute.org

John Eichberger is executive director of The Fuels Institute. For more infor mation, visit www.fuelsinstitute.org.

Corn ethanol has seen its CI reduced through technology and efficiency, and this trend is expected to continue through more sustainable farming practices, as well as through carbon capture and sequestration incentives.

Looking Back to Look Forward

BY JOE O’BRIEN

Fuels Market News has been publishing Fueled for Thought articles authored by Source North America since 2015. Let’s revisit three of the issues we’ve addressed in previous Fueled for Thought articles, recap their past and cur rent status, and rate their progress—whether the issue is stuck in “park,” coasting in “neutral,” cruising forward in “drive,” or going backwards in “reverse.”

CORPORATE AVERAGE FUEL ECONOMY STANDARDS

Recap: In 2018, we wrote about Corporate Average Fuel Economy (CAFE) Standards, which, at the time, the federal government was proposing to freeze:

“The EPA estimates that freezing the fuel economy standards could reduce costs by $2,340 per vehicle by 2026 (theoretically, automotive manufacturers who are not beholden to invest in new emissions technologies would pass on the savings to consumers). Others argue that cost-conscious consumers looking to curb fuel expenses will continue to demand advanced fuel economy technologies, regard less of what standard the regulatory agencies settle on.

“Fuel marketers, fleet operators and general consumers should keep a close eye on what subsequent adjustments automakers make to their future fleet offerings and vehicle purchasing decisions. Their response will be an indicator of what fuels will be dominating demand.”

Current situation: Instead of abandoning improvements altogether, the March 31, 2020, final rule sought to increase fuel economy in new vehi cles by a modest 1.5% annually, with fleets averaging 40 mpg by 2026. The standards undercut more stringent standards drafted by California and which are adopted by several other states. California and automakers finalized a deal later that year in which BMW, Ford, Honda, Volkswagen and Volvo agreed to produce fleets averag ing 51 mpg by 2026, an indicator that automakers had a legitimate interest in higher fuel economy goals.

In April 2022, the National Highway Traffic Safety Administration announced CAFE standards that require an industry-wide fleet average of 49 mpg for passenger cars and light trucks in model year 2026. The new standards will increase fuel efficiency 8% annually for model years 202425 and 10% annually for model year 2026.

Progress: CAFE standards are currently situated between “neutral” and “drive.”

ROAD FUNDING

Recap: In 2019 and 2020, we explored road funding. In 2019, we questioned if it was time to raise the federal gas tax, which was—and remains—18.4 cents per gallon, a tax rate that has gone unchanged since 1993. In 2020, amid sharp drops in fuel demand spurred by COVID-19 shelter-at-home orders, both state and federal gasoline tax revenues had suffered steep declines due to reduced fuel consumption. Additionally, as fuel consumption dropped, refiners struggled with an almost instantaneous surplus of inventory.

Current situation: As of March 2021, at least 36 states have raised or reformed their fuel taxes since 2010. And while the federal gas tax has remained the same, the Bipartisan Infrastructure Deal signed into law in November 2021 reauthorized surface transportation programs for five years and invests $110 billion in additional funding to repair roads and bridges and support major projects.

Progress: In reverse. Although substantial federal funding has been earmarked for roadway improvements, many governing bodies waived gas taxes in an effort to appear as if they were easing inflation. A long-term solu tion has not been established.

E15 AND HIGHER ETHANOL BLENDS

Recap: In 2018, we looked at the via bility of achieving higher octane fuels through higher ethanol blends. In 2019, we also evaluated the considerations for selling E15 and began to unpack the administrative failures that prevent the United States from making meaningful progress with renewable fuels:

“The U.S. EPA’s [May 2019] approval of E15 is about more than offer ing motorists a higher-octane, lower-priced gasoline. Much more. The approval of E15 illustrates a fundamental flaw in U.S. policy making that prevents federally guided initiatives from achieving long-term goals.

“Agriculture is part of the fabric of this country. But the federal administra tion stepping to favor ethanol doesn’t encourage innovation in farming.”

Current situation: In July 2021, the D.C. Circuit Court of Appeals reversed the 2019 EPA rule that lifted

restrictions on the year-round sale of E15. Amid soaring fuel prices this year, the EPA issued emergency waivers to allow for the summertime sale of E15.

At the time this article is being writ ten, the Lower Food and Fuel Costs Act (which would match E15’s Reid Vapor Pressure volatility standards to those of E10) had passed the House.

As for the Renewable Fuel Standard, the EPA adjusted the rule’s retroactive requirements for 2020 and 2021 to reflect volumes actually produced and set renewable fuel obligations for 2022 at higher levels than were proposed in 2021. The corn ethanol mandate is set at its highest level ever, and the man date for advanced biofuels, including ethanol made from grasses and woody plants, was increased. That notwith standing, expansion of farming these crops has been slow.

Progress: Neutral. Although E15 is here to stay, unless and until economic or regulatory factors compel agricul tural firms to grow crops besides corn and soybeans, innovation in renewable fuels is unlikely to move very far.

CONCLUSION

Road funding, renewable fuels and fuel economy standards all have one thing in common: It is highly proba ble their transmissions will slip amid turbulence from an election year. As said in a previous column, “it is unfortunate that U.S. election cycles now seem to mirror the short-term fiscal structure of publicly traded corporations. This renders us inca pable of truly committing to—and achieving—any forward-looking plans that serve to ‘promote the general welfare,’ something the preamble to the Constitution instructs our leaders to do.”

Joe O’Brien is vice president of marketing at Source™ North America Corporation. He has more than 25 years of experience in the petroleum equipment fuel industry. Contact him at jobrien@sourcena.com or visit sourcena.com to learn more.

Although E15 is here to stay, unless and until economic or regulatory factors compel agricultural firms to grow crops besides corn and soybeans, innovation in renewable fuels is unlikely to move very far.

Breaking Concrete

The time may be right to update aging USTs and related components.

BY ED KAMMERER

The funny thing about time is that it can be both interminably long or pass in the figurative blink of an eye. When it comes to the installation and operation of underground storage equipment and systems at retail-fueling sites, the pas sage of time seems much quicker than it should be.

If you were a retail fuel-site owner or operator in the United States in 1998, that was the year the underground storage tank system at your location needed to become compliant with 40 CFR, Part 40, the regulation developed by the U.S. Environmental Protection Agency to govern the storage of haz ardous materials in USTs.

UST systems by nature give off an “out of sight, out of mind” vibe, and now we are approaching the 30-year

expiration deadline for most UST manufacturers’ product warranties. Once these USTs are out of warranty, they become more difficult to insure, and owners who can obtain insur ance for them may face much higher premiums.

In the October 28, 2021, issue of the Petroleum Equipment Institute’s Tulsa Letter, Rick Long addressed this loom ing situation. He noted that according to the EPA’s UST Finder Tool, more than 150,000 USTs in North America would be out of warranty by 2030. The first suggestion from insurance carriers “is for owners of aging USTs to install new tanks.” For those owners who may not be willing to or are incapable of installing new USTs, one of the insur ers’ additional suggestions is to “install new piping, sumps and spill buckets.”

THE TIME IS NOW

In the colder portions of the U.S., or those that experience unpredictable temperature swings, winter is not the ideal time to break concrete to install new UST systems. But it is the perfect time to assess the age and condition of UST systems and, if necessary, plan capital outlays for the upcoming 12 months, which may include UST system replacement or retrofit.

That may be easier said than done, though, as a lot of other things have changed in the retail-fueling indus try since 1998. The most obvious is that the fuel menu has expanded to include multiple grades of gasoline with differing percentages of ethanol, from E5 to E85. Ultra-low-sulfur diesel was not available prior to 1998, but it is now a staple at many retail-fueling sites. Alternative fuels, from ethanol to biodiesel, are also being offered at more locations as vehicle manufacturers expand their rosters of hybrid vehicles.

The great unknown with these new gasoline, diesel and alternative-fuel formulations is how they are reacting with or affecting the performance of USTs and their components installed in the ground before the formulations

even existed. As an example, after ULSD was introduced to the motor-fuel pool, it reacted adversely with Buna-N (nitrile) rubber, which is commonly used in fueling systems, meaning that it had to be replaced with a substance fully compatible with ULSD.

The end goal in every fuel-storage application is to ensure that the fueling site’s UST system achieves and main tains the highest level of fuel storage, dispensing and containment perfor mance. There is nothing worse for a fuel-site operator than to find out that a leaking UST, tank sump or piping connection has contaminated the local groundwater supply, the repercussions of which can be costly and far-reaching from both a financial and reputational perspective.

TO BREAK OR NOT TO BREAK

As fuel-site operators assess the state of their UST systems, here are some things to consider before breaking up forecourt concrete to install a new UST, plus system components like piping, sumps, spill buckets, overfill valves, manholes, etc.:

1. Verify that all UST-system tanks and components are certified by Underwriters Laboratories.

2. Consider sourcing all components from a single manufacturer, rather than creating a “Frankenstein’s mon ster” of different parts from different suppliers to ensure that you create a fully integrated UST system designed to work seamlessly together.

3. Make sure all new USTs and their components are fully compatible with current and future fuel for mulations, blends and additives, including alcohol blends from E5 to E85, ULSD and biodiesel.

4. Install UST-system equipment that is testable, repairable and maintain able from ground level with no need to break concrete in order to access

or replace the components; this will optimize fuel-site uptime while con trolling costs.

5. Where possible, identify and deploy plug-and-play fueling systems that employ prefabricated, factory assem bled and tested components that lower field labor and associated costs, while reducing the risk of installa tion errors.

Leading manufacturers of UST components and systems are well aware how important it is that their products operate reliably and safely throughout their service life, even though they are hidden away under ground. These manufacturers strive to offer industry-standard families of dispenser, tank and transition sumps, piping systems, entry fittings, multiports, manholes, overfill-preven tion valves, spill buckets/containers, emergency shear valves and pressure vacuum vents. This allows fuel-site operators to create a UST system with compatible components from the same manufacturer, which results in less downtime and lower mainte nance, repair and replacement costs, all while improving the operator’s peace of mind.

While our perception of the passage of time can change as the situation changes, there’s no question that 24 years is a long time for UST systems to be operating. One of the ways to avoid exorbitant repair, replacement or remediation expenses that can be caused by aging UST systems that are approaching end-of-warranty status is to take stock of the system’s condition. Petroleum equipment manufacturers are ready to assist by offering compo nents designed to operate seamlessly with each other, allowing for the creation of a fully integrated system that optimizes long-life performance, cost, uptime, safety and regulatory compliance.

Make sure that all new USTs and their components are fully compatible with current and future fuel formulations, blends and additives, including alcohol blends from E5 to E85, ULSD and biodiesel.

Ed Kammerer is the director of global product management for OPW, based in Cincinnati, Ohio. He can be reached at ed.kammerer@opwglobal.com OPW delivers product excellence and a comprehensive line of fueling equipment and services to retail and commercial fueling operations around the globe. For more information, go to www.OPWGlobal.com

Delivering Site Security with the Right Technology

Dan Harrell Invenco Chief Innovation Officer www.invenco.com

Q: WHAT ARE THE KEY POINTS RETAILERS NEED TO KNOW WHEN IT COMES TO PAYMENT SECURITY ON THE FORECOURT?

A: Payment security should be a top priority for retailers everywhere. The c-store environment is high traffic with multiple payment systems throughout the site, making it hard for employees to continuously monitor systems and customers. Because of this, criminals may look to c-stores as a target location for payment fraud and data breach. For years, credit card skimmers were the largest threat when it comes to c-store payment crime, but as payment trends and EMV require ments work to reduce that threat, retailers need to make sure their entire systems are secure on and off the forecourt.

Q: WHAT KEY FACTORS SHOULD RETAILERS LOOK TO IMPLEMENT TO KEEP THEIR PAYMENT SYSTEMS SECURE?

A: Standardization and compliance certifications should be well known and understood by c-store owners every where. There are several certification processes and compliance regulations put into place across payments that retailers should ensure are met when they are searching for tech solutions at their sites. Indoor and outdoor EMV certification and PCI data security stan dards should be a part of each vendor’s payment solutions.

Q: HOW DO YOU ANTICIPATE SECURITY WILL CHANGE OR EVOLVE IN THE FUTURE?

A: Security has changed and will con tinue to change as payments change. We have seen this time and time again, with new payment trends like contact less and alternative payment methods. We anticipate that as payment technol ogy becomes more “remote” with things like prepayment over an app or internet browser, it will become increasingly important for businesses to invest in secure payment platforms with strong data encryption features to protect cardholder data.

Q: HOW SHOULD RETAILERS PLAN TO PROTECT CARDHOLDER DATA?

A: Having a point-to-point encryp tion (P2PE) solution implemented and PCI approved is crucial to protecting customer data. P2PE solutions encrypt customer data as soon as they are collected so there is no opportunity for criminals to steal or copy the data. When a payment transaction is completed through the P2PE payment standard, data are protected even if a system is subject to hacking or fraud. Having this

system put in place is a great way to ensure payment systems will remain safe now and moving forward.

Q: HOW SHOULD RETAILERS PLAN FOR FUTURE SITE SECURITY AS THINGS CHANGE?

A: Retailers should look for solutions with open, standards-based architec ture that can be updated and adjusted as security standards change. Cloudbased updates should be available so that new software versions can be deployed to each system without the need for techs to implement updates. Retailers should also make sure that the system they choose in the first place is rooted in security, so they can ensure their vendor is and will stay up to date on the latest standards and security measures.

Q: WHY IS IT SO IMPORTANT FOR C-STORES TO MAKE SECURITY A TOP PRIORITY?

A: Reputation is everything, and with such a competitive market, busi nesses cannot afford to lose customer confidence over payment security. A security breach can be disastrous to the retailer. It’s bad enough if it is a massive national big-box chain, but the damage done to the reputation of a strong local or regional chain can be even harder to survive. Years of effort spent to establish the brand, build customer loyalty and confidence can evaporate overnight.

As more transactions move online, c-stores will need to protect their rep utation by going above and beyond to implement the latest in security stan dards and compliance to ensure they stay on par with competing industries. At the pump, sites should be diligent about using outdoor EMV-approved payment terminals and keeping a close eye on their hardware systems.

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

How Will Retailers Use Blockchain?

Despite recent hits, cryptocurrency still offers opportunities for retailers.

BY DAVID WILKINSON

Given the amount of cryptorelated Super Bowl commercials that kicked off in 2022, it’s safe to say blockchain awareness and popularity is increasing among both consumers and businesses. Even with rising inflation, stock market vol atility and higher interest rates causing cryptocurrencies to lose value during the summer, experts still predict that bitcoin could climb to be worth $100,000.

Cryptocurrency isn’t the only blockchain-based technology being adopted by consumers and businesses. Eighty-one percent of the world’s top 100 public companies used blockchain technology in 2021, up from just two in 2014. Use cases vary as blockchain technology, known for its flexibility, is

applicable to many different industries and businesses and can help improve operations and profits.

Below are examples of ways con venience store retailers can use blockchain technology—and not just cryptocurrency—in their payments, loyalty programs and inventory man agement processes.

CRYPTOCURRENCY AND PAYMENTS

Convenience stores want to offer ser vices that both banked and unbanked individuals can use, and crypto applies to both of those. Regardless of taking a hit in early June, cryptocurrency has lasting power and is expected to gain traction once again. Since consumers buy cryptocurrency, retailers are look ing for ways to accept it at their stores

and online. In fact, nearly three-quar ters of retailers have reported plans to accept either cryptocurrency or stablecoin payments within the next 24 months.

For example, in 2021, Sheetz became the first convenience retailer to accept bitcoin and other digital currencies in-store and at the pump. Also that year, software, consulting and tech nology provider NCR Corporation agreed to acquire LibertyX, a crypto currency software provider, to give its retail customers access to buy and sell cryptocurrency, conduct cross-border remittance and accept digital cur rency payments across digital and physical channels.

In addition to giving consumers another payment option, accepting cryptocurrency allows retailers to interact with cryptocurrency markets themselves. Depending on the pay ments service they are using, retailers could immediately have cryptocur rency payments settled back in fiat.

LOYALTY PROGRAMS

Retailers could also benefit by award ing cryptocurrency to consumers through their loyalty programs. Most retail loyalty programs today are traditional earn-and-burn programs

where consumers earn points or a reward as they shop. However, as consumers build up more points and rewards, that is a liability for retailers because consumers can “cash” in those points at any time. Retailers then have to redeem the points as a discount against goods and services.

By integrating blockchain technol ogy and digital currencies into loyalty programs, the programs can become better assets and bring broader market value to both consumers and retailers.

First, retailers can band together to create a universal loyalty digital currency. As consumers earn loyalty points, they would actually be earning a digital currency that can then be used at more than one retailer, poten tially decreasing the liability for a single retailer and improving flexibility for consumers. Retailers could also set up a blockchain exchange where consumers can swap one retailer’s loyalty points for another. For exam ple, a consumer with Starbucks points could swap them for Wawa, Sheetz or Buc-ee’s points.

Additionally, one of the emerging innovations is self-sovereign identity, the ability for individuals to own and control their own identifiers and data. With SSI, consumers could house their digital identity on their phones. Then, if they are loyalty customers at several different retailers, the consumers will have the ability to share their prefer ences with those retailers and receive customized bids for their loyalty and purchases. This is a way for consumers to monetize their own data and prefer ences while preserving privacy.

SSI is part of the growing move ment to create an open data collection standard across all retailers, doing away with the current diverse methods of data collection and creating one method that is easy for both retailers and consumers to use.

For the retailer, moving loyalty points onto a third-party blockchain

network could unburden them of the heavy infrastructure and administra tion of today’s work-intensive loyalty programs.

INVENTORY MANAGEMENT

A potential way blockchain technology can influence inventory is by reducing food waste, which the U.S. Food and Drug Administration estimates is about 30-40% of the country’s food supply. Retailers who sell food could leverage blockchain as a digital foot print of the details around when fresh food was delivered and the time since preparation, the custody of it all the way through the supply chain and how to optimize the life of the food.

For example, blockchain technology could provide greater visibility into sell-by dates for food. If retailers can easily track upcoming expirations dig itally using blockchain, they can more easily run specials and promotions and push notifications around those goods before they expire.

Blockchain technology could also help with real-time inventory visibility. If each item in the store has a digital footprint, retailers could more easily track incoming goods and then match them to inventory already in the store. This would help retailers make better decisions about their next orders.

THE FUTURE IS BLOCKCHAIN

These are just a few of the current and future blockchain use cases for the retail industry. As blockchain tech nology is adopted and integrated into the tech stacks of more businesses, use cases will continue to develop and expand beyond what we can predict today. For now, the best way retailers can stay on top of the technology is by taking steps to integrate it into their payments, loyalty programs and inven tory management operations. That way, they will be ready for additional developments as blockchain technol ogy continues to grow and evolve.

David Wilkinson is president, NCR Retail, and vice president and general manager, North America Retail Sales, NCR Corporation. Based in Atlanta, NCR is a leading enterprise technology provider that runs stores, restaurants and self-directed banking.

By integrating blockchain technology and digital currencies into loyalty programs, the programs can become better assets and bring broader market value to both consumers and retailers.

Tight Times

Inflation and high fuel prices make a dangerous mix.

BY ROY STRASBURGER

“It is always something”– Roseanne Roseannadanna, social commentator and pundit.

Generally speaking, consumers are fed up with the way things are going. COVID-19 and the ensuing lockdowns took a toll on people’s patience and flexibility. Retail rage became a thing. Customers quickly got upset with store staff for any type of inconvenience—whether it was mask mandates or being out of

their favorite product. This happened in our stores on almost a daily basis.

Now, there is a new set of factors to tip people over the edge: inflation and high fuel prices. While these two items are related, I have found that the retail consequences are different for each.

The U.S. retail fuel industry has done an outstanding job of creating customer price sensitivity. No other industry promotes the price of their products with two-foot-high numbers on the side of the road. I’d wager that

most drivers can quote you the price of a gallon of gas but not the price of a gallon of milk.

But I digress. Nevermind.

There are two main issues that result from high fuel prices, and the first is psychological. The average consumer does not understand why fuel prices go up and tends to blame retailers for the high prices. The knee-jerk reaction is that the retailer is gouging the public and making a huge profit. Trying to explain that fuel prices are directly related to the cost of fuel and that most fuel retailers do not calculate their profitability on a percentage basis but, rather, on a cents-per-gallon basis, does not help to mollify anyone.

The second issue is fuel consump tion. When the price of gasoline goes up people tend to drive fewer miles

because it becomes more expensive. Therefore, gas demand goes down, retailers sell fewer gallons, which causes fewer customers to stop at the store. That chain of events can have an impact on the profitability of the business.

Regarding inflation (which, for my purposes, I am focusing on products other than fuel), the customer reac tions don’t seem to be as emotional. Inflation causes consumers to think more about their pocketbook and make buying decisions based upon the perceived value for money. This can have an impact on convenience store sales when the public perception is that products in c-stores are usually more expensive than in other loca tions. Shoppers will go to other retail channels (such as dollar stores, grocery stores or online) to buy their goods, while looking for the best value.

So how do we combat these two challenges? First, we must educate our employees so that they can have intelligent conversations about prices and why they have gone up. The simple answer is that the cost of goods (i.e., the price that the retailer has to pay) has increased due to supply chain issues and the war in Ukraine impact ing the global cost of raw materials.

The second strategy is to make sure that you are providing value for money in your store. Inflation and high prices mean that people will have less money to spend because their incomes have not increased at the same rate as the price of goods. Typically, what we see in a convenience store is that the customer “trades down” on product categories to try to save money and get a better value. For example, instead of buying an expensive craft beer they may buy a mass market brand. A similar thing happens with products

that you sell in different sizes. People will buy a small package rather than a large one of the same product because it costs less money.

Create and advertise promotions within your store showing your value proposition to your customer. Work with your suppliers to see if you can get discounts and rebates so you can do BOGO or multipack discounts to make the consumer feel that they are getting more for their money. It is important to promote the economic value—how much money the customer is saving by taking advantage of the promotion.

Finally, giving away something for free can have a big impact on the cus tomer and make a lasting impression. Choose items that do not have a large cost to you—such as coffee or fountain drinks—and include them in a larger bundle. To be even more effective, randomly give out something for free to a customer who will appreciate the gesture and will develop a special bond with your store. Who doesn’t like to get something for free?

The irony of Roseanne’s comment is that she was at the peak of her fame the last time fuel prices and inflation were both running high in the U.S. The industry weathered those diffi cult economic times and will do so again. The key is being sensitive to the concerns of your customer, whether they are emotional or financial, and provide them a value that will be recognized and appreciated. What costs you a few cents now will create a long-term customer in the future, and you will get a significant return on your investment.

(Editor’s note: For those of you not of a certain age, Roseanne Roseannadanna is a character created by Gilda Radner on Saturday Night Live in the late 1970s.)

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

Create and advertise promotions within your store showing your value proposition to your customer.

REMANUFACTURED PARTS

What they bring to the table

WHAT ARE REMANUFACTURED PARTS?

The remanufacturing process takes a used OEM part or “core,” cleans it and replaces common fatigued and failed components. Remanufactured parts should not be confused with recondi tioned or refurbished parts.

Kaylie Long Scoles

Marketing Director

RDM Industrial Electronics Inc.

WHAT ARE THE COMMON MISCONCEPTIONS WITH REMANUFACTURED PARTS?

A common misconception about remanufacturers in the petroleum equipment industry is that we build products to order, insinuating long lead times of customers sending a core in, remanufacturers receiving the core, remanufacturing their core and then sending it back to the customer. This is an inaccurate depiction of the

remanufacturing companies in the petroleum equipment industry. Remanufacturers have core stock built up for production to work through and have finished goods warehoused ahead of time. At RDM, the bulk of orders are shipped out from finished goods the same day they are placed. The customer will then send their core in for us to add to our core stock. Thus, the business model of remanufacturers provides a continuous flow from cores to finished goods into the customer’s hand, so the parts will be readily avail able when the customer orders.

WHAT ARE THE BENEFITS OF AFTER MARKET/REMANUFACTURED PARTS?

One benefit that is not necessarily front-of-mind is the environmental impact. The environmental benefits in

REMANUFACTURED

favor of remanufacturing include using significantly less energy and raw mate rials and reducing C02 emissions. In addition to being more sustainable for the environment, mom-and-pop stores can keep their existing fuel dispensers up and running without a huge invest ment in new dispensers.

ARE THERE COST SAVINGS WITH REMANUFACTURED PARTS?

There certainly are cost benefits. Remanufactured products are often a fraction of the cost of OEM products and provide an alternative source for companies who wish to cut their cost without sacrificing quality. Buying remanufactured is an economical choice that allows service companies, distributors and c-stores to maximize their profit margins and boost the bottom line.

WHAT ABOUT QUALITY?

Remanufacturers in the petroleum equipment industry have been around for many decades and are the experts on the common failures of OEM products. Their business models run off taking used, failed product “cores” and sending them through intensive trou bleshooting and product testing, fixing the identified problem and replacing components and common failures

unique to each individual product as a preventative measure. The reman ufactured product should offer no concerns for the customer.

WHAT ABOUT CUSTOMER SUPPORT COMPARED TO THE BIG OEMS?

Not only are remanufactured prod ucts just as reliable as OEM products, but they also often have quality guarantees and similar warranty periods as OEMs. Remanufacturers in the petroleum equipment indus try are no longer a handful of people doing repair work in a basement. They are robust organizations with cutting edge technology, modern equipment and procedures and have knowl edgeable sales, customer service and technical support staff to assist you in real time. Remanufacturers support both older, obsolescent equipment, as well as newer equipment just out of OEM warranty.

SUPPLY CHAIN DISRUPTIONS HAVE SHAKEN EQUIPMENT MANUFACTURERS SINCE THE PAN DEMIC. HOW DOES THIS IMPACT REMANUFACTURERS?

COVID-19 disrupted the supply chain worldwide; the petroleum equipment industry was not spared. Remanufacturers have an advantage over OEMs because they run on cores, which are often abundant. So, as long as components can be procured, remanufacturers are able to stay ahead of the curve on supply chain disruptions and are able to avoid stock outages. When OEMs are giving prolonged lead times, remanufactur ers will likely have stock ready to ship so that you’re able to receive needed parts and equipment in days instead of weeks, months, etc. This increases downstream satisfaction through the supply chain ultimately getting fuel dispensers, for example, up and running at a quicker rate.

This interview is brought to you by RDM Industrial Electronics Inc.

Aviation’s Move to Sustainability

BY DR. RAJ SHAH, DR. VIKRAM MITTAL, DAISY-ANN NORMAN

There is a move across the trans portation sector to upgrade to renewable power sources. In 2019, the global aviation industry burned 95 billion gallons of fossil fuels, resulting in emissions of over a billion tons of carbon dioxide, accounting for 12% of the total carbon emissions from the transportation sector, according to the International Energy Agency.

The International Air Transport Association has committed the aviation industry to achieve carbon neutrality by 2050. Initially, the aviation industry focused on carbon

offsets, where airlines would invest in planting trees or land restoration to offset the carbon emitted from their aircraft. However, given the scale of the aviation industry, the global usage of carbon offsets would be difficult to implement, so the industry has recently committed to modernizing fleets to allow for more efficient and sustainable aircraft. In particular, the industry is investing in “greener” fuels that will be more carbon neutral.

RECIPROCATING ENGINES

Although much of the environmen tal push for the aviation industry is

focused on larger commercial aircraft, the contribution from smaller, general aviation aircraft is not negligible. Small aircraft are used for a variety of pur poses, ranging from personal travel to agriculture and tourism. In the United States alone there are almost 200,000 small aircraft, the bulk of which use internal combustion engines running on avgas.

The first approach to reducing the carbon footprint for small aircraft follows the advances made in the auto motive community for electric vehicles. This makes sense given that many of these engines are comparable in size and power to automotive engines. Indeed, it is possible to power aircraft through a combination of batteries and motors. However, this approach is very heavy, especially when looking at the energy requirements for larger aircraft.

While not feasible for larger aircraft given the weight of batteries, several companies are developing electric versions of smaller airplanes. RollsRoyce recently completed a 15-minute maiden voyage of a one-seater electric

Both general and commercial aviation face significant challenges, but work is progressing.

Boeing 2022 eco Demonstrator

BY BOEING

airplane capable of flying 300 mph. This airplane is primarily to show proof-of-concept for using an EV and could potentially serve certain niche applications, such as short commutes.

Lengthy charging times are another issue common for EVs and aircraft; however, newer battery chemistries are showing faster recharging times. Similar to automobiles, small airplanes cannot be readily modified to run on batteries and motors. As aircraft end their life cycle, new battery-powered planes would replace them.

Many of the benefits of electrifica tion can be realized through replacing the batteries with a hydrogen and a Proton Exchange Membrane (PEM) fuel cell. PEM fuel cell technology is fairly mature and has demonstrated efficiencies in excess of 70%, according to the EIA. PEM fuel cells do not gener ate hazardous emissions since the only real byproduct is water. A PEM fuel cell vehicle would be zero emissions.

Still, PEM fuel cells have several dis advantages. First, like electrification, their use would require a complete overhaul of the small aircraft fleet, a process that would span decades. Second, hydrogen has several large challenges, especially related to storage and production. Notwithstanding, several companies have developed hydrogen fuel cell aircraft.

The third alternative avoids the issues associated with electrification by changing the fuel from being oilbased to being derived from other carbon-based sources. This approach does not require significant mod ification to the aircraft, while also potentially allowing tetraethyl lead (still used in aviation to boost octane) to be removed from the fuel.

The most natural option would be ethanol, given its high-octane number and commercial availability, espe cially in the United States and Brazil. Ethanol [can be] more expensive than avgas, and there are issues with cold starting and corrosiveness, which the automotive industry is resolving using additives in the fuel. However, a bigger challenge comes from the energy density of ethanol. Ethanol only has an energy content of 30 MJ/ kg as compared to gasoline, which has a value of 44 MJ/kg. Since aircraft designs are weight-constrained, the additional fuel weight must be considered.

Ethanol is not the only green alter native. Several countries, including Germany and Brazil, are evaluating other biofuel options. Biofuels made from animal products tend to avoid many of the issues associated with ethanol. They can achieve many of the properties of gasoline, including energy density.

Another attractive option is elec tric fuels, such as the ones under development by Porsche. These fuels are produced from extracting carbon dioxide from the atmosphere and combining it with water. By adding energy to this mix, the mixture is converted into carbon monoxide and hydrogen, commonly referred to as syngas. Syngas can then be reformed into a variety of fuels, including avgas or gasoline. E-fuels are sustainable if the energy for reversing the com bustion process is from a renewable source, such as solar or wind.

A challenge with each of these approaches is cost. Ethanol is the only alternative that is comparable in cost to avgas. However, new developments

While not feasible for larger aircraft given the weight of batteries, several companies are developing electric versions of smaller airplanes.

The more practical alternative for kerosene is sustainable aviation fuel.

in renewable energy sources, catalysts and agriculture should decrease prices.

TURBINE ENGINES

The bulk of the aviation industry relies on turbine engines that run on jet fuel, which is basically kerosene. The aviation industry is moving away from traditional jet fuel.

Given the challenge of energy densities of batteries coupled with the weight-constrained nature of modern aircrafts, battery-electric options are not feasible. Since electrification is not possible for these aircraft, the air line industry is evaluating two other replacement options for jet fuel— hydrogen and synthetic aviation fuel.

The first alternative involves replac ing jet fuel with hydrogen in a turbine engine. Hydrogen combusts with oxygen like jet fuel; however, the com bustion process only generates water as a byproduct. Further, a given mass of hydrogen has more than three times the energy of a similar mass of jet fuel. With these benefits in mind, Airbus is actively developing the ZEROe con cept aircraft, which will use hydrogen

combustion. The prototype of the ZEROe airplane is expected in 2035.

Despite the many benefits of hydro gen, significant technical challenges remain, with the largest issue being storage. Typical storage tanks for hydrogen are voluminous and heavy, with most tanks being more than 10 times heavier than the hydrogen they contain. However, new advances are being made in metal hydrides that are offering a compact storage option. In particular, aluminum hydroxide, commonly referred to as alane, offers a promising storage mechanism for hydrogen.

Another issue arises from the sus tainability of hydrogen. Hydrogen is produced from the partial combustion of methane, resulting in a carbon foot print comparable to jet fuel. However, many countries, including the U.K., Japan, Norway and France, are building hydrogen production facili ties that use solar and wind power to electrolyze water to produce hydrogen, resulting in no carbon footprint.

A larger issue is that current aircraft engines cannot readily burn hydrogen.

World Fuel Services delivering sustainable aviation fuel

IMAGE

BOEING

Rather, the engines and fuel tanks would require significant modification to allow the plane to run on hydrogen, to the degree that the entire plane would likely require re-design.

The more practical alternative for kerosene is sustainable aviation fuel (SAF). SAF is not petroleum-based; rather it is produced from biomaterial, including plant products, used cooking oils, organic waste material and animal fat. SAF can be used as a direct replacement for kerosene in most airplanes and does not require significant engine modifications. And, unlike oil, SAF feedstock may be replenished on a continuous basis. According to independent research, enough renewable feedstock exists to power the whole airline fleet.

Although the name implies that SAF is sustainable, there are several large sustainability challenges associated with its usage. First, the biomass for SAF can potentially compete with food crops. Additionally, the generation of biomass for SAF necessitates a large amount of land, which can result in environmental deterioration. Moreover, some of the processes for converting biomass into SAF are inefficient.

Another technical challenge is associated with the amount of SAF allowed in an engine. Currently, engine manufacturers limit the blending ratio of SAF to 50%. Recent developments out of the National Renewable Energy Laboratory identified a pathway for producing SAF from food-waste-derived fatty acids to allow for a 70% blending limit. Rolls-Royce has successfully tested a new engine that can run on 100% SAF.

SAF still faces a major roadblock related to its cost. SAF is about five times the cost of traditional jet fuel. One promising technique for reduc ing the cost is to produce SAF from algae, which is inexpensive and has a high crop yield. Another longer-term option, termed solar jet fuel, uses concentrated sunlight to synthesize carbon dioxide and water vapor into a hydrocarbon, which can be refined into jet fuel.

The IATA goal of achieving carbon neutrality by 2050 requires addressing both the small aircraft sector, which uses avgas, and the large aircraft sector, which uses kerosene. The sus tainability goals for the small aircraft market can be achieved through a combination of biofuels, hydrogen fuel cells, and battery-electric power. Eventually, battery-electric aircraft will serve for short-range applications, such as commuting and crop-dusting, and hydrogen fuel cell aircraft will be used for applications that require longer ranges.

A harder challenge is the large aircraft sector, especially given its increasing demand and the large amount of fuel used annually. The aviation market is investing in two key technologies—hydrogen and SAF. This sector would require the use of hydrogen-powered aircraft for short-duration flights and SAF for longer flights. However, given the projected production of SAF and hydrogen, the sustainability goals will likely still require carbon offsets to achieve carbon neutrality by 2050.

Note: This article is a condensed version of a paper that can be found at www.fuels marketnews.com.

Dr. Vikram Mittal is an assistant professor at the United States Military Academy in the Department of Systems Engineering.

Dr. Raj Shah is a director at Koehler Instrument Company. He is an elected Fellow by his peers at IChemE, CMI, STLE, AIC, NLGI, INSTMC, Institute of Physics, The Energy Institute and The Royal Society of Chemistry. He can be reached at rshah@koehlerinstrument. com

Daisy-Ann Norman is part of a thriving internship program at Koehler Instrument Company and is a student of chemical engineering at State University of New York, Stony Brook, where Drs. Mittal and Shah are part of the external advisory board of directors.

The Loop System delivers cost-savings and high performance

Sharpen Driver Skills

BY MARK MURRELL

Every couple of months we get a request from someone for a course on avoiding fixed-object collisions. Usually, we don’t even get that much detail in the request. It’s just, “do you have a fixed-object course?”

There are lots of ‘fixed-object’ courses available in the trucking industry in both classroom and online formats, so I’m not surprised people ask. However, in truth there’s no such thing as dedicated training courses to avoid fixed-object collisions.

What I find is that fixed-object colli sions are backing incidents, bad turns or improper clearance, with the occa sional rear-end incident popping up as well. But are these the courses the fleet manager should be requesting? What issues do these courses really solve? The reality is, if you need a course to teach you how to avoid crashing into something, that’s a problem.

Drivers shouldn’t be treated as a distinct entity with dedicated train ing. Instead, they should be trained to properly execute the specific

maneuvers—backing, turning, etc.— regardless of whether other objects are present. If you train someone spe cifically to avoid a fixed object, are you saying it’s OK to do the turn poorly if there’s nothing in the way? Is it OK to do a terrible job backing as long as you don’t hit something? Of course not.

Offering a fixed-objects course is a great example of treating the symptom rather than the disease. The training

focus should be on performing maneu vers properly. Your drivers should be offered courses on proper driving techniques for intersections, turns and curves. Similar story for backing.

Focusing on driver behavior rather than the specific outcome of one situation leads to much better perfor mance and provides a more effective training experience as well. Imagine the poor driver placed in a fixed-objects course who is trying to figure out why some of the content talks about turns, while portions talk about parking lots or loading docks, or about low bridges. It’s all over the map and not connected in any way that’s meaningful. On the other hand, a course specifically about all the ins and outs of doing proper turns is going to make more sense, and the content will be retained more easily.

The moral of this story is to think about the behavior that needs to be changed rather than focusing too much on a specific outcome of that behavior. You’ll get better results.

Mark Murrell is co-founder of CarriersEdge, a provider of online driver training for the trucking industry, and co-creator of Best Fleets to Drive For ®, an annual evaluation of the best workplaces in the North American trucking industry produced in partnership with the Truckload Carriers Association. He can be reached at www.carriersedge.com

The reality is, if you need a course to teach you how to avoid crashing into something, that’s a problem.

Training drivers to avoid fixed objects doesn’t resolve the greater issue.

Farmers or Hunters?

BY JOHN KIMMEL

Peter Drucker said, “Nothing happens until someone sells something.” He was right, of course, and I would add that nothing great happens until someone sells a lot of something. That is why you need to know the keys to hiring great salespeople and keeping them on your team. This will be critical to your organization’s long-term success. If you have struggled in the past to attract and retain salespeople that performed above average, then follow the steps below to create a sales team worth bragging about.

DECIDE WHAT KIND OF SALESPERSON YOU WANT.

Even in the world of outside sales, not all B2B salespeople need to have the same skill sets. Do you need a hunter or a farmer? A hunter is someone whose primary role is to hunt down and land new accounts. This person

needs to be strong in prospecting, moving people through the sales cycle quickly and closing. This role is primar ily focused on gaining market share for your company. A farmer, on the other hand, is someone whose primary role is wallet share. This person needs to be great at leveraging rapport, discover ing new opportunities inside existing accounts and creating loyalty. Let me guess, you want both, right? The prob lem is that it is unusual for a person to be great at both of these strategies, so you need to decide which of the two types of salespersons you are after.

CREATE AN ATTRACTIVE COMPENSA TION PROGRAM.

Even compensation can differ based on the type of person you need to hire. As a general rule, between one-third and two-thirds of the total compensation plan should be fixed, and the other por tion variable. For example, farmer-style

salespeople are typically more reserved and cautious. For them, a comp plan that includes two-thirds salary and onethird commission is usually about right. On the other hand, hunters tend to be risk takers and want to be rewarded for taking those risks. For them, an uncapped plan that includes one-third salary and two-thirds commission may be more appropriate.

WRITE A GREAT AD TO RECRUIT THE RIGHT PEOPLE.

If you are looking to hire rockstar hunters who will close fast and set the world on fire, you are not going to attract them with a seven paragraph, thousand-word ad or solicitation. They will never read it. Think bullet points and as few words as possible. Tell them how much money they can make and how much you will support them, and they are likely to apply. Worry about the details later in the interview process. On the flip side, that ad most likely will not attract a detail-oriented salesperson who needs to have an engi neering background and lubrication certification. Create an ad specifically for the person you are looking for. One size does not fit all.

Here’s how to hire great salespeople.

LOOK FOR PEOPLE IN THE RIGHT PLACE.

Make sure you run your ad on a hiring site that caters to salespeople. Today, that would be LinkedIn first and Indeed second, but that could change tomorrow, so make sure you spend your money in the right place. Also, recognize that most of the great sales people already have a job. That may mean having someone who is profi cient in using LinkedIn to find those people and get them to respond to your solicitations.

WEED OUT THE MISFITS WHEN YOU INTERVIEW.

Over 90% of hiring decisions are based on aptitude. We like what the resume says, and so we use the inter view process to try to prove it is real. Unfortunately, that is not why we fire people. Sixty-seven percent of firing decisions are based on culture; the employee lied, cheated, stole or was habitually late to work. For that reason, you need to include questions that pertain to your core values in your interviews. By the way, great interviews should only involve you speaking about 10% of the time. Ask great questions, and let prospective employees convince you that they are right for the position.

KEEP THE HIRING PROCESS SALES-CENTRIC.

If you are looking for someone who is adept at the one-call close but your hiring process takes six weeks and involves 27 interviews with every department including accounting, do

you really think he or she will want to work for your company? Save the long, cautious hiring process for your next CFO. Hire salespeople fast if you really want the best talent.

USE SALES LEADERSHIP TO ONBOARD AND TRAIN NEW SALESPEOPLE.

One of the biggest mistakes I see orga nizations make is turning a fired-up, ready-to-go salesperson over to HR to onboard. Two weeks and 80 wasted hours later, the new hires have been subjected to endlessly boring meetings about everything they “need to know” to be successful at your company, and they are so disenchanted that they are considering going back online to find a new place to work that “under stands” salespeople. Instead, let your super-successful sales manager do the onboarding. The new hires may not learn the nuances of how every system works, but they will be prepared to do what you hired them to do, which is sell. Focus your training on making them more money. Teach them new skills. Teach them customer journey. Teach them how the CRM can make them more successful. These are the lessons that will build loyalty for your organization and keep the great people you have on your team.

DON’T MAKE THE MISTAKE OF SKIP PING STEPS.

If you don’t feel like your team can exe cute all the steps above, then bring in an expert in sales hiring who can help. Your shareholders and your bottom line will be glad you did.

Even in the world of outside sales, not all B2B salespeople need to have the same skill sets. Do you need a hunter or a farmer?

John J. Kimmel is the author of “Selling with Power” and has spoken for many state and regional petroleum marketer associations. Kimmel provides custom solutions to increase the effectiveness and profitability of sales teams for petroleum marketers all over the United States. To learn more, visit www.johnjkimmel.com

Return of the Majors?

After walking away from direct retail in the U.S. in the early 2000s, some oil companies are re-exploring the opportunities.

By Keith Reid

A

trend began to emerge in the early 2000s that changed the face of the fuel retailing industry in the U.S. market—the major oil companies began stepping back from direct company-operated retail sites and direct supply. It started in late 2003, with ConocoPhillips divesting itself of 2,000 Circle K stores, followed in 2004 by an additional 1,000. The process spread throughout the major oil com panies, and by the end of the decade the exodus was largely, but not entirely, complete.

The rationale was straightforward. The tradi tional center-island marketer and other more basic sites typically operated in the majors’ networks were becoming increasingly non competitive. Further, regulations continued to add headaches for companies that derived the majority of their revenue from crude exploration and production. What’s more, large, centralized

national or regional operations found it hard to compete with the entrepreneurial drive of inde pendent, local operators.

“The oil companies could never get the same ROI on co-co retail as they could on fuel,” said Roy Strasburger,” CEO of StrasGlobal, which provides turnkey retail management solutions. Strasburger assisted a number of the oil com panies with their transitions. “Accounting saw a lot of money tied up in real estate—up to this point the oil companies considered real estate to be nonappreciating land banks—and the sale proceeds would help shareholder returns. In addition, oil companies were always run by men who came up through the exploration and refining side of the business and weren’t big fans of retail—why invest the money in the back court when you could drill a new well?”

In the divestitures, brand and supply relation ships were largely retained. Strasburger noted that the new owners were required to sign a 20-year contract. It was a boom period for inde pendent marketers and retailers to acquire some top-tier sites and supply customers.

Now, some major oil companies have started to re-explore the concept of direct retail operations.

BP ACQUIRES THORNTONS

bp began its withdrawal from retail in late 2007. Fiona MacLeod, then president of bp U.S. conve nience retail, explained the rationale at the time: “By tapping into the entrepreneurial experience and knowledge of local station owners, we will build a strong franchise network that will help us grow our business. This business and the people in it have created a culture of excellence that will be the backbone of our organization going forward.”

What a difference 12 years makes.

ArcLight Capital Partners and bp acquired Thorntons in early 2019 and in August 2021 fully acquired Thorntons operations. The company noted that this transaction would position bp as a leading convenience operator in the Midwest, with 208 owned and operated locations across six states, including Florida, Illinois, Indiana, Kentucky, Ohio and Tennessee. bp plans to retain and build on the Thorntons brand.

“We have a proud history of high-quality retail brands across the country. Incorporating Thorntons into our business combines their

customer-first culture with our existing U.S. retail network and will help us deliver our convenience strategy of offering customers what they want, where and when they want it,” said David Lawler, chairman and president, bp America.

“We are committed to putting the customer at the heart of what we do to help accelerate the mobility revolution and redefine the conve nience experience at service stations,” said Greg Franks, bp senior vice president, mobility and convenience, Americas. “Thorntons has generated long-term customer loyalty over the last 50 years because of its best-in-class operations. We are excited to welcome them into our family.”

This was also seen as promoting bp’s strategy for its convenience and mobility business, with a goal of nearly doubling global earnings by 2030 and delivering 15-20% returns.

There are currently 20,500 bp retail sites worldwide, and the company’s U.S. retail presence

consists of roughly 7,200 bp and ARCO-branded sites, along with more than 1,000 ampm con venience stores in Arizona, California, Nevada, Oregon and Washington. Further, bp aims to increase the number of strategic convenience sites (foodservice, etc.) in its global network from about 2,000 today to more than 3,000 by 2030.

SHELL ACQUIRES LANDMARK

Shell began its exit from direct retail by launch ing the multisite operator (MSO) model in 2005, where Shell still owned the site and handled the forecourt fueling operations but leased the store operations and other profit centers to indepen dent operators. Two years later, Shell began dissolving the MSO model and selling off sites like its peers.

Now, that has changed. In October 2021, Shell Retail and Convenience Operations LLC acquired the Landmark fuel and convenience network. This consists of 248 company-owned fuel and convenience retail sites whose convenience stores operate in Texas under the Timewise brand. The agreement also includes supply agreements with an additional 117 independently operated fuel and convenience sites.

“Today’s announcement increases our presence in a core market and shows our growth strategy in action,” Huibert Vigeveno, Shell’s downstream director, said in announcing the move. “It brings us closer to more customers and strengthens our ability to meet their rapidly changing needs. The deal also allows us to work hand-in-hand with customers to help shape demand for low-carbon energy products and services while profitably decarbonizing alongside them.”

The company noted that the acquisition advances Shell’s Powering Progress strategy in three ways: by growing its retail footprint in one of its core markets, by providing opportunities to offer customers expanded fueling options (including electric vehicle charging, hydrogen, biofuels and lower-carbon premium fuels) and by allowing for the growth of non-fuel sales through an enhanced convenience offering.

Shell stated that it remains committed to collaborating with wholesalers and dealers to serve customers, drive business value and thrive through the energy transition. There are more than 13,000 Shell-branded sites across the United States. Globally, the company expects to service 40 million customers daily at its retail service stations, have 55,000 Shell-branded retail service stations and 15,000 convenience stores.

“We have a proud history of highquality retail brands across the country. Incorporating Thorntons into our business combines their customer-first culture with our existing U.S. retail network and will help us deliver our convenience strategy of offering customers what they want, where and when they want it.”

IMAGES

RE-ENTERING OR NOT?

So far, the bp and Shell announcements, while notable, don’t signal a full return to the previous company-operated retail models. Both have stated goals to expand their retail operations, but that does not appear to be exclusively through company-operated locations. Nor have other major oil companies given any notable indication of making such moves (though that could change at any time).

It is interesting to note that the two deals rose in different fueling landscapes. The bp deal was inked at a time when the Trump Administration was far more favorable to liquid fuels, prices were low and oil production outstripped demand. The Shell deal takes place at a time when supply is tight, prices are high and there is a push for zeronet carbon—sooner rather than later—and a rapid expansion of EVs.

Both majors stated a similar rationale for the acquisitions, seemingly more focused on the store side of the equation. However, there is another rationale that might be in play that is not cited in the public statements.

As industry expert Joe Petrwoski noted in FMN Magazine at the time of the initial ArcLight deal (Petrowski was also advising ArcLight), “Now, what major oil misses is the guaranteed and rateable off-take from a convenience chain, so the hunt is on for large chains with significant fuel volume (Thorntons is 320 million gallons annually) and most importantly a fully developed and skilled management team with a well-re spected, non-petroleum brand,” he said.

Petrowski also expected further deals, and although bp has not announced an expansion, the Shell Landmark deal did come to pass.

Strasburger sees a number of factors that might be driving a return, noting that not all of the ini tial expectations were met and that some tangible benefits were lost. “The new owners of the sites often did not uphold the brand standards the oil companies wanted,” he said. “Sites started looking shabby, and customer service went down. It was hard for the brands to convince the new owners to make capital investments in the sites. The oil

companies also realized that they lost the retail fuel margins that they had previously earned from the co-cos.”

What’s more, as the 20-year leases expire, there are ramifications for the major oil brands. “Many of the sites were not going to renew. This was the time we started seeing private-branded fuel and no-brand fuel gaining market share,” he said. “Why should the operators pay a premium for major branded fuel when they could buy it cheaper in the unbranded market? This was a neg ative impact on the brand as the signs were going to start disappearing.”

Strasburger notes that the oil companies are trying to navigate alternative fuel and electric vehicle pressures. “How can you reinvent yourself as an alternative fuel provider if you don’t have sites to provide alternative fuels? If you are going to be a ‘mobility hub’ you need land,” he said.

“Today’s announcement increases our presence in a core market and shows our growth strategy in action. It brings us closer to more customers and strengthens our ability to meet their rapidly changing needs.”

CHEVRON NEVER LEFT

Chevron bucked the exit trend and never abandoned company-operated sites.

It has more than 8,000 U.S. Chevron and Texaco sites, of which about 800 are company operated. We spoke with Mike Vomund, Chevron vice president of Fuels, Americas Fuel & Lubricants, to explore Chevron’s operational experience.

What was the rationale for keeping a direct retail network?

We have had a consistency of strategy and consistency of purpose since the start. Some 95% of our business is through our retailers and marketers. We do it so that we can be the best supplier possible to those retailers and marketers.

If you’re going to be in the branded retail business, there’s nothing like walking in the steps of our customers and having a company-operated network where people like myself can get experience with the business. People who come up through the Chevron chain get opportunity to actually work in a station and be a station manager. That experience is tough to simulate in a classroom. I worked in the company operating stores. You learn a heck of a lot about what the business really requires. So, a big part of it is just the development of our people and development of our business.

What are some of the things you test in the company operations?

Electric vehicle charging is an example. We’ve built them ourselves, contracted them, bought the electricity, gone through third-party suppliers, etc. And then we meet with our retailers and say, here is our experience. We’ve actually done both models, and we’ve got the data and the information to share, and you can make your own decision. The retailers appreciate that we have actual real-world experience from our own stations that can help them be a better retailer-marketer out there. Then there are the operational challenges—things like labor shortages and product supply chain challenges. We can give things a try and then inform our retail customers on what’s worked

I assume the operations are not run only as an educational cost center. The company operations certainly need to pay their way. You need your return on capital and all the usual financial metrics. It’s a relatively small network that’s focused on the West Coast, where we can have enough scale and market knowledge and not be out of touch. We don’t try and spread it across the U.S. We operate where we think we can be competitive. How we balance [our company operations with our partner operations] is to make sure that it’s a win-win, so both us and our retailers and marketers benefit from it equally.

Would a return really matter to current play ers if the majors re-engage with direct retail? To some, it would signify a return to the landscape 10-15 years ago. It also would provide some significant opportunities for private, independent operators who are looking to exit and possess toptier sites. What would be the downside?

“Ultimately, I believe that a return will be bad news for independents,” said Strasburger. “By having co-cos, the oil companies can indirectly influence the retail price of fuel. It’s not a coinci dence that the average cents per gallon went up after the time of divestment. Ultimately, the oil companies’ priority will be gallon throughput, and they will price accordingly. This will put more pressure on independents’ profitability. The oil

companies will also subsidize alternative fuel installations at their sites so that they will be the last man standing.”

Fortunately (in a tough love sort of way) the independent retail side of the industry has a lot of practice overcoming challenges through speed, agility and creativity should this trend develop further.

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

GORMAN-RUPP

IN THE LEAD

Taking on the EV Challenge

By Keith Reid

How Kum & Go is aggressively exploring the EV landscape.

BRAD PETERSEN

DIRECTOR OF RETAIL FUELS KUM & GO

Kum & Go is a fourth-generation, family-owned convenience store chain that was established in Hampton, Iowa, in 1959 and is part of the Krause Group family of businesses. The company operates over 400 stores with over 5,000 associates in 11 states (with a planned expansion into an additional three states). Krause Group is dedicated to sharing 10% of all profits with the communities it serves.

Kum & Go has a diverse fuels offer that includes the typical three grades of gasoline, plus E15 and E85. It also provides a premium “Xtreme Diesel” in conjunction with the additive pro vider Power Service. DEF supports clean diesel technology, and commercial customers also can access compressed natural gas. Kum & Go’s branded fleet card offers up to seven cents per gal lon off at Kum & Go locations. The Krause Group also includes the fuel-hauling operation Solar Transport, which supports retail and commercial customers.

The company is also out in front exploring how to address the growing electric vehicle market. It is a member of the Fuels Institute and a voting member of the Fuel Institute’s Electric Vehicle Council. Kum & Go offers multiple types of charging stations for the growing EV market, including universal EV chargers and Tesla Supercharger stations. We spoke with Brad Petersen, Kum & Go’s director of retail fuels, on how the com pany is approaching the EV challenge.

HOW LONG HAS KUM & GO BEEN PURSUING A FORMAL EV STRATEGY?

We flirted with Level 2 chargers in the early 2000s, but we didn’t have a real plan or strategy around it. Our formal strategy started around 2018. We were planning on entering the EV space with DC fast chargers, and since then, we’ve just continued to elevate our goals and our strategy as we’ve continued to gain traction and confidence in this space.

OFFERING CHARGING IN THE EARLY 2000S WAS AHEAD OF THE CURVE. WHAT PROMPTED THOSE EARLY EXPLORATIONS?

It was the hybrid models that were coming out at that time. The chargers were free and low kilowatt.

HOW MUCH “PULL” IS THERE FROM YOUR EXISTING CUSTOMER BASE? ARE THE CHARGERS OCCUPIED?

Obviously, EV adoption and usage is growing but at a relatively slow pace. We’re deploying DC fast charging, both third party as well as our own, in quite a few states. Colorado has our highest adop tion, and we’re seeing growth there that is comparatively sig nificant. That is particularly the case in the Denver area. More broadly, we feel that’s going to take a considerable amount of time before we see significant broad penetration. And a lot of that will depend on which party is in power and what legislation gets passed.

WHAT PROMPTED KUM & GO TO PURSUE BOTH AN IN-HOUSE AND THIRD-PARTY APPROACH?

Like everyone, we’ve been learning by trial and error, using both third-party and in-house solutions. We’re trying to understand not only what is the best solution that works for us but also that meets customer needs. There are pros and cons to both approaches. With third party there is little to zero capital investment, and the partner manages all aspects of the charging. However, we’re limited with branding, and we’re limited with access to customer data—the entire customer experience. The third party owns all that. We also see little to no EV revenue. We’re purely using that as a traffic driver for inside sales—capture those customers to use the char gers, and then get them in the store.

With the in-house approach it’s inverse. We own the chargers outright, so we have full control over the branding, data, customer experi ence, and we can gain the revenue. The challenge is the significant capital investment both with the DC fast chargers and the internal resource capacity.

HOW DOES CHARGING FIT IN WITH THE REST OF YOUR FUEL OFFERS?

Our main goal is we want to be inclusive for all our customers. We’re going to have traditional fuels in our space, and we’re going to continue to build sites with gas and diesel. We have no plan to pull back from traditional fuels currently.

When we’re building new sites, we are looking at whether the site is currently or likely to be a good EV location. And, since 2020, we build our sites with conduit underneath the concrete in

Most EV customers typically preselect where they’re going to charge. That is especially the case with longer trips.

preparation. That way, if we add EV charging, we don’t have to tear up the concrete—we already have that in place. It’s just a low-cost way we can plan for the future.

DO YOU MONETIZE CHARGING?

With third parties involved, it’s managed by Tesla or Electrify America, and we don’t deal with that. But with our own, we’ve been playing with it for several years and we’re continuing to learn. We do charge, and we try different scenar ios. We’ve tried charging by the time spent in the parking stall, or you can charge by a certain cap of kilowatt per hour. We’ve come to realize that charging by a typical kilowatt hour is the most simplified and understandable for the customer. It’s the most comparable to how you get charged with liquid fuel.

Our rate depends on what the demand charge is. (A demand charge is an individual commer cial-related fee from the electric utility based on the peak electrical demand at a site during a month.) The demand charges from these utilities can often make the investment unprofitable. We have some sites where our price is probably 25 cents per kilowatt hour. We do have a certain area where the demand charge is high, so we need to charge higher just to break even. We’re lucky that we’re in areas where we don’t see extreme demand charges, like those found in the Southeast—Florida or Georgia. Some of those are just crazy, and retailers in those areas have a hard time deploying fast charging effectively.

DO YOU MARKET AND SUPPORT THE PROGRAM?

We haven’t done a lot, but we are working on utilizing the brand and marketing around EV. We do know that most EV customers typically preselect where they’re going to charge. That is especially the case with longer trips. It is a dif ferent segment of customers, but ultimately the overall experience is similar. They still need to use the restroom. They still need food. They still need to stop to get their drinks.

We offer free Wi-Fi at all sites, so they’re going to get that. Those amenities will entice where they want to stop. Then, just as with liquid fuels, we provide clean restrooms, safe and bright sites, fresh food offerings, etc. Customers are going to be there for longer periods of time. It’s not, fill in five minutes, use the restroom and off. We know that they’re going to be there on average 30 minutes.

ARE THEY USING THAT TIME TO TAKE ADVANTAGE OF THE AMENITIES—AND PROFIT CENTERS—IN A PROFITABLE MANNER?

This has been a big question for all of us. We’ve conducted several in-house studies looking at this to better understand these customers. As I noted, our average time is right at 30 minutes, and we have seen a higher than average in-store conversion among EV customers and the oppor tunity to have these customers purchase more inside, as well.

ANY FINAL THOUGHTS?

We’re preparing for the right infrastructure plan. We’re trying to participate in state- and federal-level programs to take advantage of these dollars coming down the pipeline. We just talked to several states last week to be ahead of the game. These are good opportunities.

I also think we’re fortunate that the utilities haven’t started to be involved yet with placing DC fast chargers. But it is a concern. If public entities are applying for these state and federal grants, that’s obviously going to be taking from c-store opportunities. We know there’s going to be grocery and Walgreens, CVS—that type of player—that’ll be fighting for these as well. And that’s going to take some share. But we’re just not sure if these utilities are going to be trying to apply as well.

Keith Reid is editor-in-chief and editorial direc tor of Fuels Market News. He can be reached at kreid@FMN.com.

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Getting the Carbon Out With

Biofuels

Biofuels

By Keith Reid

Advanced biofuels have the carbon

performance for both the short and long haul.

The rush toward a net-zero carbon future has heavily emphasized electric vehicles in the transportation or “mobility” space. Replacing combustion with electric batteries and motors seems simple on the surface. The performance of electric vehicles has come a long way, to where even without a significant regulatory push or subsidy support EVs are viable to a subset of consumers with favorable usage profiles.

However, the report “Assessment of Biofuels Policy: Effectiveness of Emissions Reductions,” created by Stratas Advisors for the Fuels Institute, illustrates the hindrances to an immediate pathway to EVs and the ability of alternative biofuels to help meet both shortterm and long-term emission goals. (The full report is available at www.fuelsinstitute.org.)

Aside from obvious areas like aviation, even as EV technology improves, there will always be applications where EVs will be square pegs trying to fit into round holes. What’s more, there are entire regions, such as Africa, where the electrical gid is underdeveloped.

If the goal really is net-zero carbon, why should bio and renewable liquid fuels that meet these goals be left off the table?

As the report notes, the viability of any solution for a zero-carbon future must consider the carbon intensity of the solution and how that plays out in the entire life cycle. EVs, for example, have no “tailpipe” carbon, but they do have a range of carbon inputs from mining and disposal of battery materials, to the production of the vehicle, to the charging infrastructure and sources of electricity generation.

Life-cycle carbon forms a core metric of carbon inten sity (CI) and is a driving factor of how well the biofuels analyzed in the report perform. It should be noted that life-cycle models are highly subjective. Some of the most notable are centered on the greenhouse gases, regulated emissions, and energy use in technologies (GREETA) model.

Here is a roundup of some of the more common bio fuels, with information from the report and input from marketers and retailers who are successful with various biofuel and renewable fuel products.

ETHANOL

Ethanol is a dominant renewable fuel in the U.S. market and is practically universal at 10%, with increasing penetration occurring at 15% in gaso line. E85 is also sold, which provides the greatest CI impact and is the starting point for net-zero with this fuel.

Ethanol has had a split history in the environ mental community. It was out of favor for a while in California because of carbon intensity concerns. The report details how California Air Resources Board model adjustments to the life-cycle analysis have caused ethanol’s carbon intensity to drop considerably.

Ethanol production contributes to about 43% of fuel ethanol’s carbon intensity. Ethanol producers are investing heavily in carbon capture and seques tration technologies. Ethanol industry groups are working to get zero carbon intensity or negative carbon intensity ethanol by 2050, though the goal is to have those in place sooner.

The American Coalition for Ethanol (ACE) has introduced a CI calculator to help its members understand the carbon intensity of their farms and ethanol operations, along with a simplified version of the tool to raise awareness about factors impacting the CI of ethanol. These tools help illus trate corn ethanol’s ability to attain net-zero and net-negative greenhouse gas emissions.

A potential ethanol-fueled future is presented in the Next Generation Fuels Act of 2021. The underlying concept has long been discussed as a significant but ultimately conventional solution for carbon reduction. The act would establish a high-octane (95 and 98 Ron) certification test for fuels and supports ethanol blends up to 30% by volume, while requiring automakers to design and warranty vehicles for the use of these fuels

beginning with model year 2026. The bill would also include a low-carbon requirement specifying that the source of the octane boost must reduce life-cycle GHD emissions by an average of at least 40% compared to a 2021 gasoline baseline. While stalled, the act remains a viable future option.

There are many ethanol success stories in the industry. Bosselman Enterprises, owner of the Nebraska-based Pump & Pantry convenience store chain, was one of the first marketers to sell E15 and E85 in Nebraska and has achieved success and expertise in monetizing RINs. California-based Pearson Fuels, one of the nation’s largest E85 distributors, has seen sales consistently increase despite the distance from Midwest ethanol pro duction by leveraging the state’s Low Carbon Fuel Standard (LCFS) credits.

Meanwhile, Midway Service, an auto service/tire center in Baltic, South Dakota, which still offers fuel, sells higher ethanol blends. Its success has enabled the operation to move to the next level, including acquiring a new location. The company also distributes wholesale gasoline and diesel through its subsidiary Vollan Oil.

The operation has an E10 base stock but will sell E15, E30 and the star of the operation—E85. Ethanol can provide a cost advantage in more normal times, but in today’s market, the price differential between ethanol and base gasoline is significant.

“We sell a ton of E85—at $2.19 a gallon it sells itself. Even with the BTU loss. And, my loaded cost, excluding RIN, is 1.5681,” said Bruce Vollan, Midway’s owner. “We’ve never sold this much etha nol before, and most of it in E85 form.”

Vollan noted that some competitors can add $1 to his price at retail and still take in good volume.

“We’re making money, the ethanol industry

the goal really is

then why

that

is standing on its own two legs, it’s creating the green product we want and it bolsters our regional agriculture,” Vollan said. “It is an absolute, super success story for us.”

BIODIESEL

Biodiesel is the second-most consumed biofuel in the United States with a volume share of about 2.8% of the total diesel pool and a volume of 2.4 billion gallons in 2019. Biodiesel is made from the trans-esterification of vegetable oil and animal fats and, as with ethanol, is sold and blends between B2 (2%) and B20 (20%). Most biodiesel is blended at B5 (5%).

One of the critical applications for biodiesel is to facilitate Bioheat, a blend of biodiesel and ultra-low sulfur heating oil. It provides 80% fewer emis sions compared to petroleum heating oil (basically diesel).

The Northeast and Northwest have a similar environmental perspective as California, which is reflected at both the governmental and consumer levels. Heating oil was increasingly seen by some in the region as a product whose end was near. Bioheat countered that assertion.

“I’m the fourth generation. So, to pass it over to the fifth you need a cleaner fuel,” said Norman Woolley, president of Woolley Home Solutions. Woolley has been in business since 1924 and offers heating oil, HVAC services, plumbing and propane refilling. It also operates a motor fuels biodiesel pump for consumers/fleets. “We started with coal and wanted to transition the business into a cleaner fuel, which at that time was fuel oil. Now we’re adding biodiesel and reducing the sulfur, and then we’ll keep increasing the blend until we can be carbon neutral.”

Bioheat has been embraced by heating oil distrib utors and forms the launch pad for the industry’s Providence Resolution, a commitment to a 15% reduction in CO2 emissions by 2023, a 40% reduc tion by 2030 and net-zero-carbon emissions by 2050. This gives liquid fuels a solid footing to fight electrification and propane in the carbon wars.

There are product benefits beyond the regulatory

“We’ve never sold this much ethanol before, and most of it in E85 form.”

pressures in the markets Woolley serves.

“When you have that conversation with a consumer who wants to do electric or natural gas, you’re able to tell them about Bioheat. It makes that conversation a lot easier,” Woolley said. “I have young children as well, and in science class you can tell the story of our fuel and how it’s evolved over time.”

Biodiesel in motor fuel applications has also provided some of the advantages seen with ethanol in the current market.

Star Oilco, based in Portland, distributes diesel, biodiesel, renewable diesel, off-road diesel and, to a lesser extent, gasoline. It operates cardlock sites, heating oil delivery, bulk fuel, on-site mobile fuel ing service and a single Shell retail site which does heavy diesel business. Its wholesale fueling serves the Pacific Northwest centered on Oregon and Washington as a common carrier, while covering both states completely as a mobile on-site fueler.

“Not too long ago diesel went up 70 cents a gallon wholesale in my market, like a rocket,” said Mark Fitz, Star Oilco president. “We were working the

CHEVRON TALKS REG ACQUISITION

One of the biggest announcements on the biofuels front came with Chevron’s acquisition of Renewable Energy Group in June 2022. REG utilizes a global in tegrated procurement, distribution and logistics network to operate 11 biorefin eries in the U.S. and Europe. In 2020, REG produced 519 million gallons, or 1.7 million metric tons, of cleaner fuel delivering 4.2 million metric tons of carbon reduction. FMN spoke with Kevin Lucke, president of Chevron Renewable Energy Group, for more on the acquisition and Chevron’s low-carbon fuels.

WHAT MADE REG SO APPEALING?

For more than 140 years, Chevron has developed affordable, reliable energy that is essential to our way of life. We believe that the future of energy is lower carbon, and we are working to grow our lower carbon business. By 2030, we intend to have the capacity to produce 100,000 barrels/day of renewable fuels.

WHAT DO YOU SEE AS BEING THE FUTURE OF LIQUID FUELS IN THE INDUSTRY?

We believe liquid fuels—in high demand today—will continue to be an important part of the transporta tion sector for decades to come.

WHAT LIQUID/GASEOUS FUELS WILL CHEVRON BE CONCENTRATING ON FOR THE FUTURE?

Chevron is developing an exciting portfolio of alternative fuels to complement our offering of high-qual ity motor gasoline, diesel and jet fuel. With our acquisition of Renewable Energy Group and new joint venture with Bunge, we are growing our ability to secure renewable feedstocks, manufacture renew able diesel and biodiesel, and market those fuels to our customers. We have also produced a test batch of sustainable aviation fuel at our El Segundo Refinery and see greater opportunity to produce and market SAF in the coming years.

In terms of gaseous fuels, Chevron is producing renewable natural gas made from dairy biomethane through ventures with CalBio Energy and Brightmark. This work complements the growth of our CNG retail network, primarily through the Beyond6 retail brand. We also recently announced a new business venture with Iwatani and Toyota in which we will build 30 hydrogen fueling stations at select retail loca tions in California by 2026.

WHAT DO YOU SEE WITH THE ROLES OF BIODIESEL AND RENEWABLE DIESEL SPECIFICALLY?

Renewable diesel and biodiesel can be used by customers who want lower life-cycle carbon intensity fuels for their operations, especially in hard-to-abate sectors such as heavy-duty vehicles, rail, marine and more.

HOW DOES THIS WORK WITH AN EV STRATEGY WITHIN THE BRAND?

Chevron believes that several types of fuels will be needed as lower carbon solutions for the trans portation sector. Renewable liquid fuels, renewable natural gas and hydrogen are fuels that should be allowed to compete for policy incentives alongside EV technologies.

phones, calling our customers to watch your fuel surcharge. It was crazy. We were able to get B20 at 30 cents below B5 for a week or two. Having that option really took the edge off for our customers when the market went crazy.”

RENEWABLE SYNTHETIC FUELS

Renewable and synthetic fuels include green and blue hydrogen for applications and fuel cells and synthetic road fuels such as renewable gasoline,

renewable diesel and methanol-to-gasoline eFuels. The report notes most of these fuels are targeted at aviation and shipping.

Renewable diesel uses the same feedstocks as biodiesel but with a different production pro cess that generates a product almost identical to petroleum diesel. The report notes that in 2019, renewable diesel had a market share of about 1.2% of the total U.S. diesel pool, or roughly 0.73 billion gallons. Most of the demand for renewable diesel

comes from California, where its market share of about 16.3% is expected to reach over 40% by 2024 due to incentives and obligations of the low-carbon fuel standard.

A leader on the renewables front, Star Oilco has been into biodiesel for over two decades and moved into renewable under pressure from low-carbon fuel regulations.

“I had to get renewable to maintain my refuse haulers who were being mandated to use 99% renewable diesel (R99). So, you have these man dates that are driving it, and you’re kind of against a rock and a hard place and you have to adapt,” Fitz said. He sees renewable diesel as being the “next generation fuel that is perfectly suited to carbon markets, while providing more direct compatibility with petroleum diesel as a ‘drop-in’ substitute.”

A CARB-friendly formulation with a low CI is R80B20, a mixture of renewable diesel (80%) and biodiesel (20%) which provides the drop in benefits of renewable diesel with the lubricity of diesel.

One challenge is that the renewable man dates rapidly popping up are straining product availability.

“California wants all the harbor tugs to go renewable. That’s millions of gallons more,” Fitz

said. “Then you add the [possible] sustainable avi ation fuel requirements. So, were going to be even more short than we are now. There is a delusion in government that they’re dictating and mandating anything that looks positive to move is off petro leum, and it just doesn’t work that way.”

A number of refineries are converting to renew able diesel, which itself had some impact on the recent, acute conventional diesel shortages, espe cially on the East Coast.

Renewable gasoline, also called renewable naph tha, is a byproduct of renewable diesel production. Like renewable diesel, renewable gasoline is a drop in fuel with similar energy content, and it can be blended in higher proportions more easily than ethanol. However, the report notes that low yields from renewable gasoline production make it unlikely to be a significant fuel product for decar bonization of the U.S. gasoline pool.

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

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FLEETCOR EXTENDS BP RELATIONSHIP

FLEETCOR Technologies Inc., a leading business payments company, has extended its agreement to manage the commercial fleet card program for British Petroleum (bp). FLEETCOR will continue to operate bp’s commercial fleet card program across more than 6,500 North America locations. The FLEETCOR portfolio of brands auto mates, secures, digitizes and manages payment transactions on behalf of businesses across more than 100 countries in North America, Latin America, Europe and Asia Pacific.

POET ACQUIRES SAVANNAH TRANSLOAD FACILITY

POET, a producer of biofuels and a producer of bioproducts, has signed a purchase agreement with Savannah Marine Terminal (SMT) to acquire its railto-container transload facility in Savannah, Georgia. The acquisition will include all equipment and real estate to oper ate the grain transload facility. The Port of Savannah, one of the highest volume container ports in the U.S., has geo graphic synergy with several of POET’s key global markets for its animal feed products, including Dakota Gold dried distillers’ grains and its corn fermented protein product, NexPRO. The facility will also strengthen POET’s shipping process, ensuring even greater traceability and transparency for its customers, who have already come to expect nothing less than the best in food safety and quality.

HATHWAY COMPLETES REBRAND TO BOUNTEOUS

Hathway, a digital growth partner for top restau rant and convenience store brands including Wingstop, Dutch Bros. Coffee, Noodles & Company, Panda Express and Dash In Food Stores, has completed its rebrand to Bounteous. Bounteous has been recognized as the digital transformation and co-innovation partner behind bil lion-dollar, multinational brands, unlocking rapid growth for itself and its clients. Hathway was acquired by Bounteous in November of last year to accelerate Bounteous’ strategic road map and expand its restaurant and convenience store client portfolio that includes Domino’s, Shake Shack and Wawa.

CHRIS COOPER APPOINTED NESTE US PRESIDENT

Chris Cooper has been appointed president of Neste US as of July 1. In his role, he is responsi ble for supporting and aligning regional business strategies to deliver the strategic growth targets, and he acts as Neste’s primary representative for the external community in the U.S. Cooper is also vice president Americas of Neste Renewable Aviation. Neste’s renewable waste and residue sourcing platform in the U.S. includes fully owned Mahoney Environmental, a collector and recycler of used cooking oil, and Agri Trading, one of the largest independent renewable waste and residue fat and oil traders in the U.S.

PHILLIPS 66 TAPS FREEWIRE FOR EV CHARGING

Phillips 66 signed a letter of intent with FreeWire Technologies in support of its first electric-vehicle charging program in the United States. FreeWire’s Boost Charger offers an attractive alternative to costly and time-intensive upgrades to electrical grid and power infrastructure of an individual site. It connects to existing infrastructure without burdensome construction costs and permitting restraints.

ADD SYSTEMS ANNOUNCES THE PASSING OF MARK COLLINS

ADD Systems (Advanced Digital Data Inc.) shares the sad news of the passing of Mark Collins, ADD Systems vice president of ADD South. After more than 35 years, he made an indelible mark on ADD’s products, team members and clients. His contributions are countless, and we are grateful for his years of service, expertise and friendship. Collins spent his whole career in the petroleum industry.

GORMAN-RUPP ACQUIRES FILL-RITE

The Gorman-Rupp Company, a designer, manu facturer and international marketer of pumps and pump systems, announced that it has completed its previously announced acquisition of Fill-Rite and Sotera, a division of the Tuthill Corporation. With facilities in Fort Wayne, Indiana and Lenexa, Kansas, the Fill-Rite and Sotera brands carry strong legacies associated with superior products and hold leadership positions in attractive niche pump markets. Fill-Rite provides rugged, high-performance liquid transfer pumps as well as a comprehensive line of mechanical and digital meters, preci sion weights and measures certified meters, hand pumps, hoses, nozzles and accessories.

OPW LAUNCHES LEGEND BY BELANGER BRAND

OPW Belanger, part of OPW and Dover, announced the launch of its Legend by Belanger Tunnel Car Wash Series product brand. The Legend by Belanger pays hom age to Belanger’s more than 50-year history as an innovator and creative trendsetter in the tunnel car wash space. All Legend by Belanger tunnel wash components are built around flexible wash configuration models that enable you to create the wash solution that satisfies both you and your customers’ expectations. Built on the strength of Belanger’s aircraft-grade aluminum frame work, Legend by Belanger equipment features minimal moving parts. Where motion is required, each component relies on automotive-grade bearings or lube-free pivot points for minimal maintenance and easy servicing.

LEIGHTON O’BRIEN INKS DEAL WITH DIVERSIFIED ENERGY SUPPLY

Leighton O’Brien, a global SaaS fuel analytics and technology provider, has signed an agreement with Georgia-based Diversified Energy Supply to deploy its ATG Compliance and Alarm Management software for its customers

for automated environmental compliance and effective ATG alarm response. Diversified will deploy Leighton O’Brien’s Compliance tool as part of its iHUB solution to help custom ers track and manage all aspects of leak detection to meet EPA regulatory requirements. Diversified will also implement Alarm Management to monitor and filter out false alarms and resolve real alarm issues via workflows to ensure mini mal site disruptions or shutdowns.

GILBARCO VEEDER-ROOT ANNOUNCES PASSPORT CONTAINERIZATION AND EDGE COMPUTING

Gilbarco Veeder-Root announced an initiative to further increase the industry-leading reliability and flexi bility of Passport Point-of-Sale by leveraging edge computing with Acumera’s Reliant Platform in the convenience store environment. The containerization development currently in progress for Passport® Point-of-Sale, simplifies the tradi tional point-of-sale architecture; enabling faster updates and increased overall uptime and resiliency. Running Passport as a container-based application on Acumera’s Reliant Platform allows for full local redundancy of the point-of-sale—even when internet connectivity fails.

DFS RELEASES BRAND-NEW MAGLINK LX PLUS CONSOLE

Dover Fueling Solutions (DFS), a global provider of advanced customer-focused technologies, services and solutions in the fuel and convenience retail industries, launched its next-generation automatic tank gauge console, the ProGauge MagLink LX Plus. This brand-new console

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is available in Europe, the Middle East, Africa, Asia Pacific and Latin America and will soon be available in the U.S. The ProGauge MagLink LX Plus is DFS’ premium console and is part of the long-standing ProGauge MagLink LX console family. It joins the MagLink LX 4 model to bring several upgrades, includ ing intelligent “touch and swipe” technology, resulting in a truly immersive and interactive experience for the end user.

EVGO SELECTED AS EV CHARGING NETWORK PROVIDER FOR PORTLAND

EVgo Inc., a public fast-charging network for electric vehicles (EVs) was selected as the City of Portland’s partner to deploy EV charging infrastructure on city-owned property. Through the partnership, EVgo will install eight direct current fast chargers and up to 44 Level 2 chargers across Portland, Maine.

ADD SYSTEMS AND P3 PROPANE SAFETY ANNOUNCE NEW INTERFACE

ADD Systems, a supplier of back-office and home-office software solutions for the propane industry, has partnered with P3 Compliance System and Mobile Safety App by P3 Propane Safety, a provider of safety documenta tion, compliance and training for the propane industry. P3 Propane Safety enables propane retailers to easily save and report on critical safety procedures, decreasing error rates and increasing operational efficiency. Its software also flags inspections that need follow-up and creates critical man agement reports to help retailers stay ahead of safety. The interface between P3 Propane Safety and ADD was enabled by ADD Systems’ SmartConnect® product.

Thank you to these advertisers who have demonstrated their support of the fuels industry by investing in Fuels Market News.

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EDGEPETROL

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Fuels Market News 27 www.fuelsmarketnews.com

MidContinental Chemical Co Inc 43 www.mcchemical.com

Northwest Pump & Equipment Co. 45 nwpump.com

OPW Retail Fueling System 29 www.opwglobal.com/loopsystem

OPW Vehicle Wash Solutions 49 opwvws.com

PetroClear 27 petroclear.com

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When the Majors Exited Direct Retail and Supply

BY KEITH REID

The late 1990s saw considerable consolidation among the major oil companies when the “Seven Sisters” (or thereabouts) turned into the four sisters. ExxonMobil, ConocoPhillips, bp (Amoco) and ChevronTexaco. The major oil company at the time supported the branded independent retailers and branded jobbers as they do today. However, they also provided direct supply to dealers and operated company-owned and company-operated retail sites (co-co). Though these operations could be nota ble in size by single-chain standards, they were still a minor part of their entire branded network.

In 2003 ConocoPhillips announced the sale of roughly 2,000 sites. Ashland petroleum announced an agreement to sell 193 of its Speedway Super America convenience stores. And Shell had developed its multisite operator program, which would lease out the store operations while still owning the retail and managing the forecourt. This lasted a couple of years before Shell also decided to divest. The new owner ship typically came with a long-term supply contract.

These actions started to generate a bit of a buzz. The rationale for the move was straightforward. Most of

the major oil company profitability came from exploration and production, and the direct operation of retail and marketing could be very problematic and distracting for far less profit. For example, the article noted that bp’s E&P upstream operations generated some $12 billion in earnings at the time compared to downstream’s $2 billion including refining. Upstream employed nearly 17,000 people while downstream slightly over 73,000. And retail competition was becoming fierce.

“All the major oil companies have done is replace the cookie-cutter island marketer of the 1980s with the cookie-cutter 4,000 square-foot conve nience store of today,” stated the late Jim Fisher, CEO of retail site selection and improvement consultancy IMST. “They cannot operate the units profit ably, and this is true with any national company with a single market applica tion. You cannot get true uniqueness and convenience in a location where you say, ‘We have 2,000 locations and everything will be the same.’ They can’t address the needs of the market. They put too much money in the sites and too much general and accounting cost and too much operational cost and they can’t make money.”

Fisher noted he had been predicting

the withdrawal since the mid-1980s.

A similar sentiment was expressed by the late Richard “Dick” Spiegel, CEO of Tuxedo Park, New York-based M. Spiegel and Sons Oil Corp., who was busy acquiring some of the retail sites that were becoming available. Spiegel had 47 years in the industry at the time and managed to see a few things over the years. He noted the environ ment was like the major oil pullback from heating oil some 40 to 50 years previously. “They had terminals, they had trucks, they had salesman, they had bookkeeping and they were selling oil at maybe $0.25 a gallon. And then they decided that they could sell to one guy who could then sell to 10,000 customers. And he’ll take care of the serviceman, the salesman, the environ mental issues, and they all got out of it. But they still sold an awful lot of fuel oil, didn’t they?”

It’s interesting to note that Fisher, while being interviewed for the article, predicted the eventual return to direct retail by the majors, which we might (or might not) be seeing now. Any review of NPN magazine over its 105year history shows this cycle has been repeated many times, typically when something like a tax provision made it easier to pass along the cost of retail while still retaining the wholesale gallons.

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

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