Fuels Market News Spring 2023

LOOKING BACK AT IMO 2020

The impact of the sulfur reduction rule is hard to pinpoint but is felt in the marketplace

SPRING 2023

In the Lead Fuels Institute’s John Eichberger

Bulk Plants

How easy is it to add biofuel storage?

April 18-20, 2023 Dallas, TX

When best-guesses just don’t cut it.

Sharing growth-igniting data and insights is what we do at NACS, and the NACS State of the Industry Summit is where it’s all unveiled. Join us next month in Dallas for two jam-packed days designed to help you understand the industry outlook, and use it to your advantage.

Register Now: convenience.org/CarpeData

FROM THE EDITOR

Decarbonizing Maritime Shipping

This issue’s cover story reexplores IMO 2020, an initiative by the International Maritime Organization to radically reduce the sulfur found in bunker fuels. The article covers how what was once seen as a potentially major disruption to the world’s fuel logistics was overwhelmed, and largely absorbed, by the double impact of the COVID-19 pandemic and the Russia-Ukraine war. The article explores this in detail and includes expert commentary, so please check it out.

However, not covered in the article are future initiatives planned for maritime fueling. IMO 2020 was focused on addressing a traditional pollutant, sulfur oxide, but the next step is aimed at reducing greenhouse gas emissions. The goal there is to cut such emissions in half by 2050, and then completely at some unstated point later in the century. This is a tremendous challenge. The possible solutions and their impacts on shipping logistics and costs are mostly uncertain today.

The plan is to implement the reduction in phases, with short-, medium- and long-term perspectives. Part of this will encompass (as with the trucking industry) improvements in the overall system, such as more hydrologically efficient hulls, combined with a variety of less-carbon intensive fuels. IMO lists such potential future fuels and propulsion as ammonia, biofuels, electric power, fuel cells, hydrogen, methane and wind.

Ammonia is seen as a potential leader given it has a reasonable energy density. However, to say the technology is in its infancy is an understatement, as an article from DNV, an assurance and risk management firm, notes. For starters, the ammonia in question is green ammonia, which cannot be made from petroleum sources and is currently not being produced.

The propulsion technology is also in its infant stage. The DNV article highlighted a huge maritime two-stroke engine that is being developed by MAN Energy Solutions, but it must deal with both a very slow flame propagation and combustion temperatures roughly three times greater than that of diesel. While ammonia combustion may be low on carbon, it produces the conventional pollutant nitrogen oxide, which can be handled with conventional catalytic techniques, and also nitrous oxide, which itself is an extremely aggressive greenhouse gas. One possibility is to also use ammonia with fuel-cell technology, another area that needs considerable development.

The final propulsion source on the list, wind, is a bit ironic. The greenhouse gas emission reduction goals of the Paris Accords (COP 21) would have carbon emissions at a preindustrial baseline level—essentially matching the age of sail. Pure sailing vessels would still suffer from the same disadvantages that saw them quickly eclipsed by steam propulsion as the technology developed in the mid to late 1800s. A future system would likely be a hybrid similar to that used in the transition period—sails plus an alternative engine-propulsion system. As we’ve found with power-generating windmills, there are days, if not weeks, when the wind fails to blow.

EDITORIAL

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

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

Ben Nussbaum Senior Editor (703) 518-4248; bnussbaum@convenience.org

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

CONTRIBUTORS

Al Barner, Madeline Bennett, John Eichberger Joe O’Brien, Brian Reynolds, Allen Schaeffer, Roy Strasburger

DESIGN Imagination www.imaginepub.com

Cover image by Sven Hansche/Shutterstock

ADVERTISING

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

PUBLISHING

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

Nancy Pappas Marketing Director (703) 518-4290; npappas@convenience.org

Logan Dion Digital Ad and Media Trafficker (703) 864-3600; production@convenience.org

EDITORIAL COUNCIL

RETAILER/MARKETER MEMBERS

Mark Fitz, president, Star Oilco; Derek Gaskins, chief marketing officer, Yesway; Jeff Reichling, general manager of fuel, Kwik Trip Inc.; Jim Weber, executive vice president of merchandise and marketing, The Spinx Company

VENDOR/SUPPLIER MEMBERS

Regina Balistreri, director of marketing, ADD Systems; Joe O’Brien, vice president of marketing, Source North America Corporation; Kaylie Scoles, marketing director, RDM Industrial Electronics Inc.; Jen Threlkeld, product marketing manager, Dover Fueling Solutions

Fuels Market News Magazine is published quarterly by the National Association of Convenience Stores (NACS), Alexandria, Virginia, USA.

Subscription Requests: circulation@fmnweb.com

POSTMASTER: Send address changes to Fuels Market News Magazine, 1600 Duke Street, Alexandria, VA, 22314-2792 USA.

Keith Reid is the editor-in-chief of Fuels Market News.

He can be reached at kreid@fmnweb.com.

Contents © 2023 by the National Association of Convenience Stores. Periodicals postage paid at Alexandria, VA, and additional mailing offices.

1600 Duke Street, Alexandria, VA, 22314-2792

PUBLISHED BY

U.S. C-Store Count Stands at 150,174

There are 150,174 convenience stores operating in the United States, according to the 2023 NACS/NielsenIQ Convenience Industry Store Count. The count is up 1.5% from December 31, 2021, snapping a four-year run of declines. There are roughly 100 stores fewer than before the COVID-19 pandemic struck.

With the U.S. population at 334.2 million, according to the U.S. Census Bureau, there is one convenience store per every 2,225 people.

Convenience stores sell an estimated 80% of the motor fuels purchased by consumers in the United States. The new store count shows that 118,678 convenience stores sell motor fuels (79.0% of all convenience stores).

The gain of 2,148 stores was largely driven by an uptick in the number of c-stores selling fuel. In all, the industry picked up 2,037 additional sites that offer fuel and 111 c-stores that don’t sell fuel. This also marks a reversal from prior years, which saw the number of fuel-selling locations contract as the number of non-fuel c-stores expanded.

In addition, there are “gas station/kiosk” stores that sell fuel but not enough of an in-store product assortment to

be considered convenience stores. Overall, there are 13,346 kiosks. The kiosk format continued to decline—down 11.2% the past year and 49.3% over the past six years—as more consumers sought out stores that have robust food and beverage offers.

“The value of convenience continues to grow, and that’s a driving factor why every retailer, regardless of channel, seeks to provide it. And it’s also clear that the convenience offer at convenience stores resonates with consumers, given the record in-store sales at convenience stores and increase in store count,” said NACS Managing Director of Research Chris Rapanick.

Texas continues to have the most convenience stores (116,018 stores), or more than one in 10 stores in the United States. The remainder of the top 10 is the same from the year prior: Despite a decline in store count, California remains second at 12,000 stores, followed by Florida (9,596), New York (7,917), Georgia (6,719), North Carolina (5,749), Ohio (5,673), Michigan (4,879), Pennsylvania (4,728) and Illinois (4,666). Alaska grew its store count by 9.2% but still has the fewest stores (190) of any state.

“One of the most impartial, eclectic and diverse meetings I attend all year.”

“An experience unlike any other in the industry…a diverse group of stakeholders, getting together to discuss very pressing topics.”

“What I found here is openness…different technologies…we keep it all in the room…we’re not afraid to say what we feel.”

These are just some of the many comments we have received from folks who have joined us for our annual FUELS conferences.

The FUELS’23 Conference is shaping up to be one of our best ever! We have finalized our agenda and we will be celebrating our 10th Anniversary. It should be a very special opportunity to network, engage and participate in a unique and inclusive setting.

Topics Include:

Lessons Learned from Past 10 Years

Why the Focus on Decarbonization and How Do We Account for It?

EV Infrastructure – The Perspective of Drivers and Charger Operators

The Economics of Charging – Utilization, Timing and Demand Charges

Addressing the Elephant in the Room – Internal Combustion Engines

Feeding the Big Dogs – Powering Commercial Vehicles

Creating A Hydrogen Economy

The Energy Transition of Retail

Finding Solutions that Work for All

The Next Big Breakthrough?

Register now for THE conference of the year for unbiased research and dialogue with key stakeholders in the energy sector that will reimagine the transportation industry.

To find out more and to register, go to www.fuelsinstutue.org

It’s Time for the NACS State of the Industry Summit

There’s still time to register for the NACS State of the Industry Summit taking place in Dallas, Texas, April 18-20, 2023.

The NACS SOI Summit is the only industry event that delivers actionable insights behind the data on the latest financial, operational, categorical, regional market and consumer trends in convenience. Attendees receive early access to 2022 convenience industry data , which drives the NACS State of the Industry Report, offering exclusive industry information not available anywhere else.

Retailers and suppliers rely on this proprietary data from the summit to benchmark their performance by region and top-performing quartiles, see what’s working and not

Calendar of Events

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

MAY

NACS Convenience Summit Europe

May 30-June 01 |

Intercontinental Dublin | Dublin, Ireland

working for others across key categories, learn what drives the consumer to enter their store (or not) and purchase what they do, and to gain ideas on how to take their business to the next level. NACS is uniquely positioned to provide data and insights laser-focused on the needs of the convenience industry and is backed by its 50+ years of strategic analysis in the space.

The conference is held over two jam-packed days, and those who attend include fuel and convenience retailers and industry partners who want to make data-driven decisions and know the value of using insights and benchmarking to improve their businesses. The event not only builds new connections and opportunities but also is the premier opportunity to upskill future leaders who can impact performance as they grow and develop their convenience and fuel industry knowledge.

Register today at www.convenience.org/events/SOI

JULY

NACS Financial Leadership Program at Wharton

July 16-21 | The Wharton School | University of Pennsylvania | Philadelphia, Pennsylvania

NACS Marketing Leadership Program at Kellogg

July 23-28 | Kellogg School of Management | Northwestern University | Evanston, Illinois

NACS Executive Leadership Program at Cornell

July 30-August 03 | Dyson School | Cornell University | Ithaca, New York

OCTOBER

NACS SHOW

October 03-06 | Georgia World Congress Center | Atlanta, Georgia

NOVEMBER

NACS Innovation Leadership Program at MIT

November 05-10 | MIT Sloan School of Management | Cambridge, Massachusetts

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

Without Trucks, America Stops

Carbon

BY JOHN EICHBERGER

We have all seen the bumper stickers—“Without trucks, America stops.” And it’s true. According to American Trucking Associations (ATA), 72% of the nation’s freight is moved by trucks. At the same time, as the industry and the nation consider strategies to reduce carbon emissions from the transportation sector, these vehicles must be a focus of our efforts. They account for 24% of U.S. transportation greenhouse gas emissions. In doing so, we also must recognize the complexity and unique characteristics of medium- and heavy-duty vehicles (MHDV) to find solutions that balance environmental progress with economic activity.

WHAT IS AT STAKE?

To really understand the market, it is important to put it into context. The following data again comes from ATA:

• Gross freight revenues from trucking were valued at $875.5 billion in 2021, 80.8% of the nation’s total freight bill. This is equal to 4% of the U.S. gross domestic product.

• Commercial trucks paid $48.46 billion in federal and state highway-user taxes in 2020 (a pandemic year). This accounts for 24% of all government spending on roadways.

• There were 38.9 million trucks registered and used for business purposes in 2020.

• Registered trucks drove 302.14 billion miles in 2020 (again, a pandemic year) and consumed 44.8 billion gallons of fuel.

• 95.7% of for-hire carrier companies on file with the Federal Motor Carrier Safety Administration operate 10 or fewer trucks.

• 7.99 million people were employed in jobs related to trucking in 2021, excluding those who were self-employed.

Because this sector is extremely diverse, reducing emissions will require a multifaceted approach that applies customized solutions to different vehicle types and use applications. According to a Fuels Institute report published in April, 94% of commercial vehicles sold are deployed in 17 different use-case applications, each of which carries with it unique operating characteristics and energy requirements.

MARKET SHARE OF ALTERNATIVE MHDVs IS LIMITED

According to data provided by Statista, 99.5% of commercial vehicles in the U.S. in 2020 were powered by diesel or gasoline-fueled engines. And despite growing discussions about electrification of the MHDV market, forecasts for market penetration remain relatively anemic.

The primary reason for the slow rate of adoption is price. Statista reports that electric-powered medium-duty trucks in 2025 will cost twice as much as comparable diesel vehicles, while heavy-duty electric trucks will cost more than 2.5 times as much.

For some applications, such as parcel delivery vehicles that travel a consistent range and return to a base each night and school buses that have prolonged downtime throughout the day, electrified powertrains are attractive for both emissions and economic reasons. Other segments of the MHDV market, however, do not present the same opportunities for electrification.

MORE OPTIONS FOR MHDV MARKET

The diversity of vehicle type and duty cycle within the MHDV market makes application of some decarbonization strategies more challenging than within the light-duty market, but it also creates opportunities for more options that may not be viable with passenger vehicles. For example, incorporating more biodiesel and renewable diesel into the fuel supply can dramatically reduce the carbon intensity of the fuel these vehicles burn. In fact, these fuels represent a 68% reduction in carbon intensity compared with straight diesel fuel and can be blended in higher concentrations (thereby improving the associated carbon benefits) than most light-duty vehicles can accommodate with gasoline-ethanol blends.

MHDVs are also capable of running on a wide variety of gaseous fuels, like natural gas, which can lower carbon emissions. When renewable natural gas is used in these vehicles, the carbon intensity has the potential to be negative due to the nature of renewable gas.

In an era where decarbonizing transportation has been identified as a key objective, addressing the MHDV sector is critical. There are strategies that will fit certain use-case applications but not others. Recognition of this reality is important, especially when considering public policy initiatives.

reduction for MHDVs requires taking multiple approaches.

Electric powertrains are gaining market share in the lightduty vehicle market, but the slow rate of adoption among commercial vehicles globally indicates that additional strategies must be available for many vehicle applications.

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

3 Future Fuels to Keep an Eye On

BY JOE O’BRIEN

Although EV expansion is garnering a lot of attention right now, it is not the only horse jockeying for a position in the automotive energy race. With that in mind, here are three additional future fuels that have favorable odds in the next 10 to 15 years.

ETHANOL

A few indicators point to the expansion of ethanol. First, federal and state funding for ethanol is plentiful and rising. The U.S. Department of Agriculture has offered $100 million to help transportation fueling and fuel distribution facilities make equipment compatible with biofuels. Energy Marketers of America reports that $75 million of the funding is being made available to fuel retailers, with 40% of it earmarked for businesses with less than 10 stations.

States are also offering incentives. For example:

• In Kansas, an income tax credit is available for 40% of the cost to install alternative fueling infrastructure.

• Through 2026, Nebraska is offering a credit of 5 cents on each gallon of E15 sold and 8 cents per gallon of E25 or higher blends sold.

• Cost-share grants in Iowa help facilities upgrade or install new E85 or dual E15 and biodiesel infrastructure.

Secondly, the development of higher ethanol blends between E15 and E85 continues.

Ethanol Producer reported in October that the U.S. Environmental Protection

Agency approved the continuation of research in Nebraska to confirm the long-term adaptability and feasibility of E30.

RENEWABLE DIESEL

Although the adoption of medium-sized electric trucks used for short local runs is accelerating, the transition to long-haul electric vehicles is expected to be slower. The energy that long-haul trucks consume combined with larger payload considerations complicates the electrification of the heavy-duty truck fleet.

Concurrently, global supplies of diesel have dropped due to geopolitical instabilities and a decrease in refining capacity. As a result, demand for diesel is volatile and unpredictable for 2023.

That notwithstanding, diesel’s volatility is creating a market for renewable diesel. Renewable diesel is made from the same resources as biodiesel but produced using a different process. The result is a fuel that is chemically identical to petroleum diesel and can support the hauling capacity needed by today’s truck fleet. It can also be used to create biodiesel blends, which would seem to make it uniquely suited for bridging a supply gap.

However, that optimism may not be grounded in reality.

A report from Cerulogy suggests that bullish projections from the Energy Information Administration (EIA) about the expansion of renewable diesel are not realistic. The report concluded that a generous policy environment for renewable diesel has led to new stand-alone facilities, conversions of existing refinery units and coprocessing with fossil fuels at existing refineries. Nevertheless, renewable diesel production capacity is still likely to fall short.

Total diesel production capacity has dropped by about 180,000 barrels per day since 2019. That being said, about 21 proposed or under-construction renewable diesel projects join a handful of plants with existing renewable diesel refining capacity. This would seem to indicate renewable diesel production is expanding, but perhaps not quite as vigorously as initially projected by the EIA.

HYDROGEN

While growth in hydrogen fueling appears strongest in the Asia-Pacific region and Europe, there is evidence that expansion in the U.S. is also on the horizon.

Auto manufacturers including Honda, Hyundai and Toyota are currently offering fuel cell electric vehicles (FCEVs) to customers in markets where hydrogen fuel is available—most notably California. However, the infrastructure for distributing hydrogen nationwide in the United States still needs to be developed. (More than 800 public hydrogen stations were deployed globally in 2021. By contrast, there were only 43 retail hydrogen stations in the U.S. in mid-2020.)

Although the federal government is allocating funding toward hydrogen fueling, the near-term boost for hydrogen in the U.S. is likely to be modest. The $1.2 trillion U.S. bipartisan Infrastructure Investment and Jobs Act apportioned $62 billion to the Department of Energy (DOE) for

investments in infrastructure, including $9.5 billion for clean hydrogen. Part of the financing will fund the creation of regional hydrogen hubs (H2Hubs). Utilization of clean hydrogen in the transportation sector will be among the characteristics the DOE will evaluate when selecting proposals for the H2Hubs funding.

Although light-duty applications for hydrogen appear sluggish, it is gaining traction as a diesel alternative in the U.S. In a draft of its National Clean Hydrogen Strategy and Roadmap, the DOE reports that “hydrogen and fuel cells offer significant opportunities for applications requiring long driving ranges, fast fueling and large or heavy payloads.”

The draft goes on to say, “Fuel cells are particularly viable for applications such as heavy-duty trucks that require fast fill times comparable to diesel today, or long driving ranges above 500 miles.”

Several commercial heavy-duty truck manufacturers have announced plans to expand production of hydrogen-powered heavy-duty trucks. Additionally, electric vehicle maker Nikola Corp. announced it is working with KeyState Natural Gas Synthesis to create Pennsylvania’s first low-carbon hydrogen production supply chain.

Future fuels aside, the internal combustion engine may ultimately be the dark horse in race.

A Fuels Institute literature review points to the ICE’s staying power and continued dominance for the next decade. The report, “Future Capabilities of Combustion Engines and Liquid Fuels,” suggests that ICEs will continue to play a significant role through at least 2035. According to the report, ICE design improvements in pursuit of a lower carbon footprint continues to be the subject of research efforts. This is an indication that automakers aren’t giving up on the ICE just yet, though no major vehicle manufacturer has decided to invest all R&D efforts in internal combustion engines.

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.

A report from Cerulogy suggests that bullish projections from the Energy Information Administration (EIA) about the expansion of renewable diesel are not realistic.

When the Lights Go On

Prepare now so that you’re not left asking where everyone went.

BY ROY STRASBURGER

Afew weeks ago, my wife, Eva, and I had a lovely meal in London with a couple of our very good friends. The location was a fabulous Italian restaurant in the center of the city. When we arrived, the place was packed. In the intimately lit dining area, every table was filled with couples conversing, friends carousing or businesspeople cutting deals across the table. We had a delightful meal of

antipasto and pasta, and we finished the occasion with a leisurely after-dinner drink. During our meal, we were deep in conversation, talking about old friends, new adventures and where we thought the world was headed. Unexpectedly, the restaurant’s lights came up. When we looked around, all our fellow diners were gone. We had, once again, managed to close the restaurant—having had a wonderful time in the process.

Have you ever had that feeling? Being somewhere and suddenly looking around and wondering why you are the last person there? If you’re not careful, you may one day have that same feeling regarding the fuel business.

The retail fuel industry is going through the most disruptive change since the introduction of self-service gasoline. Alternative fuels are a real thing, and electricity is currently

leading the charge (see what I did there?).

So, what have you done to prepare yourself for a change in your business, your customer, and your competition? Let’s take each one separately.

Change in business. The retail fuel industry is going through a revolution (not evolution). You may not see it your area, but it is already happening in Europe and California and will be felt in the rest of the United States over the next 10 years. Although gasoline will still be needed, the demand for gasoline is going to go down due to the phasing out of cars with an internal combustion engine. That means that fewer gallons are going to be sold at each retail location. Even if fuel profit margins go up dramatically, it is not going to make up for the loss of gross profit dollars when fewer gallons are sold.

If you are the owner of a site that is barely making it with the current fuel situation, you need to start thinking about how you are going to prepare for the future. Keeping your head in the sand and continuing to do business as usual is not a strategy for success.

Change in customer. Your customers’ expectations of convenience are going to be redefined along with the change in transportation. Two things are going to be at the forefront: ridesharing and electric vehicles. Whether autonomous vehicles become a reality for widespread public use soon is still a big question. What will become more prevalent, though, will be people sharing vehicles and driving less, whether it’s through Uber-like programs, car-ownership sharing

programs or a more efficient public transportation system. There will be fewer vehicles on the road and fewer opportunities for people to stop at your store. Customers will start thinking that convenience is based more on delivery, foodservice, unique products, occasional electric charging top ups and innovations that create a destination rather than simply an additional purchase when they fill their tank.

Change in competition. As fuel volumes go down, the retail gasoline business is going to be dominated by the operators who can pump the most gallons at the lowest cost. They will be the last people in the room. High-volume sites are going to need attractions and offers that make them very unique to bring in the remaining internal combustion engine drivers. Not only that, if they decide to get into electric charging stations, their competitors are going to be nontraditional sites that also offer charging stations, such as shopping malls, pharmacies and people’s homes.

The retailers who are going to come out ahead in the recharging game will be those who are located on major thoroughfares where drivers will need to top up on long drives or those located in residential areas where there are not abundant home or apartment charging stations. The fuel retailers who are in the middle of this spectrum—and that is most fuel sites in the United States—will not survive as they are today.

What is the solution? Explore your options. Now is the time to start looking at your future. You need to be ready when the lights come on.

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.

Have you ever had that feeling? Being somewhere and suddenly looking around and wondering why you are the last person there? If you’re not careful, you may one day have that same feeling regarding the fuel business.

Cutting the Cost With EV Charging

How convenience stores can get their money’s worth on EV charging stations.

BY MADELINE BENNETT

Installing electric vehicle (EV) charging stations doesn’t have to result in prohibitive energy bills for convenience store operators. By reducing demand charges and accessing federal grant funds and tax incentives, convenience retailers can profitably install EV charging stations, maintaining or even growing their customer base as more Americans shift toward electric vehicles.

NEVI GRANTS FOR EV FAST CHARGING STATIONS

Financial incentives from the federal

government and states can help offset the cost of installing EV charging stations. Convenience stores are encouraged to apply to the National Electric Vehicle Infrastructure (NEVI) program, created as part of the $1.2 trillion Infrastructure Investment and Jobs Act signed into law in 2021. Convenience stores qualify for NEVI funding if they have:

• Access guaranteed 24 hours a day, 365 days a year

• Facilities to simultaneously charge four vehicles

• 150kW of power capacity per port

• ADA compliant parking spaces

• Restroom amenities

• A location within one mile of designated FHWA Alternative Fuel Corridors

• A location at least 50 miles from an adjacent NEVI-funded charging station

NEVI requires stations to be at least 97% reliable, and because states and localities are encouraged to deploy projects that use smart charge management, to minimize impacts to the grid. Among solutions, battery-assisted charging offers both these benefits. After a successful NEVI grant application, convenience stores can receive up to an 80% rebate on the upfront cost of installing EV charging stations. NEVI grants can be competitive and may involve upgrades to a site’s entire power grid. Another way to decrease the cost of EV charging stations is through investment tax credits offered by the federal government as part of the recently passed Inflation Reduction Act (IRA).

INVESTMENT TAX CREDITS FOR BATTERY-ASSISTED AND BATTERYINTEGRATED EV FAST CHARGING STATIONS

Demand charges are tied to the highest peaks of electricity usage within a specified period by commercial or industrial customers, which includes convenience stores. Demand charges can be extreme. They can be triggered when a charging station gets a few drivers in a row using a lot of energy or many drivers each using a small amount. EV charging platforms can reduce demand charges by using battery storage. While battery-assisted EV charging stations produced by private companies can look more expensive than ones from public utilities, installing them is usually far less costly for convenience stores.

One year after NEVI was created, the federal government created an additional option for businesses looking for tax credits to help fund their investment in battery-assisted or battery-integrated EV charging stations. These tax credits come with fewer requirements than NEVI funding. Convenience stores can qualify for IRA tax credits if the technology they are purchasing:

• Has a storage capacity of not less than 5 kilowatt hours

• Is completely constructed by 2025

• Is not transportation property (e.g., is not a car, bus or other vehicle)

Businesses can qualify for tax credits equal to a 6% to 50% discount on their purchase of energy storage technology. The amount that the government awards depends on factors such as whether the purchased products are made in the United States and whether the product is installed in an “energy community”–an area that historically produced other forms of energy, such as coal or oil. It could be possible for specific sites to access both NEVI grants and IRA tax credits. Convenience stores should consult charging station vendors and tax advisors to find the charging solutions that work for their needs.

THE BUSINESS CASE FOR INSTALLING EV FAST CHARGING STATIONS AT CONVENIENCE STORES

Installing EV charging stations opens high-potential revenue streams for convenience store owners. An increasing number of Americans drive electric vehicles. Today, 3.4% of light-duty vehicles on the road are fully electric, up from less than 1% four years ago, according to a report from the U.S. Energy Information Administration. This trend is only projected to accelerate, especially as some states, such as California and New York, have announced plans to halt the sale of combustion vehicles in coming years. The federal government intends to end its purchase of new gas vehicles for government use by 2035.

A high volume of sessions per day makes the EV fast charging business feasible. The EV boom will create a consistent stream of repeat customers spending time and money at businesses with fast charging stations. Convenience stores can remain integral to drivers’ routines as drivers make charging stops during commutes and trips. Since up to 90% of drivers make a purchase at retail stores while charging their EV onsite, installing EV charging generates guaranteed revenue. Similar to gas pumps, EV charging stations can be integrated with customer rewards or loyalty programs to keep drivers returning and ensure an excellent customer experience.

While installing EV charging stations looks like a large upfront expense, when done carefully it is an affordable, smart investment. Choosing an EV charging station that manages demand charges and applying NEVI funding and/or IRA tax credits can keep costs low and charging profitable. Convenience stores are in an exciting position to be leaders in EV charging, and a range of public and private options exist to help make that future a reality.

Madeline Bennett is the sales development representative at Electric Era Technologies. Electric Era engineers advanced storage systems for EV fast charging stations.

Financial incentives from the federal government and states can help offset the cost of installing EV charging stations.

The Sophistication of Wetstock Management

forecourt analytics

BY BRIAN REYNOLDS

There are some strange happenings out on the forecourt and some nagging issues that require more than traditional ways of doing business. Some involve acts of nature. Others involve acts of human nature. Wetstock management solutions, typically involving tank gauges and sophisticated tank monitoring software, can analyze fuel products

and tank activities on a real-time basis and can provide an explanation for strange events—and actionable recourses for not-so-strange (but no less critical) events.

Let’s look at a few of these.

EARTHQUAKES

First, a look at nature intruding on retail fueling operations.

On July 8, 2021, a 6.0 magnitude earthquake was felt along Antelope Valley, 20 miles southwest of Smith Valley, Nevada. The quake was detected as far away as San Francisco and Carson City, Nevada. It also caused tank probes to bobble due to tank slosh. Wetstock technology recorded the entire event. Aftershocks were also detected.

Generally, wetstock tank charting capabilities are designed to continuously time stamp and record fuel tank inventory for purposes such as leaks, theft, sales and deliveries. Now, a new feature can be added to the wetstock repertoire of events that can be monitored for in real time—seismology! A wetstock management system recorded the quake from start to finish. The United States Geological Survey with

Wetstock management solutions can take

to the next level.

its remote sensors has nothing on fuel operators with wetstock management. We have gas stations on every block in town with tanks full of fuel and probes in them.

Next, let’s explore the more adventurous events.

HIGH NOON FUEL THEFT

Humans have many good traits, but greed is not one of them.

As crazy as it sounds, emboldened thieves are no longer restricted to operating in the dark shadows of the night when it comes to stealing fuel. In fact, stealing in broad daylight at a busy gas station works to the thieves’ advantage when taking high volumes of fuel.

This is accomplished by either hacking into the dispenser and appearing to be making a normal gas transaction or by parking a van directly above a UST, opening a removable floor and vacuum pumping directly into a container. Daylight and a busy location seem to offer a stealthy security blanket for the bandits.

The most organized theft that I have heard of to date is where a typical-appearing service truck and masquerading service technician seem to be calibrating dispenser meters. This caper is complete with orange cones and a safety vest. The crook commences to steal volumes of fuel. As with any business enterprise, legitimate or not, a solid ROI dictates the risk vs. reward merits of the endeavor. As prices hover around the $5 per gallon mark for diesel, and given the ease with which it can be redistributed, such as passing it off as heating oil, fuel theft is an extremely attractive business model.

It’s difficult to report what the average amount of fuel stolen per event is, but frequently the number is over 500 gallons. Diesel weighs approximately 7 pounds per gallon, so 500 gallons x 7 pounds = 3,500 pounds.

That much fuel (or more) is going to require a big truck. Using wetstock detection methods and correlating them with video surveillance shows

that the caper appears to often include more than one vehicle.

Clearly the fuel thieves are operating with a high level of knowledge regarding fueling systems, both the dispensers and the automatic tank gauge (ATG). One of the reasons why busy gas stations are hit is because the ATG doesn’t recognize a rapid loss, as the volume stolen is commingled with the volume sold and the system simply doesn’t recognize the loss. A full, sophisticated wetstock management solution can spot such discrepancies and minimize fuel loss.

THE REGULATOR IS COMING AND WE’RE MISSING REPORTS

Another issue with human nature is wanting to be efficient … but losing control and quality of life in the process.

For a fuel retailer, nothing ruins your day like missing compliance reports when the regulator is coming to see you. The more locations an operator has, the more reports he or she must keep up with. In today’s world the term “keeping your head in the clouds” no longer means staying out of touch. In fact, keeping records in a location that can be retrieved quickly from anywhere, such as the “cloud,” is a good thing.

A computer maintenance management system (CMMS) is how successful retailers manage their entire operations, and the forecourt is no exception. A CMMS offers cloudbased document retention along with work-order management.

In today’s world the highly specialized skilled-labor workforce is being asked to do more work with less help. Using a CMMS is a great way to regain efficiencies and provide quality of life by automating as many things as possible. Regulators are unforgiving of inefficiency and are rumored to be stepping up enforcement to increase state revenues.

True CMMS systems also allow the mechanism for environmental compliance vendors to become willing

Brian Reynolds works for Dover Fueling Solutions in ClearView, wetstock management sales. He can be reached at Brian.Reynolds@ DoverFS.com or (325) 733-6490.

In today’s world the term ‘keeping your head in the clouds’ no longer means staying out of touch. In fact, keeping records in a location that can be retrieved quickly from anywhere, such as the ‘cloud,’ is a good thing.

accomplices for assisting in populating databases, and their ability to do so correctly is something that can be monitored automatically as well. Here are some of the features that a forecourt CMMS can provide:

• A secure and organized system for pass or fail of tank systems in a location that can be accessed from any Internet-enabled device

• At-a-glance document audit for purposes of knowing if any compliance inspection testing reports are missing

• ATG compliance

• SIR compliance and inventory control

• Annual compliance testing, inspections and interstitial monitoring

• Monthly visual walk-through reports

• Asset management at a glance

with details such as warranties and how expenses are being monitored to avoid duplication of effort on maintenance

• Integration and tracking of work orders by allowing vendors access to a mobile app

• Limited-visibility access to regulators, which in many instances satisfies their curiosity without them needing to come to your locations Wetstock management solutions, all the way through CMMS integration, have a range of exceptional capabilities, including some they were never designed to provide—like tracking natural events. However, where human nature is concerned regarding day-today operations, these solutions provide a ROI not just in financial terms but in peace of mind as well.

As crazy as it sounds, emboldened thieves are no longer restricted to operating in the dark shadows of the night when it comes to stealing fuel.

July 16-21, 2023

The Wharton School

University of Pennsylvania

Endowed by:

July 23-28, 2023

Kellogg School of Management

Northwestern University

Endowed by:

July 30-August 3, 2023

The Dyson School

Cornell University

Endowed by:

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Massachusetts Institute of Technology

Supported by:

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Yale School of Management

Yale University

Endowed by:

Kaylie Long Scoles Marketing Director RDM Industrial Electronics Inc. www.rdm.net

FIGHTING

FUEL THEFT

PRICES HAVE DROPPED SOMEWHAT. IS FUEL THEFT STILL AN ISSUE?

Fuel theft has been rampant since prices skyrocketed after the start of the Russia-Ukraine war. Although the prices have now moderated somewhat, the issue has not gone away. For just one example, this January, thieves in Hilltown Township, Pennsylvania, stole $3,000 worth of diesel—261 gallons—at a retailer by using two trucks with extra tanks and accessing, then bypassing, the pay system in the dispenser.

HOW IS FUEL BEING STOLEN?

There are numerous ways. You can steal fuel from the tanks directly through the UST manhole with specially modified trucks or vans if they can be parked over the manhole during vulnerable hours. There are a variety of ways to steal fuel directly from the dispenser, particularly older models, if you can gain access to the insides and manipulate some of the electronic systems. I won’t go into specifics on how, obviously, but unfortunately you can find tutorials on the internet.

WHAT SHOULD STORE ASSOCIATES DO?

Associates are often inexperienced and busy at peak times during the day, and managers may be distracted with any number of tasks. The thieves are very accomplished at knowing how not to draw attention at the site. They may even pretend to be maintenance personnel. Train staff to be very aware of customers who are spending too much time at a dispenser. Train them to look for unusual behaviors on the forecourt and the types of behaviors to watch out for and what actions to take. And if maintenance personnel arrive unexpectedly, have staff confirm with headquarters that there is maintenance scheduled for that day.

HOW CAN AN OPERATOR PHYSICALLY PREVENT THEFT?

There are a variety of ways. For the USTs themselves, you can make sure they are secured with quality locks and caps. They can also be blocked off, to a varying degree, to where essential access is not a burden but unauthorized access draws attention. Cameras

FIGHTING

THEFT

can also help bring visibility to these back-site areas. Similarly, cameras with recorders can put more eyes at more angles on the forecourt to discourage theft and, if nothing else, make arrest and prosecution easier.

A quality wetstock management system might also be useful for catching theft in process, although it needs to be sufficiently sophisticated to detect theft during high-volume hours.

WHAT ABOUT THE DISPENSER ITSELF?

There are several solutions that are viable at the dispenser. Fuel theft solutions can be broken down into low, medium and maximum security. An easy and low-cost first step is to upgrade the standard dispenser locks, place security warning labels on the outside of the pump and place security tape. The next level of security includes devices such as pulser covers and boxes used to enclose the pulser with a lock to help prevent tampering and fuel theft. To achieve maximum dispenser security, an alarm should be installed that will trigger an alert when the dispenser has been breached.

Fuel-dispenser security systems such as the Defender One provide a comprehensive solution to guarding the upper and lower door, which protects against both fuel theft and skimmers. We saw a need and developed a solution that sounds an alarm if the upper or lower door is breached. It disables the pump, without killing the AC power, so that fuel cannot be dispensed. This security device is controlled by a simple key fob with in-store monitoring available. The in-dispenser alarm system pays for itself in a few months, and with no subscription fees, it is a cost-effective solution for both small and large retailers.

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

Back to Basics

Fuel economy and maintenance and repair strategies can combat today’s supply chain issues and rising fuel costs.

BY AL BARNER

Today’s fuel prices have reintroduced a bevy of asset management challenges for fleets that significantly impact the bottom line of every organization. This is especially a concern since fuel is the largest component of total cost of ownership for any fleet. And while it is challenging to procure new trucks, it’s equally important to have a solid fuel economy and maintenance strategy to identify where costs are eroding the bottom line.

Fleet professionals are struggling

with pinpointing why and where their costs are rising, important questions often asked by c-level executives. The simple answer is that inflation is driving all prices up, extended life cycles are driving costs up (the additional maintenance repairs, component parts and fuel degradation), not to mention rising labor rates for drivers, mechanics and third-party providers.

More importantly, fuel prices have overtaken the driver shortage as the top concern expressed by drivers and motor carriers, as reported by the

American Transportation Research Institute’s (ATRI) 2022 Top Industry Issues survey. Also, when fuel rises quickly over a short period, it becomes tough for a fleet to pass this cost to its customers.

Similarly, according to the 2022 National Private Truck Council (NPTC) Benchmarking survey, “Equipment and maintenance-related issues surged into second place and fuel-related issues driven by the spike in diesel prices leapfrogged other issues to take the number three position—up more than 10 times year over year.”

A significant problem facing the industry is that many fleets still do not use data analytics to pinpoint their diesel cost per mile (CPM), and instead continue focusing on diesel cost per gallon. Companies must analyze their OBC/ELD and maintenance data to determine KPIs such as fuel economy and MPG per model year, mile-per-year

(MPY) analysis by model year and fleet utilization by miles to establish a baseline.

This approach, combined with a fleet modernization plan and corresponding fleet services support, can help keep a fleet’s cost per mile in line.

This level of planning and additional line-item visibility can also make all the difference in the world in front of the leadership team. Fleet personnel should be able say to leadership, here’s what we foresee happening, this is why maintenance is rising, this is why our tire cost is rising, this is why our fuel cost is rising, and here’s what we plan to do about it.

EFFECTS OF EXTENDING TRUCK LIFE CYCLES AND THE FUTURE OF PROCUREMENT

According to Steve Smith, senior industry adviser at DDC FPO and president of Smith Transportation Consulting Services, “When the economy starts to slow down, the industry’s kneejerk reaction is to extend the life of equipment,” he commented at the recent ATA MCE 2022 conference. “However, extending the life of a tractor could help fleets save capital in the short term, but eliminate cashflow due to the cost of repairs.”

Unfortunately, according to the NPTC, many private fleet respondents report they were forced to extend their equipment trade cycles due to the unavailability of equipment.

CPM have increased dramatically over the past few years, and several key drivers must be tracked to independently understand how they impact the P&L. This includes cost increases on parts, service and fuel when trade cycles are extended. This will lead to maintenance being performed at a higher rate, but also replacement

components typically not addressed in a shorter life cycle. Parts and service have seen a 10% to 20% increase in cost, depending on the component.

Fuel has been volatile, with cost increases and decreases of more than 25% in a quarter. Trying to forecast future costs can be a challenge; this is why it’s recommended to focus on a controllable baseline. For example, fuel planning should be based on gallons used and not price. This allows fleets to maintain operating controls during times of price variation. Parts can be tracked by VMRS code and frequency. Older vehicles can be used as a benchmark to determine planned expenditures. Many industry trade organizations can provide industry vertical data, as can the right asset-management partner.

“Always get current with your trade cycle. With a tractor, let’s call it five years, but it really depends on your business and how many years you are going to drive,” added Smith. “You will go down a maintenance and repair hole very quickly if you try to extend tractor life cycles.”

Ultimately, a data-driven LCCM (life-cycle cost management) plan helps corporate fleets make measurable changes to both the financial and environmental bottom line. The average driving MPG for a 500-unit fleet operating a five-year life cycle is 8.41, while the average for an eight-year cycle is 7.90. Organizations that have switched from an eight- to five-year life cycle have resulted in a net reduction of 2,494,770 gallons of fuel. This will have a significant impact over the next five to 10 years, producing a 6.1% reduction in CO2, or 25,122 metric tons. This calculation further confirms that a shorter life cycle is more cost-effective.

Fuel prices have overtaken the driver shortage as the top concern expressed by drivers and motor carriers, as reported by the American Transportation Research Institute’s (ATRI) 2022 Top Industry Issues survey.

FUEL STRATEGIES

That MPG gap created from running vehicles longer results in increased fuel spend, increased carbon output and essentially more cost overall, eating into profits. So, as we’re thinking about managing our life cycle and mitigating cost in these challenging times, there are several things to consider when it comes to fuel.

First, it’s important to understand how a dual MPG on tractors works for both newer and older models. There is a minimal break-in period for newer units, but it’s not like it used to be 10 or 15 years ago when we saw a half-mile penalty. Today they start at 8.41 per gallon, and as the vehicle enters the end of its life cycle, you will typically see fuel degradation. As you think about managing a life cycle, you can’t base your procurement cycle one year out. Therefore, you must have a multiyear approach and a one-, three-, and five-year plan for equipment replacement.

The goal of achieving optimum fuel savings needs to be owned by everyone, including technicians, drivers and analysts. Each group needs to work together to review data, buy fuel correctly, eliminate idle time

and work on route optimization to realize proper utilization of the truck. What’s more, aftertreatment fault codes must be closely monitored and dealt with promptly. Organizations should also work with drivers to implement speed/accelerator limiters, which have been more widely accepted even though, for the first time since 2005, they made ATRI’s list of drive concerns because of road rage from speed differentials. While it’s an area of concern, it’s also why it is essential to have open communications with drivers.

PROPER MAINTENANCE REDUCES M&R AND FUEL COSTS

If you previously operated a truck for four or five years and are now dealing with supply chain challenges, you will be required to stretch that truck to six or seven years, and the maintenance you perform on that truck will be different.

Let’s look at the aftertreatment system again. Trucks that operate for four or five years, typically under warranty, may have a system short of fueling with regeneration or possibly one cleaning the diesel particulate filter (DPF) system. Fleets that operate

Fuel has been volatile, with cost increases and decreases of more than 25% in a quarter.

Trying to forecast future costs can be a challenge; this is why it’s recommended to focus on a controllable baseline.

longer life cycles must overcome additional challenges for their fuel strategy and the broader fuel management system, tires, and so on. Tires, in particular, are significant because a longer life cycle can impact replacement cycles, the type of tires, and service and repair costs over a more extended period.

Furthermore, fleets may also find they need to replace their one box system, which is the box that holds the DPFs on class 8 tractors. This may result in error codes for their DPF system, causing regenerations to increase. When this occurs, drivers must stop more often to regenerate the system, which can adversely impact their business. This eventually results in DPF replacement along with components such as crossover pumps, dosage valves, and in some cases crossover tubes—line-item expenses that add up significantly over time.

However, if truck life cycles are extended but PM cycles aren’t

realigned, your entire M&R operation may no longer be in sync with thirdparty provider recommendations in regard to internal mechanics and key operating components, which negatively affects each truck’s performance.

Data analytics and these strategies will help you better understand the big picture and how today’s fuel prices and life cycle extensions impact your cost structures. You’ll also be able to pinpoint at the line-item level where specific expenditures are adding up. With this visibility, you can instill much-needed confidence in the leadership team to make the right procurement decisions that benefit the bottom line in the long run. Companies must also work with a partner that can help determine the cost by VMRS codes and set a strategy for asset procurement, which is critical when all your baselines for the previous 10+ years are no longer relevant.

Al Barner , CTP, is senior vice president of strategic fleet solutions for Fleet Advantage, a leading innovator in truck fleet business analytics, equipment financing and life-cycle cost management. For more information visit www.fleetadvantage. com

Diesel Powers Forward

What’s in store in 2023 for consumer diesel vehicles and diesel fuel prices?

BY ALLEN SCHAEFFER

By all accounts, the year ahead promises more of the same: an off-balance economy tipping toward the recessionary zone, with lingering labor and supply chain issues and dynamic energy markets.

Annual auto sales in the United States in 2022 were down 8.6% due to continuing supply problems and, most recently, headwinds due to higher interest rates as well as a slowing of automotive demand. Automotive sales will end the year at about 13.8 million, which is the lowest since 2011, when the economy was recovering from the Great Recession. Consumers have

more efficient vehicle choices than ever before, with manufacturers offering a growing array of fully electric vehicles including pickup trucks, cars and SUVs along with a few fuel cell vehicles and a host of plug-in hybrids, as well as those powered by conventional internal combustion engines. EV sales in 2022 were 5.9% of all vehicles for the entire year, up from 3.3% for all of 2021. The diversity in fuel options and vehicle technology choices today compared to a decade ago seems mind-numbing, making it clear that at least for the moment, we are not a one-size-fits-all world when it comes to our vehicles.

Looking at diesels, for 2022 these vehicles represent 1.3% of total sales compared to 1.2% in 2021. For 2023 there are 32 options for diesel engines in vans, pickup trucks and SUVs available in the United States. In the advanced diesel vehicle category, last year’s U.S. sales were led by the Mercedes Sprinter Van followed by three pickups—Chevy Silverado, GMC Sierra and Ram 1500—and then the Ford Transit van.

Commercial diesel models classified as Class 2 and 3 vehicles (over 8,500 lbs. gross vehicle weight rating) are series 2500 and 3500 heavy-duty pickup trucks. Sales of these commercial diesels represented an estimated 3.5% of total sales in 2022, up from 3.2% in 2021, as the overall declining vehicle market enabled a greater share with similar sales volumes.

This year, General Motors will debut a new diesel engine (Duramax 3.0L inline six-cylinder model LZ0) in the

Chevrolet Silverado 1500 pickup truck. GM’s diesels include those rated by the U.S. EPA at 29 mpg city, with some models having a driving range of 756 miles on a single tank of fuel. No range anxiety here!

Diesel drivers have choices about fueling their vehicles. All diesel models available today are certified by manufacturers as capable of using B20 fuels—20% biodiesel/80% ultra-low-sulfur petroleum diesel. According to the U.S. Department of Energy Alternative Fuels Data Center, more than 800 retail stations sell biodiesel across the country.

DIESEL FUEL PRICES: SETTLING DOWN?

Distillate fuels like diesel were in high global demand in 2022, with prices substantially impacted by the Russian war against Ukraine, seeing the highest price at the pump ever recorded. At the time of this writing, diesel prices are running at $4.549 (national) to $5.08 a gallon (West Coast), up 89 cents per gallon from last year.

Recent studies by the Clean Fuels Alliance America showed that the U.S. production of biodiesel and renewable diesel consistently reduces distillate fuel prices by increasing the supply. As the production and availability of cleaner, better fuels grew over the last decade, the price impact increased to a 4% benefit in 2020 and 2021, keeping diesel fuel prices lower at the pump.

Looking ahead to the rest of 2023, the Energy Information Administration’s (EIA) Short-Term Energy Outlook forecasts global oil inventories higher at the end of 2023 than earlier predictions, leaving crude projections for $92 per barrel in 2023, which is $3 per barrel less than forecasted in December 2022.

EIA projects U.S. refinery utilization will remain near its five-year average through 2023. It expects that the combination of a slight contraction in the economy and refinery maximization of distillate fuel production will

reduce distillate prices in the next five months.

RENEWABLE BIODIESEL FUELS

The use of renewable biodiesel fuels is growing as a key strategy to help decarbonize the transportation sector. More investment in feedstocks and refining capacity to produce the high-quality renewable fuels is necessary to achieve these strategic goals. The global renewable diesel market by production has reached 2.61 billion gallons in 2021. The market is expected to reach 7.45 billion gallons per year by 2027.

According to the EIA, biodiesel production averaged about 0.123 million barrels per day in 2022 and is expected to expand to 0.128 million barrels per day in 2023. Biodiesel net imports are expected to average 0.003 million barrels per day in 2022 and 2023, up from 0.001 million barrels per day in 2021. EIA also forecasts that more renewable diesel fuel will have been produced than conventional biodiesel fuels at the end of 2022. Depending on feedstocks, using advanced renewable biodiesel fuels instead of petroleum-based fuels lowers greenhouse gas emissions by anywhere from 50% to 85%, along with reductions in other emissions like particulates.

No one knows exactly where this year will take us, but at this moment it feels like flashing yellow lights at a busy intersection. Will supply chain pressures finally ease? Will a new COVID-19 variant upend the global workforce? What happens in the Russia-Ukraine war? If there is a recession, how long will it last and how bad will it be? When will retail fuel prices come back to earth? Will automakers’ bets on EVs pan out? What is the future for internal combustion engines and sustainable fuels as a key climate strategy?

That’s why in 2023 maybe the best advice comes from the airline industry: “Even if the captain has turned off the seat-belt sign, we recommend you keep your seat belt fastened at all times.

The diversity in fuel options and vehicle technology choices today compared to a decade ago seems mind-numbing, making it clear that at least for the moment, we are not a one-size-fits all world when it comes to our vehicles.

Allen Schaeffer is the executive director for the Diesel Technology Forum, a nonprofit organization dedicated to raising awareness about the importance of diesel engines, fuel and technology.

LOOKING BACK AT IMO 2020

What was the actual impact of lowering sulfur in maritime bunker fuels?

By Keith Reid

Do you remember IMO 2020?

The International Maritime Organization’s 2020 sulfur reduction rule? If it slipped your mind, you’re not alone. What was once considered a potentially earth-shaking issue for the entire fuels market has since been easily eclipsed by other factors.

IMO 2020 was supposed to have a significant impact on distillate prices and availability and be generally disruptive to refined fuels in general. In 2012, the International Maritime Organization (IMO) lowered the maximum sulfur content in marine fuels to approximately 35,000 ppm, with the intent to get sulfur content down to 5,000 ppm between 2020 and 2025. While the regulation was not universal, the IMO is made up of nearly 200 member countries that represent the most active shipping markets and ports throughout the world.

Maritime bunker fuel oil is a distillate comparable to diesel, heating oil or jet fuel. There has been a steady process of reducing sulfur levels in diesel, heating oil and gasoline, yet certain markets, such as maritime and aviation, had been able to absorb the remaining high-sulfur fuels. This made high-sulfur fuels cost-effective while simultaneously reducing strain on the refining sector and making sour crude more viable. IMO 2020 impacts this balance and was seen as potentially creating significant disruptions to refining and shipping and ultimately increasing the price of most refined fuels and the products that are shipped using this fuel. It was also seen as potentially disrupting global supply chain logistics.

The Fuels Institute commissioned a literature review on the subject in 2019, titled “IMO 2020,” that reviewed over 30 reports, blogs, columns, presentations, email updates and other literature covering the projected impact. The primary theme was uncertainty. Both the maritime and refining industries had several ways in which they could react to the challenge, the specifics of which could potentially lead to varying degrees of impact on fuel markets.

The report noted that many media sources were indicating a virtual apocalypse from the switch to low-sulfur bunker fuels. It cited such projections as “one of the most disruptive changes to ever affect the refining and shipping industries— global impacts totaling in excess of $1 trillion over 5 years” and “consumers could be hit by $240 billion by 2020.” These projections not only included the direct impact on the fuel product but also the carryover impact on the supply chain. Some combination of the following was seen as meeting the challenge:

• Shipping companies switching to lower-sulfur fuel. The cost of the fuel would be higher but there would be no significant capital outlays for the shippers. The refining industry would have to make major moves (which had not occurred at the time and would likely take at least four years to implement) to upgrade refineries to “full conversion” capabilities where high-sulfur fuel could be desulfured. This approach is capital intensive to the refining sector.

• Adding scrubber technology to ships. Technology exists to remove the sulfur at the vessel itself, in the same way power plants can remove high-sulfur content from coal or oil. This would require a significant capital outlay on the part of shippers, yet the fuel cost would be lower and there would also likely be more international availability in lessdeveloped regions.

Other possibilities, such as changing over to marine gas oil, which is typically very expensive, or liquefied natural gas (LNG), which requires new vessel construction or significant modifications, were considered marginal alternatives.

HOW IT PLAYED OUT

Going on three years since the implementation date, what exactly has happened? Detailed, authoritative data is hard to come by, but according to an Offshore Energy article by Jasmina Ovcina Mandra published in September 2022, IMO 2020 has successfully dropped sulfur oxide emissions by 77%.

While the article does not provide nuance on the extent to which compliance or shipping disruptions from COVID-19 created the 77% drop, other data suggest that very low sulfur fuel oil (VLSFO) was the primary route initially taken by shipping companies. S&P Global Commodity Insights from March 2021 indicated that about 78% of the fuels tested globally met the IMO 2020 sulfur standard.

There was some movement to LNG and marine oil gas and scrubbers. The ROI for scrubber adoption hinges on the price differential between the low- and high-sulfur fuels. Scrubbers need a differential of about $100 per metric ton of bunker fuel to provide a solid ROI, according to longtime maritime fuels journalist and editor Sam Chambers, writing in Splash247.

During the COVID-19 disruptions, Ship & Bunker data showed a differential drop to $45 per ton at the lowest point. Since the Ukraine war, VLSFO peaked at over $1,000 with differentials reaching over $500 according to Chambers. In February 2022 the differential had dropped to $160 per ton.

PANDEMIC AND UKRAINE WAR DISRUPTIONS

The literature review concluded that the price impacts to gasoline and diesel would range from 25 cents to 75 cents per gallon and would likely be limited to a window of two to three years. That may or may not have been the case. The apocalyptic price predictions largely materialized, though IMO 2020 was virtually unacknowledged in the market analysis. The double whammy of the pandemic and the Russia-Ukraine War that the fuels world has been reeling under since 2019 more than muddied the waters.

“IMO 2020 definitely was a big point of the supply and demand conversation around two to three years ago, but how things change once a pandemic floors a global economic engine,” said Joe Butler,

business unit leader at Pilot Company and a Fuels Institute board member. “I don’t think I’ve heard anything about how the IMO sulfur specs are contributing to fundamental global shortages in a while.”

He noted that the current discussion is focused on a range of other issues, including the supply and demand rebalance from lingering COVID-19 impacts, ESG impacts to capital expenditure in traditional hydrocarbon, a supply rebalance with the war, lingering demand impacts from Chinese COVID issues, the current economic slowdown in Europe, potential recession impacts domestically and conversion of units to renewable diesel/ sustainable aviation fuel to meet anticipated demand.

That doesn’t mean it didn’t have an impact or change the distillate production stream going forward.

“IMO 2020 is definitely competing with desulfurization capacity. It’s just that it seems like it is being drowned out by the cacophony of other louder issues,” Butler said.

Stephen Jones, an oil market strategist and a board member for the Fuels Institute, concurred. “Although hard to substantiate, and perhaps being overshadowed by larger factors, I do think the sulfur limit is a contributing factor among many that add up to some of the price strength and general market tightness.”

VGO IMPACT

Troy Vincent, senior market analyst at DTN, has extensive experience analyzing maritime fuels. He noted that vacuum gas oil (VGO) is one area where IMO 2020 has made a significant impact.

“Many ships switched over to this VLSFO, and ultimately what that does is it cuts a good portion of refinery inputs for distillate output, namely VGO,” Vincent said. “It put that in the bunker fuel stream. So you went from taking that VGO and splitting it into diesel molecules that would be used for on-road diesel and diverting that in a post-IMO 2020 world into producing VLSFO bunker fuel. As a result, middle distillate refinery

yields have dropped as VGO gets utilized for bunker fuel.”

Vincent sees the VGO impact as an indefinite component of the market that will push prices higher, and IMO 2020 as a market driver, but not one that will right-size the market and keep prices elevated forever. That is especially the case if the global economy continues to weaken.

Vincent noted another impact on the diesel market that ties in IMO 2020 and other desulfurization efforts. “The desulfurization process at the refinery level is very energy intensive,” said Vincent. “With natural gas prices at record highs all around the world, this incentivized running lighter, sweeter crudes with lower diesel yields. That’s one reason that crack spreads for diesel have been as high as they are.”

The disruptions of the past several years seem to have masked, and perhaps eased, the anticipated impact of IMO 2020. Desulfurization is now baked into the market. According to Vincent, it’s most likely to be a more notable factor when disruptions occur moving forward.

“When something does go wrong from a supply perspective, IMO 2020 is always going to be pulling that VGO toward the [bunker] fuel market,” he said. “Anytime you have a supply shortage or outage or a refinery problem, it’s just going to exacerbate things. This did change the game. At the time it wasn’t all that important because of COVID and everything else, but as we look forward—particularly in the Atlantic Basin and Europe—this is going to continue to keep that part of the market tighter than you would otherwise have expected.”

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

In 2012, the International Maritime Organization (IMO) lowered the maximum sulfur content in marine fuels to approximately 35,000 ppm, with the intent to get sulfur content down to 5,000 ppm between 2020 and 2025.

JOHN EICHBERGER EXECUTIVE DIRECTOR THE FUELS INSTITUTE

The Fuels Institute is a non-advocacy research organization dedicated to studying transportation energy. It was founded by NACS in 2013 as a 501(c)(4) nonprofit social welfare organization. It publishes fact-based research projects designed to answer relevant market questions. The organization celebrates its 10 th anniversary this year. In The Lead looks at the accomplishments of the Fuels Institute over the past decade by interviewing its director, John Eichberger.

What was behind the creation of the Fuels Institute?

Around 2011, the NACS Executive Committee expressed frustration that the industry sells 85% of the fuel in the United States, yet fuel policies are being developed in a dysfunctional way. Everybody’s in their silos—refiners, biofuel producers, auto manufacturers, oil companies. They’re not working on a coordinated strategy, whether it be a business or a policy. The idea was that NACS should take a leadership role and try to bring these groups together to have a more cohesive outcome.

A second factor was to understand better where the market’s heading. A lot of the research we were accessing was conducted to support a desired outcome. The executive committee really wanted objective insight into where the market was heading.

We realized the need for a separate organization, since we would not have had the diversity of participation if we were under the NACS umbrella. Then, over the course of a year, NACS

President and CEO Henry Armour and I started putting something together, talking to people, coming up with new ideas and building a structure. We had several organizations willing to support it, an economic model, the objectives and the structure. The executive committee approved it, and we launched it in February 2013. I left my position as a NACS lobbyist to be the director of the organization.

How is it funded?

NACS provides a grant every year from operating capital, but the primary funding comes from individual companies that want to be part of this group. We’re not a membership organization, even though we call them “members.” Each participant contributes a certain amount of money, and they get certain benefits in terms of insight, the ability to work on research projects, the eligibility to serve on our board of advisors and such. Then we get research grants from the NACS Foundation, from the SIGMA Fuel Foundation and other entities to support our research. They contribute because they believe in a collaborative, objective voice, and they want to have a say.

The Fuels Institute is not an advocacy organization, so describe the collaborative process and what that accomplishes.

We have a board right now of more than 60 companies, and that board reviews every publication. So, if anybody on the board thinks something is biased or factually incorrect, they’re going to flag it. And they’re not going to let us publish it until we resolve the bias. So, when you think about that, our board has oil companies; retailers; distributors; equipment manufacturers; ethanol, biodiesel and renewable diesel producers; electric vehicle charging companies; engine manufacturers; vehicle manufacturers; national laboratories—they’re going to be watching for anything that may be tainted. Also, most of our grant money comes from 501(c)(3) foundations, so the research must be in the public’s interest, otherwise we can’t use the money.

You produce a lot of research. What have been some of the key papers and reports that the Fuels Institute brought to the industry?

One of the first ones we did was called“Tomorrow’s Vehicles.” It was a statistical forecast of vehicle sales and operations through 2023. And we’re getting ready to do a reflective paper on that one, because the forecast in 2013 for this year is not consistent with where the market is. That report generated a lot of attention and gave us an opportunity to have conversations about market scenarios and directions.

Another one was an analysis of how the U.S. infrastructure for fuels distribution works. The motivation behind that was having lobbied for so long on fuels policy, I know policymakers don’t understand it. They don’t understand fungibility—that products from different refineries go in the same pipeline to the same terminal and then they’re blended with ethanol or biodiesel—any of that stuff. So we put that paper together to explain that when a hurricane hits the Gulf Coast,

it is going to affect supplies in New England and the Pacific Northwest, and here’s why. And that was extremely helpful when we had supply disruptions.

More recently we did a huge paper on octane. There’s a big push to go to a 95-octane national standard, which would be today’s premium. We commissioned the study because higher octane fuel in an optimized engine can improve fuel efficiency by up to 8%. How do you do that? Let’s look at how the refining industry can produce a higher-octane fuel. How long would it take to convert the refining production? And then, ultimately, how do you get it to the customer? While the initiative has stalled, it was a 200-page report that is instrumental to our understanding of what’s required for significant fuel transitions.

We did a life-cycle comparison analysis last year between combustion engines and battery electric vehicles, which clearly delineated that an EV is not as clean in a coal state as it is in a renewable-electricity state, for example. And that deploying EVs where it makes the most sense environmentally is a better strategy than putting them everywhere right now. I think that paper, and the one right before that called “Impact of Transportation-Related Environmental Initiatives,” which did a survey of carbon taxes and low-carbon fuel standards and electrification and internal combustion engine bans set the Fuels Institute on a new track. Rather than focusing on a specific fuel, we’re looking at global objectives with initiatives like decarbonization. The Fuels Institute doesn’t weigh in on what such objectives should be, but rather how we can address them.

What are some reports on the horizon?

We’ve got several new papers. Two are on electric vehicles. One covers demand charge mitigation. How do you basically accelerate profitability of a charger? Another one is a driver survey. We are also looking at how you decarbonize combustion engines. And then we’re working on putting together a program where we can evaluate the market readiness for more chargers and evaluate the profitability of charging stations and what consumers actually do while charging their vehicles.

We think the work we’re doing is high quality and helpful. We want the right people to understand it and utilize it so that we can have a better transportation market going forward.

The end goals for the Fuels Institute have recently become more focused on legislative bodies. What drove that?

We think the work we’re doing is high quality and helpful. We want the right people to understand it and utilize it so that we can have a better transportation market going forward. So, we brought on two new people last year to help build our communications and marketing capabilities. And we integrated a direct-to-policymaker outreach program where we’re using a database of legislative contacts in Washington, D.C., as well as in state capitals and with local government officials. When we publish a research paper, we are able to use that database and find individuals within government at all levels who are interested in that topic and send the paper to them.

You offer ESG Integrity, an ESG solution for the industry. Tell us about that.

It’s a joint venture outside of the Fuels Institute’s normal structure that is a for-profit enterprise that will then make contributions to a research fund in a legal, tax-free manner. We know environmental, social and governance reporting requirements are increasing, whether they be mandated by government, mandated by banking or information that your customers require. ESG reporting is growing in intensity in terms of who’s asking for it. What we created was a module for fuel retailers and distributors and fleet operators to simply collect their data and incorporate it into a platform that then produces a report. It is much less expensive than contracting with outside consultants.

The Fuels Institute also has an annual meeting. What are the main benefits for attendees?

We usually have a target attendance of 150 to 175 stakeholders, with representatives from vehicle manufacturers to every energy provider or resource you can think of. The diversity is huge. If you have any questions about the market, there’s going to be somebody in that room who can answer it. The experience, the breadth of perception, the knowledge is unparalleled. And because we’re not pushing an agenda and we don’t publish the transcripts, the conversations are much more honest and much more insightful. Our next

meeting, Fuels’23, is scheduled for May 22-24 in St. Louis, Missouri.

You have been instrumental in driving the Fuels Institute forward, but it’s hardly a one-person job. Tell us about the Fuels Institute staff.

Jeff Hove is our vice president. He’s an ambassador for the brand, and he brings in some needed technical experience, especially on the environmental side. He also is a strong fundraiser, and his primary role is to help with the operational strategic growth of the organization and find new ways to continue bringing more resources to the institute so that we can do more research.

Amanda Appelbaum is our director of research. Amanda’s job is to make sure our research is processed properly. She brings together the task groups to help develop the scope of work. She manages RFPs and the vetting of proposals from outside research firms to do the work. Amanda helps coordinate the execution of the research throughout. And then she manages the peer-review process to make sure everybody has an opportunity to engage. She oversees the production all the way up to distribution. Also, because she’s been here the longest, she’s a key strategic advisor.

Marjorie Kass came on board in January of last year. She’s our marketing and communications director. Marjorie came in to help us get our message out. How do we get financial services analysts to pay attention to us? How do we get our research to be more tangible to more people? And that’s led us to a brand reevaluation.

And then we brought in Amanda Patterson in June last year. She’s our marketing and projects coordinator. Her job is to help keep the trains running. She’s been doing a lot of design work. She manages our social media. Amanda’s managing our direct communications to legislators and public policy officials. She’s really been kind of a jack-ofall-trades when you need a doer.

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

TO BULK PLANTS BIOFUELS ADDING

BIOFUELS

How easy is it to bring biofuel storage into a bulk plant or terminal operation?

By Keith Reid

Five years ago, Robert Brown had the opportunity to acquire a small fuel terminal to support his growing heating oil delivery operation, Broco Oil. “It was a small terminal, but I always saw the benefit of having some bulk oil on hand to take advantage of market swings,” said Brown.

Brown, along with his wife Angela, began building Broco Oil with a single delivery truck in 2007, after he left the Navy Seabees. It was about this time that heating oil dealers realized that a move to a more environmentally acceptable fuel was inevitable.

In the prime heating oil markets of the Northeast—where Broco Oil is based—and the Northwest, there is a strong environmental focus among both legislators and customers. While some operations began to explore propane, the heating oil side began its move to Bioheat. A common goal among heating oil marketers is to reach a 50% blend of biodiesel and heating oil by 2030 and net-zero carbon footprint by 2050. There is a similar push for low-carbon motor fuels among their fleet customers.

“We wanted to do biodiesel back in 2017, but I was afraid to kick it off because I didn’t want to do it incorrectly,” Brown said. He was particularly concerned with splash blending and wanted to have greater control through a blending system at the terminal. However, trucking in biodiesel for blending had been problematic. That problem shortly resolved itself.

“Having rail access was kind of an unforeseen thing. When we first bought the terminal there was a rail line behind the property,” Brown

said. “Then a couple months later, after we’ve been watching the freight go by, my wife went to the Registry of Deeds and said, you know, the previous owners were deeded. And that’s how everything started rolling.”

INCORPORATING BIOFUELS INTO YOUR STORAGE FACILITIES

Carbon reduction has become a more front-line issue today, and nationally fuel marketers are considering adding biodiesel blends, renewable diesel and enhanced ethanol products, among others, to their conventional fuel mix. While they can purchase pre-blended product, many like to be the blender of record and take advantage of RIN opportunities. However, setting up a storage and blending operation can be quite expensive and

may not be worthwhile for smaller operations.

“A lot of the smaller guys know if you want to survive long term, you have to get into alternative fuel somehow,” said Mark Savage, owner of Savage Associates. The firm has been a leader in providing liquid and gas transfer equipment and systems to the petroleum, chemical and industrial markets since 1948. “And you have operators with very limited racks, where you just have a pump. Unless you want to spend a lot of money, the best option would be to bring in a tank and pre-blended product. Don’t do it at your rack.”

A key cost includes modernizing an older system (it’s not uncommon for many plants to have gone decades without significant upgrades) and making sure they are fit for the new fuels. Biofuels can require specific materials. For

“You have operators with very limited racks, where you just have a pump. Unless you want to spend a lot of money, the best option would be to bring in a tank and pre-blended product. Don’t do it at your rack.”

—Mark Savage, Savage Associates

example, the seals used in a range of equipment, such as pumps, need to be compatible, and pumps might need replacing. Blending at the rack requires modern meters and software. New storage is often required for the new fuels, and that comes with significant add-ons to manage product in colder climates.

Savage noted that his firm worked on a plant to bring in biodiesel blending where age was a factor. “I said, ‘The meters you’ve been using are very, very old. Parts are no longer made for them.’ The site owner responded with, ‘They’ve been working for us for the past 30 years, and maybe they will workout for us now.’”

The instillation proceeded with biodiesel ratio blending. However, during the test the meters started to see a different pressure flow rate, became unreliable and had to be replaced.

STORAGE TANKS

For Brown, the upgrade process was extraordinary. The Broco Oil location went from eight 10,000-gallon heating oil tanks with two load positions to 250,000 gallons of heating oil storage, 50,000 gallons of on-road fuel storage and 150,000 gallons of separated biodiesel storage and associated piping. All feature offloading equipment on the rail side. “If I showed you a before and after of the terminal you wouldn’t think it was the same site,” Brown said.

Adding storage is a significant cost factor, with the cost dictated by the available space, layout and local regulations. Through a combination of luck and experience, Broco managed to minimize its expenditures.

The first set of biodiesel tanks that were installed were a demolition from a decommissioned site in Connecticut. “There were six oil tanks, and we were basically told we could have the tanks if we broke them down and transported them off-site,” Brown said. “The whole growth of the terminal has been self-performed by us—excavating, pouring the concrete pad, the containment, setting the tanks. We cleaned out all our tanks and made way for the new biodiesel feedstock.”

His many years of experience as a Seabee performing similar projects, assistance from his peers and an unrestricted builder’s license made this possible. Those lacking such a background are strongly encouraged to contact industry engineering consultants and experienced contractors for the work required.

If the operator is converting an existing tank

to biofuels, a thorough cleaning is recommended. These new fuels tend to be very aggressive cleaning agents in their own right, leading to potential fouling issues downstream of the tanks as built-up contaminants are scoured off and enter the system.

Another consideration with biodiesel (but not ethanol) is its increased sensitivity to the cold relative to cloud and pour points. While regular diesel has similar concerns, biodiesel is more sensitive, although these issues are certainly manageable.

“B100 is a little different because everything has to be heated and insulated,” said Tony Cooper, vice president of construction at Acterra Group, which has provided equipment, manufacturing, consulting and specialized construction services to the fuel, renewable energy, government and fleet industries since 1958. “Your product, pipes, pumps, meters, you get into an awful lot of expense when you get to that. People aren’t aware of the expense of getting into all that. And then there’s a lot of maintenance with that. Having to maintain all your valves and that kind of stuff once they’re insulated isn’t the easiest thing either.”

Savage noted a circulation system should be installed in the tank if the throughput is limited, and temperatures should be maintained in the range of 40 to 50 degrees.

For Broco, all five 30,000-gallon biodiesel tanks are maintained at a constant 70 degrees. Introducing warm product to an already warm tank requires less energy to keep it heated. The heating is provided by three commercial-size boilers using B100.

“We’ve been able to save money because the system runs clean on the B100. Our costs have gone down every year since we’ve been using that. And this year we’re hoping to see a 25% reduction in heating costs to keep that product at temperature.”

FUEL BLENDING

Product blending is one of the core capabilities marketers pursue when adding biodiesel to their bulk storage facility. It provides both better quality control and solid recordkeeping for RIN opportunities. Quality control can be particularly important in colder climates where splash blending can face challenges. Among several similar stories Savage recounted was the following.

“We had an account that would go over to a facility and load up maybe a hundred gallons of B100, then drive down the road in the dead of winter to the bulk terminal, where they buy their

No. 2 oil and load the compartment,” he said. “And what had happened was the B100 started to solidify before they reached the other rack because it got colder than 30 degrees inside the compartment.”

As noted previously, blending will likely require modern meters and a blending system. Software can also facilitate the RIN management process.

“When you’re blending at the rack, that’s all done electronically,” Savage said. “You have two valves and two meters that work together. It’s all done electronically—recorded electronically— and you’ll see any issues, errors or deviations within the electronics. So, it’s just a matter of getting the electronics programmed properly. And once it is, it’s almost a set and forget. Then teaching the operator how to handle any alarm that comes up.”

Savage noted there are some significant blending considerations with ethanol compared to biodiesel. “You have the coefficient of expansion

within ethanol,” he said. “Ratio blending is typical for biodiesel, where you have the two meters coming in at the same time. Pretty much they blend in a coordinated fashion. With sidestream blending, you want the ethanol to come in before the product meter. All the expansion happens theoretically before your final meter and your customer’s truck or tank.”

Additive blending also becomes automated and easier, but as with everything at a cost.

OPERATIONAL ISSUES

Much of the operational maintenance is similar to maintenance when using conventional products—looking for leaks and such. However, there are differences.

Insulated tanks and piping must be inspected. Temperature needs to be monitored and the systems maintained.

Perhaps most noteworthy is the increased need to keep water out of the system. Water leads to biological growth, which generates acids that cause corrosion within fueling systems. It also creates phase separation issues with ethanol. Savage noted that any horizontal tank Savage Associates installs is pitched, and at that low end there is a drain valve.

Today’s terminal automation software is also useful for a range of operational monitoring.

“We have software with Toptech Systems,” Brown said. “It gives you daily reports on inventory levels. It gives you temperature readouts through our probes that we have installed in each tank. It gives you water levels if there is water detected so you can drain it off the bottom. It’s one of the key components that we use for our quality control daily. Those printouts give that visibility to us and to REG/Chevron because they will send wholesale customers through our terminal.”

“B100 is a little different because everything has to be heated and insulated. Your product, pipes, pumps, meters. You get into an awful lot of expense when you get to that. People aren’t aware of the expense of getting into all that.

—Tony Cooper, Acterra Group Inc.

BIOFUELS OPEN DOORS

For all the cost and complications, biofuels open doors and present opportunities.

Broco has used its blending capabilities to meet the needs of both heating oil customers and municipal biodiesel customers.

Broco’s heating oil customers in Massachusetts, New Hampshire and Maine are receiving a B50 blend. The company has reached this level by going up 10% each year since the blended fuel program began. The goal is to get the blend up to B80 by 2025. “I think we’ll be able to achieve that,” Brown said. “But we have to do it slowly because a lot of these customers have systems that are old and it’s such a clean agent, we’ve found that it’s scaling off a lot of the sludge built up in these older tanks and trying to push it through the lines.”

Broco also does business with local and state entities working to lower the carbon in their fleet operations.

“We get a lot of support from the Massachusetts Bay Transportation Authority,” Brown said. “We do a lot of work with them

anyways, providing their fuels. And now we’re in talks with them to start working them up to going solely on renewable diesel in the next five years.” The company has numerous similar opportunities throughout the region.

Broco also leverages its terminal on the wholesale side. “We can sell anywhere from a B5 to B90. And sometimes people would like to pick up just straight B99,” Brown said. “So, we opened our terminal for other companies, some that would be our competition. But having this be a regional incentive, that’s the whole reason why we opened it up, not to hoard it for ourselves, but to make us an industry leader in the biodiesel world.”

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

ADD SYSTEMS CELEBRATES 50TH ANNIVERSARY

ADD Systems (Advanced Digital Data, Inc.) has announced its 50th anniversary. In 1973, ADD Systems strived to improve the way energy distributors operate. Today, ADD Systems is happy to carry on that same goal in the energy distribution, HVAC and c-store industries. ADD Systems started with the single vision of its founder, Bruce Alan Bott. ADD Systems now has over 150 employees, United States and Canadian offices, and many clients throughout North America. Since the beginning, ADD Systems has led with these three principles: “Be honest, be fair, and treat others as you would expect to be treated.”

SPATCO ENERGY SOLUTIONS ACQUIRES PETRO SUPPLY

SPATCO Energy Solutions completed the acquisition of Petro Supply, a leading distributor of petroleum equipment in the Mid-Atlantic region, with offices in Elkridge, Md. and Richmond, Va. The addition of Petro Supply to the SPATCO family strengthens its position in the petroleum industry. SPATCO now has over 750 employees with 400+ technicians in 26 branches across 13 states in the Southeast and Mid-Atlantic region. It has over 88 years of experience as the go-to provider for petroleum fueling, installation, maintenance, environmental service and electric vehicle infrastructure solutions. In this ever-changing market, SPATCO continues to execute an ever-growing pipeline of infrastructure to support the needs of its customers.

OPW RETAIL FUELING ANNOUNCES THE TSE TANK SUMP

The TSE Tank Sump is the latest addition to OPW’s E-Series Containment Sump product family. TSE sumps are part of the industry’s first composite containment system built using the advanced fiberglass sheet-molded compound (SMC) manufacturing process, which results in a high-quality sump that increases peace of mind for fuel-site operators. The SMC manufacturing process also gives the TSE sumps the shortest delivery lead times in the industry, consistent wall thickness and smoothness for a watertight seal and a value price when compared to competitive fiberglass tank sumps.

PDI TECHNOLOGIES ACQUIRES BLUE COW SOFTWARE

PDI Technologies, a global leader delivering solutions and insights that serve as the backbone of the convenience retail and petroleum wholesale ecosystem, has acquired Blue Cow Software LLC, a fuel oil and propane

management software business. With this acquisition, Blue Cow Software will divest from Repay Holdings Corporation, a leading provider of vertically integrated payment solutions. Blue Cow Software is an industry leader among heating oil and propane dealers. The robust capabilities it offers include fuel and service ordering, delivery route optimization and wireless communication with field teams, fuel oil- and propane-specific analytics, and customer relationship management and accounting, among other innovations.

D&H UNITED ACQUIRES DOUBLE CHECK

D&H United, a portfolio company of Wind Point Partners and a leading provider of mission-critical maintenance, testing and inspection services for fueling stations and electric vehicle charging infrastructure, is pleased to announce the acquisition of Double Check Company. Headquartered in Kansas City, Mo., Double Check Company is a turnkey provider of maintenance, distribution and installation services for retail fueling systems and car wash stations. The acquisition of Double Check Company marks D&H’s entry into the Missouri and Kansas markets and extends its service footprint across the Midwest. The combination will further increase D&H’s service focus and will expand on its growing capabilities in the carwash and automotive maintenance services.

WESTMOR ACQUIRES METZLER BROS. TANK, TRUCK AND TRAILER

Westmor Industries LLC, one of North America’s most comprehensive energy storage, transportation and dispensing equipment manufacturers and suppliers, announced its acquisition of Metzler Bros. Tank, Truck and Trailer. The new location has been rebranded as Westmor Industries and expands Westmor’s ability to sell and service refined fuel and propane transportation products in the mid-Eastern U.S. Westmor’s Eastern customers will now have access to an extended network that includes a location in Duncansville, Pa. Metzler Bros. Tank, Truck and Trailer’s customers will get the same great people and service they’ve always worked with plus access to numerous other locations, products and services.

CORRIGAN OIL SELECTS IRELY FOR NEW ERP SYSTEM

iRely LLC, an innovative partner providing enterprise software for petroleum distributors and convenience stores, announced Corrigan Oil selected iRely as its partner of choice for its comprehensive ERP and operational software solution. Founded in 1958, Corrigan Oil is a family business in its third generation, owned by Mike and Tim

Corrigan. Corrigan is a distributor of fuel, lubes and propane, headquartered in Michigan. With offices in Michigan, Ohio and Indiana, it distributes in more than 20 states and Canada. iRely will be replacing its current back-office system while also becoming its single logistics solution.

CITGO RAISES OVER $2.3 MILLION FOR MDA

CITGO Petroleum Corporation concluded another successful fundraising year with more than $2.3 million raised for families living with muscular dystrophy, ALS and related neuromuscular diseases. Funds raised will be used to help accelerate research, advance care and advocate for the neuromuscular community. CITGO employees, marketers, retailers, vendors and contractors held several fundraisers throughout the year. Golf events in Lake Charles, La., Lemont, Ill., and Corpus Christi, Texas, each had record-breaking results, raising more than $400,000 each, while a Houston golf event raised more than $880,000. A bowling event in Lemont raised more than $110,000.

BESTPASS AND COMDATA ANNOUNCE PARTNERSHIP

Bestpass Inc., a comprehensive payment platform provider and leader in toll management solutions

OUR ADVERTISERS

for commercial fleets, announced a partnership with Comdata Inc., a FLEETCOR company and leader in payment innovation. The relationship helps fleets and owner-operators save money ordering permits for travel across North America. Comdata offers more than 500 types of permits for fleets in need of alcohol, oversize/overweight, superloads, manuals, IRP and trip and fuel. As one of the largest permitting services in the United States and Canada, Comdata provides fleet operators every credential needed to safely and legally transport a load.

FLEETCOR ACQUIRES EV CHARGING SOFTWARE COMPANY

FLEETCOR Technologies Inc., a leading global business payments and spend management company, announced the acquisition of Mina, a cloudbased electric vehicle charging software platform. The deal provides FLEETCOR with a market-leading home-charging software solution for commercial fleets in the U.K. and follows a successful partnership between the companies. The acquisition gives FLEETCOR the U.K.’s only EV re-charging solution that captures, calculates and pays for at-home business-use charging directly with the energy provider. Mina’s solution helps commercial fleets manage the transition to EV by dramatically simplifying and automating the reimbursement process involved in at-home charging.

Coal Gives Way to Oil on the High Seas

BY KEITH REID

Navigating the world’s oceans has always been about energy. In ancient times you had muscle-powered oars and basic sails harnessing the wind. The industrial age first arrived in the form of steam power, fueled predominantly by coal. Sailors no longer had to rely on the fickle winds, but coal did have its disadvantages, especially for navies, even before environmental concerns became an issue.

Coal was labor-intensive, requiring numerous stokers to keep the boilers fueled. It was a physically dirty fuel that made keeping sailors and ships clean a challenge. It was difficult to handle during refueling. And it produced heavy black smoke, making ships easily detectable over great distances and obscuring optical fire control systems.

Safety was also an issue. In February 1898, the armored cruiser U.S.S. Maine suffered an explosion and sank in what was then Spanish-controlled Havana Harbor, Cuba. Tensions were high between the United States and Spain and yellow journalism quickly blamed Spain for sabotage. This event helped lead to the Spanish-American War. Years later, when the Maine was raised

and examined, it was determined that the explosion was likely related to a smoldering coal bunker fire that ignited the powder magazine, sinking the ship.

The solution to coal’s issues was to replace coal with fuel oil. Fuel oil eventually found its way into both home heating and steam locomotives as well. Fuel oil either solved or greatly reduced most of coal’s negatives while providing more power. But there were initial issues.

The June 1909 edition of NPN featured a short article called “Oil Fuel on Warships.” It noted the Navy Department’s initial interest and reservations. All new battleships and other warcraft moving forward were to be equipped to use oil, even if initially they were powered by coal.

The big stumbling block was logistical. “While experiments are being made and plans devised for the use of oil, there is but a small chance that any ship will ever, or at least not for many years, be equipped for the exclusive use of oil, because it will be impossible to send a vessel so equipped on any very long cruise.”

This was simply an acknowledgment that the supply chain in place for coal

was far more robust internationally than that for oil.

Oil’s advantages were such that the supply chain issues began to sort themselves out very quickly.

The December 1911 issue of NPN featured the headline “High H. P. Engines to Increase Oil in the Navy.”

The article noted that many of the newest “torpedo boat destroyers” were designed to run exclusively on fuel oil. Of the eight most modern battleships, two were guaranteed to run exclusively on oil and it was likely that future developments would be exclusively oil-based.

The supply chain issues were still a thing. “Oil is more expensive than coal in the ports frequented by our vessels, except the ports on the West Coast of the United States. The distribution of oil at depots which would be available to the fleet in time of war is still unsatisfactory, but it is being developed.”

The article went on to point out that heavy oil engines—diesel—had experienced performance breakthroughs that made them viable for naval vessels.

Both solutions would dominate naval and commercial maritime shipping through the 20th century and into the 21st. Oil-fired boilers eventually lost favor to diesel (modern container ships are powered by huge diesel engines multiple-stories tall) and gas turbines in naval use (maritime jet engines burning jet fuel) and nuclear power in applications like aircraft carriers and submarines, where the advantages outweigh the extreme costs.

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.

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