FUELSNews 360° - Q1 2018 by FUELSNews

M A R K E T

N E W S

1st QUARTER

I N F O R M A T I O N

Table of Contents FUELSNews 360° Quarterly Report Q1 2018 FUELSNews 360°, published four times annually by Mansfield Energy Corp, analyzes and summarizes the prior quarter’s activity in the oil, natural gas and refined products industries. The purpose of this report is to provide industry market data, trends and reporting – both domestically and globally to provide insight into upcoming challenges facing the energy supply chain.

Executive Summary

Overview 6

Regional Views continued 20

January through March 2018

Economy & Demand

Fundamentals

Inventories

Exports, Production and Refinery Maintenance

21 22 24

West

Amy Nguyen

Canada

Nate Kovacevich

Renewable Fuels

Solar Panels and Washing Machines, Steel and … Soybeans? Sara Bonario

Congressional Budget Deal Impacts Fuel Users

U.S. Chamber of Commerce Lobbies for 25-Cent Gas Tax Increase 17

Nate Kovacevich

Alternative Fuels

Legal 16

Central

Natural Gas

Forward Prices, Supply, Demand, Storage Martin Trotter

FMCSA Extends Emergency Declaration, States Continue to Issue HOS Waivers

Viewpoints

Regional Views

Gulf Coast & Southeast

Northeast

Chris Carter

The ELD Debate

Dan Kemeny

Spring Cleaning – Time to Clean Your Tanks

Clint Hamlin and Madi Burton

Josh Wakeman

FUELSNews 360˚ Supply Team

Q1 2018 Executive Summary The first quarter of 2018 began with prices shooting upwards,

What’s Ahead in Q2?

Looking towards Q2, the seasonal expectation is that

followed by a severe market correction that spanned from equities to commodities. After gaining $5/bbl in January,

spring driving season will keep fuel prices elevated

crude prices gave up all of those gains in February, only to

throughout the quarter. While the trend is towards higher

rally throughout March and end the quarter higher. Prices

pressure, geopolitical uncertainty muddies the water when looking to the future. If Trump’s administration takes

rose $4.74 overall, ending the quarter just below $65/bbl.

a more aggressive stance in the Middle East, prices could

Global Political Impacts

skyrocket. Alternatively, a benign spring could reduce

Geopolitical uncertainty plagued the market with fear of

market risk premiums and bring prices lower. Overall,

U.S – China trade war, Venezuelan sanctions and the Iran nuclear deal. These factors, combined with roughly balanced supply and demand, created an extremely volatile

expect supply or demand disruptions to play a key role driving prices in Q2 and beyond. Regionally, consumers in the Midwest are benefiting from

atmosphere for fuel prices. Late in the quarter, Trump’s

cheap Canadian oil. Nate Kovacevich gives more details on

appointment of two hawkish leaders to his administration increased the risk of volatility in Q2.

these developing trends on page 20.

Economies around the globe continue to grow in sync,

The Florida market, which does not have a refinery or a pipeline feeding terminals located in the state, remained

leading to increased demand for oil. However, economic growth brought fears of rising interest rates and a stronger dollar, which contributed to February’s market correction.

well supplied throughout Q1 mostly due to the increase in the number of Jones Act vessels. Chris Carter gives an update on page 18.

Turbulent Q1 for Fuel

Like crude, fuel prices experienced a turbulent first quarter.

Below average temperatures led to a spike in natural gas

Time to Clean Your Tanks

The end of Q1 brings in the spring season. Warmer temperatures create an atmosphere for microbial growth

prices in January. Power companies switched to diesel

to flourish in fuel tanks, meaning fuel can go from

generators, drawing down diesel inventory levels during a

containing small impurities to heavy contamination in just

time when inventories historically rise. Counter-seasonal diesel demand brought diesel prices higher, carrying crude

a few weeks. Clint Hamlin gives five steps for cleaning fuel

and gasoline prices with it.

tanks and keeping them clean in his article on page 30.

Refineries began their seasonal maintenance during Q1,

We hope you enjoy this quarter’s edition of FN360°.

which contributed to the strains on supply. Although severe supply outages are unlikely, the uptick in demand combined with lower supply put upward pressure on prices.

If you have any questions, or would like to request additional copies, email us at fuelsnews@mansfieldoil.com.

Overview January through March 2018

The year began with prices racing higher, building on the momentum started in late 2017. Crude prices began the quarter at just over $60/bbl, and steadily made their way higher throughout the month. January’s rally was supported by weather and surprise draws from U.S. crude inventories. Extremely cold weather in the Northeast led natural gas prices to spike well above national averages, leading power companies to switch to diesel fuel generation. Diesel demand, in turn, created an upward pull that brought crude and gasoline prices higher as well. European countries stepped up their exports to the U.S. to help meet significantly elevated demand. The strong pull for diesel supplies kept steady pressure on inventories throughout January, keeping refineries running at full speed to keep up with demand. The result was a steady draw of crude inventories out of storage. Crude inventories usually rise during the first few months of the year, so the quick drawdown of crude inventories to start the year gave markets a feeling of exuberance, leading crude prices to soar as high as $65. NYMEX diesel prices rose to $2.10 during this time, while gasoline prices trailed at $1.93. Against the backdrop of bullish supply data, geopolitical risks also took off. As the year began, markets became fixated on Iran, where protestors stormed the streets calling for economic reform and regime change. Although nothing came from the protests, markets quickly realized 2018 would be a year of significantly higher risk than normal. 6

By the end of January, markets had gained $5/bbl, and traders pondered whether it could rise even higher. With the fundamental and political headlines suggesting prices could rise higher, investors flocked to buy oil. Net long positions in oil, the total number of oil contracts held minus the total number of shorted contracts, rose to near record highs. February, however, held different plans for oil prices. Early February saw oil prices begin to slip, falling to $64 and then steadily progressing down to below $60/bbl, reversing all of January’s gains. During this time, NYMEX diesel prices fell as low as $1.80, and gasoline hit $1.65. The correction in oil prices was mirrored in equity markets, leading investors to look for a deeper cause. The culprit behind February’s decline was, ironically, the strength of the U.S. economy. While economic growth leads to higher demand (and seemingly, higher prices), it also heralds rising interest rates. For equities markets, higher interest rates make bonds more favorable, leading investors to shift cash from stocks to bonds. For commodities, higher interest rates in the U.S. lead to a stronger U.S. dollar, since investors around the world have to buy dollars to obtain our higher returns. A rising dollar decreases demand for oil, since it takes more pesos, yen, euros, or other currency to buy the dollars needed to buy oil. Thus, via a chain of economic relationships, a stronger economy strengthens the dollar and decreases oil prices.

Overview

WTI Crude Oil Prices

Source: New York Mercantile Exchange (NYMEX)

The connection between oil and equities, two markets that typically At the retail level, diesel prices remained steady, while gasoline prices are not highly correlated, continued through Q1, though the two grew elevated quickly. Diesel prices began the quarter at $2.97, rising to $3.08 disjointed towards the end of March. in early February before following NYMEX prices lower, ending the quarter at $3.01. Market risks began escalating late February, beginning with questions Retail Gasoline and Diesel Prices of whether sanctions may be imposed on Venezuelan oil. No actions were taken during Q1, but markets did price in the possibility of future sanctions, which would have distorted markets. Trump’s announcement of tariffs on steel and aluminum in early March stoked fears of an impending trade war, and for weeks, markets traded uneasily. Developing U.S.-China trade negotiations helped allay fear that the two countries were headed towards economic war. The final major market mover of Q1 was Trump’s replacement of Secretary of State Rex Tillerson with Mike Pompeo, a hawkish CIA Director who opposed the Iran Nuclear Deal and advocated for military action against North Korea. Shortly after the change, Trump appointed John Bolton, another advocate of a more aggressive foreign policy, as his National Security Advisor. Some believe the two create an uncertain future for the U.S.

Source: Energy Information Administration (EIA)

Military action in North Korea could destabilize the region and cause an economic slowdown that causes oil prices to plummet. On the flip side, the U.S. withdrawing from the Iran deal could trigger new sanctions on Iran’s oil, taking a huge supply source off the market and causing severe price shocks. Markets, unsure of America’s future foreign policy, added significant risk premiums to oil prices. Until markets receive assurance that America will not take any destabilizing actions around the globe, prices could remain elevated in Q2 and beyond. Crude prices ended the quarter at $64.94, a gain of $4.57 overall. Diesel prices ended slightly in the red, while gasoline picked up a significant $0.25 thanks to expensive summer gasoline formulations. 7

Gasoline prices showed a bit more volatility, beginning the quarter at $2.52 and gaining a comparable 11 cents by February 5. Unlike diesel prices, though, gasoline limited losses to February, and saw impressive gains in March that pushed prices to $2.65. •

Overview

Summary, First Quarter, 2018 $2.0210 $2.0206

$64.94

24,103

Source: New York Mercantile Exchange (NYMEX), Dow Jones Industrial Average

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IIIII II

Economy & Demand

IIII II I

STATS AT A GLANCE IIIII II

• Global GDP Growth 3.9% • Unemployment 4.1% IIII II I

• Global Oil Demand 99.3 MMbpd

• YOY Increase in Demand 1.4 MMbpd

The global economy continued its boom in the first quarter, with all major economies growing in sync. Global growth is expected to be 3.9% in 2018 and 2019 according to the International Monetary Fund, an upward revision of .2%. Of course, strong, synced growth rarely lasts. In the U.S., the Federal Reserve has shown support for raising interest rates this year, which could put the brakes on growth in the U.S. The Fed voted to increase interest rates once again in March, the fourth rate hike since early 2017, bringing the fed funds rates to 1.50% - 1.75%.

Consumer Sentiment Index

Growth in the U.S. has been strong, marked by supportive numbers and impressive jobs reports. The tax reforms package passed in December gave the U.S. an additional boost, supporting growth.

Source: University of Michigan

Economic data in the U.S. points to strong growth and rising demand. Unemployment remains at its lowest level in decades, with just 4.1% of the market unemployed. Consumer sentiment has been on the upswing, reaching the highest level since 2004. •

Economy & Demand

Trump Tariffs Threaten Markets

U.S. financial markets, including commodities, were roiled in March when U.S. President Trump proposed tariffs on aluminum and steel imports. The tariffs, import taxes which excluded Canada and Mexico, were signed on March 8, beginning a dangerous cycle of trade retaliation. China quickly produced a list of products they threatened to place tariffs on, the most notable of which was soybeans, and indicated they may take action through the World Trade Organization. Tariffs are good for domestic producers, because they raise the price of foreign goods and allow local producers to raise prices. However, tariffs hurt consumers. Food and beverage companies protested the tariffs, saying aluminum sheets hold no national security implications but are crucial for canning beverages and other applications. Vehicle manufacturers agree that tariffs would raise vehicle production costs, ultimately requiring costs to be passed on to consumers. Why does this affect oil markets? Tariffs slow the flow of international goods, directly reducing maritime shipping demand. They also make goods more expensive, leaving consumers less money to use on transportation. Strong economic demand has been a key driver of high oil prices, so one hidden benefit of the tariffs may be lower oil prices. Of course, if the trucks and engine components using the fuel become more expensive as manufacturers have warned, the net result could be higher costs for fleets. â&#x20AC;˘

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Economy & Demand

Oil Demand

Strong growth has helped to create strong demand for oil, led by emerging economies. As more global citizens join the middle class, car ownership has risen, as has demand for goods transported from far-away areas. While “Peak Oil Demand” plays well in headlines, the reality is that oil demand has been robust and will continue rising for the next several decades, according to the latest findings from the International Energy Agency. The organization raised their 2018 estimate of demand growth to 1.5 million barrels per day, as emerging economies develop a need for oil. Their report shows that beyond 2020, even the explosion of U.S. production will not be sufficient to feed increasing oil demand. Liquid fuel demand in the U.S. has been rising steadily and is forecast to rise even higher over the next two years. Despite the proclaimed demand destruction of alternative fuels and electric vehicles, gasoline and diesel remain the lion's share of transportation energy. •

U.S. Liquid Fuels Demand

Source: Energy Information Administration (EIA)

Fundamentals FUNDAMENTALS AT A GLANCE

87 million barrels – Q1 2018 crude inventories below Q1 2017 • 16% – Q1 2018 diesel inventories below Q1 2017 • 1,463 – Millions of crude barrels exported daily in Q1 2018 • 10.1 MMbpd – Average U.S. crude production per day in Q1 • 90.6% – Average refinery utilization during turnaround season this year •

Global supply and demand are very close to balanced, though different agencies fall on different sides of the debate. The US-based EIA’s monthly data suggests that global oil production will outstrip consumption for most of 2018 and 2019, despite a small net deficit in Q1. On the other hand, the Paris-based International Energy Agency (IEA) forecasts a general state of undersupply for the remainder of 2018. The two agencies have slightly different methodologies on estimating supply and demand, but the two projections fall quite close to each other. It’s worth noting that last year, the EIA forecasted an oversupplied market in Q1, yet now reports an overall daily draw. Whichever agency you choose to follow, it’s clear that markets are quite close to balanced. As we noted last quarter, with inventories at their lowest level in years and little (if any) excess supply being brought to the market, there’s less slack in the supply chain. The result has been higher volatility in reaction to supply risk factors – any risk of supply falling offline leads markets to price in large premiums. This was seen throughout Q1 as numerous factors such as Iran, Venezuela and U.S. political appointments caused prices to surge. •

World Supply/Demand Balance

Source: Energy Information Administration (EIA)

Crude Inventories Return to Historical Range

Inventories

Crude inventories began the year at 419.5 million barrels, 30 million barrels below 2017 levels. The trend this year has been towards tightening supplies and lower inventories. Crude inventories typically rise from January through March, while refineries are in seasonal maintenance. This year, however, crude stocks fell in January for the first time since 2003. Although U.S. crude production has been rising precipitously, strong global demand mixed with reduced OPEC production has kept a steady pull on U.S. crude. The result has been falling U.S. inventories. As the most visible inventories in the world, the counterseasonal decline in U.S. crude stocks during Q1 helped keep prices rising throughout January, and the slow builds in February saw prices fall rapidly lower. Source: Energy Information Administration (EIA)

Diesel Inventories Trend Lower in Q1

Diesel inventories have generally tracked normal seasonal trends. Diesel stocks have the opposite pattern during the first quarter of the year – refineries undergoing seasonal maintenance use less crude oil, but also produce fewer gallons of fuel. Suppliers are left to rely on inventories to make up the difference, leading to stock drawdowns early in the year. Diesel inventories began the year 17 million barrels lower than they began 2017, thanks to significant drawdowns in September through November last year. Inventories throughout Q1 peaked in early January and continued declining throughout the quarter to reach 114 MMbbls, just slightly above the upper-edge of the 20122016 range.

Source: Energy Information Administration (EIA)

Gasoline Inventories Reflect 2017

Gasoline inventories have bucked the trend and risen quickly throughout Q1. While gasoline inventories typically rise, level off, and decline in Q1, this year gasoline inventories have continued to rise. Gasoline demand has struggled to work down inventories this year. Although inventories have not surpassed 2017 highs, they have remained well above 2012-2015 average levels. Gasoline inventories tend to remain within a very narrow band, so the strong build early this year ought to keep inventories relatively elevated through the summer. •

Source: Energy Information Administration (EIA)

Exports

While OPEC’s production cuts have been a major factor spurring oil prices higher, production in the U.S. is quickly filling the void.

Fundamentals

U.S. Quarterly Crude Exports Rise to All-Time High

In November 2016, OPEC and non-OPEC countries agreed to cut production by a total of 1.2 MMbpd. Throughout the year, compliance with the cuts has been surprisingly high. In the last few months of 2017, OPEC’s deal compliance was over 100% due to Saudi efforts and disruptions in Venezuela. Because of OPEC’s cuts, crude inventories in the U.S. have trended downward throughout the year. Still, OPEC’s cuts are just part of the global supply picture. While OPEC cut production by 1.2 MMbpd in 2017, U.S. producers rapidly brought new production online. Beginning the year at 8.77 MMbpd, the U.S. grew production to 9.79 MMbpd at the end of the year – nearly completely offsetting OPEC’s cuts. Despite some setbacks, U.S. production also celebrated reaching record highs. Hurricanes Harvey and Nate caused two major downward spikes in production, as rigs in the Gulf Coast were taken out of commission. Despite the outages, though, production in November surpassed the previous record for highest monthly output. By December, production had peaked at 9.79 MMbpd. Looking towards 2018, analysts expect U.S. production to hit 10 MMbpd, and by 2019 U.S. production, could be as high as 11 MMbpd.

Production

Source: Energy Information Administration (EIA)

U.S. production continued its ascent in Q1, building on the second largest annual production gains in U.S. history. In 2017, crude production rose from 8.8 MMbpd to 9.9 MMbpd, the second largest since the EIA’s records began. (The largest increase on record occurred in 2014, when production rose 1.4 MMbpd between January and December.) This year, crude production started strong. Production soared to over 500 kbpd during Q1. Rig counts, a leading indicator of future production, rose as well. Rig counts do not directly correspond with new production; they simply indicate the number of rigs drilling new wells. These new wells can be left as DUCs (Drilled but Uncompleted), or can be put into production immediately. Rising rig counts foreshadow more potential production in the future, but exactly when that production will be realized is not known. •

Refinery Maintenance

The most astounding part of the U.S. renaissance of production is the price environment in which it is taking place. When the previous record was set in June 2015, it came on the heels of prices above $100/bbl – exploration and drilling commissioned at the oil price peak in 2014 came online by June 2015. The latest boom in prices has occurred with prices generally around $50.

As is common in Q1, refineries began their seasonal maintenance. In the lead-up to summer gasoline requirements, refineries go offline to make needed repairs and make the changes needed for conversion. Refineries choose late winter since fuel demand is typically at a low – the hustle of holidays has passed, and consumers have not yet hit the road for spring and summer vacations.

According to the Federal Reserve Bank of Dallas, U.S. production has a break-even level between $46 and $55. Production in the Permian, the fastest growing area for production in the U.S., only needs prices at $46 to be profitable; nonshale production on average requires prices above $53, though some wells would still be unprofitable if prices rose to $100/bbl.

This year, refinery utilization, the percentage of total available refining capacity actually being used, dipped as low as 87%, not abnormal for this time of year. Maintenance this year has not been overly straining for markets, keeping inventory drains light. Further, the EIA expects maintenance will not cause any supply outages, either nationally or regionally. While unplanned outages could disrupt supplies, the foreseeable trend points to ample supplies across the U.S. •

Given the large variance in oil field break-evens, markets can expect production to continue rising in response to higher prices. Each new price threshold makes new fields profitable, allowing the U.S. production to continue its explosive growth over the next few years. • 15

Legal Congressional Budget Deal Impacts Fuel Users

On February 9, 2018, the Bipartisan Budget Act of 2018, H.R.1892, passed the Senate and the House of Representatives. President Donald Trump signed the bill later in the day. The Bill extended a fifth continuing resolution (CR) to fund the government through March 23, 2018, and it also raised the spending limits for both defense and non-defense funding for two years. H.R. 1892 lifts the debt ceiling until March 2019, provides $90 billion in disaster relief and further extends the Children’s Health Insurance Program.

Included in the Bipartisan Budget Act was a provision to reinstate the $1.00/gallon Biodiesel Blenders’ Tax Credit for the calendar year 2017. This one-year reinstatement was a victory for American consumers, biodiesel producers and all fuel marketers who blend biodiesel. The bill did not include a provision for 2018, thus there remains no credit for 2018 biodiesel blending. The budget deal restores the 9-cent-per-barrel ($.0021 per gallon) tax on oil to pay for spill cleanups. The tax did not take effect until March 1, 2018 and was only applied on a prospective basis. Many fuel marketers had been concerned the legislation would be retroactively applied to 2018 transactions that have already been processed, creating significant financial and transactional concerns. Fuel markets and consumers were relieved that the tax was not applied retroactively, simplifying the passage for all. •

U.S. Chamber of Commerce Lobbies for 25-Cent Gas Tax Increase U.S. Chamber of Commerce President, Thomas Donohue, announced in January that his organization is launching an advocacy campaign in favor of a 25-cent federal gas tax hike that would phase in over five years. As part of its campaign, the Chamber also plans to encourage Congress and President Trump to devote the revenue generated by the proposed gas tax increase to upgrades for roads, bridges, transit and related infrastructure.

President Trump endorsed the idea of a 25 cent-per-gallon tax increase. This increase, phased in over five years, would generate an additional $375 billion over the next two years, according to the U.S. Chamber of Commerce. Senator Tom Carper (D-Del.) confirmed that Trump “offered his support for raising the gas and diesel tax by 25 cents a gallon and dedicating that money to improve our roads, highways, and bridges.” Carper stated that Trump even “offered to help provide the leadership necessary, so that we could do something that has proven difficult in the past.” Under the Chamber’s proposal, the current 18.4 cents-per-gallon federal tax on gasoline (which has remained unchanged since 1993) would increase to 43.4 cents-per-gallon, while the 24.4 cents-per-gallon federal tax on diesel fuel would increase to 49.4 cents-per-gallon. The Chamber estimates the increase would boost federal revenues by $394 billion over 10 years if indexed for inflation and improvements in fuel economy. Anti-tax conservative groups are against the increase; however, support for the increase has crossed political boundaries. If Trump follows through, it could mean billions of dollars in new revenue for infrastructure and help to solve the intractable problem of the Highway Trust Fund’s shrinking potency, which is due in part to increasing fuel economy and alternative fuel vehicles that don’t pay gasoline taxes. • 16

Legal

FMCSA Extends Emergency Declaration for Texas, States Continue to Issue HOS Waivers Due to Winter Weather On January 18, the Federal Motor Carrier Safety Administration (FMCSA) extended its previously-issued Regional Declaration of Emergency for the State of Texas due to the effects of Hurricane Harvey. Specifically, the declaration waives hours of service requirements for drivers “providing direct assistance to the emergency.” The waiver was in effect through March 22, 2018. Continued reconstruction following Hurricane Harvey has made extended waivers necessary to facilitate recovery.

In addition to the hurricane waiver, the “bomb cyclone” in early January brought with it severe cold and winter weather that has lingered throughout the month. To ensure individuals across the nation have access to vital commodities including fuel, several states issued hours of service waivers for drivers transporting fuel products. New waivers were issued by states including Alabama and North Carolina. •

Regional Views Chris Carter,

Supply Manager See his bio, page 34

Gulf Coast & Southeast

Several factors contributed to tight diesel supply in the Gulf Coast and Southeast regions during the beginning of the Q1 2018, including under-supplied inventories, a Northeast Arb opportunity, and below-average temperatures. Terminal inventory tanks throughout the Southeast were not completely resupplied from the impact of Hurricanes Harvey and Irma. In early January, the spread between New York Harbor and Gulf Coast ULSD widened, encouraging shippers to move product into the Harbor-based markets. While the Arb opportunity remained opened, Colonial's diesel line (Line 2) traded at a premium of over 4 cents per gallon. While the opportunity remained profitable, product was being shipped into the Northeast region rather than the Southeast, causing inventories to remain short. When the Arb opportunity closed in mid-

GC ULSD Basis vs. Line 2 Values

Source: Oil Price Information Service (OPIS)

Florida Supply Not Challenged by Fog Delays

In mid-February, Florida supply for gas and diesel was tested due to fog and weather delays. Fog in Tampa and Houston impacts refined product shipments into the Florida market. Florida faces unique supply challenges since onehundred percent of its product is shipped via barge, truck or rail. Florida does not have a refinery or a pipeline feeding terminals located in the state. Therefore, any significant delay in shipments can result in a supply outage across multiple terminals. The Florida market was well supplied throughout the first quarter, mostly due to the increase in the number of Jones Act vessels. The Jones Act requires all goods transported by water between U.S. ports be carried on U.S.-owned and operated ships. In the past two years, the number of Jones Act vessels has increased drastically. Suppliers in Florida are benefiting from the increase in vessels since refiners and suppliers can now optimize their shipments between U.S. ports, keeping the market flush with product. This was exemplified during February when the state did not experience outages, though many vessels battled heavy fog that caused shipment delays. As a result of increased product, consumers are benefiting from lower prices. I expect Florida to continue to be well supplied for the upcoming months as we do not anticipate any major changes. • 18

February, Line 2 traded flat to a discount versus the shipping cost and product began flowing back into the Southeast. In addition to reduced inventory levels, the Southeast also experienced below average temperatures in January resulting in power plants being cut-off from natural gas supplies, which is known as curtailing. Curtailing occurs when there is a higher demand for natural gas to heat homes. Natural gas companies “curtail” power plants which are then required to burn ULSD, causing diesel demand to soar. Although product was tight at the beginning, halfway through the quarter, the market switched from being "short" to "long" product across the entire Southeast. I expect the market will remain long into the second quarter for the Gulf Coast and Southeast regions. •

Regional Views

Josh Wakeman Supply Manager See his bio, page 34

Northeast

Although severe cold hit the Northeast this winter, the region is still flush with product. This year, the Northeast experienced a winter 20% colder than 2016 and 2017. As a result, heating oil and kerosene demand increased. There were some sporadic outages for those products, but overall, the Northeast was long on refined product. I am bearish for Q2 diesel prices. Refiners like Phillips 66 in Bayway NJ, plan to finish scheduled maintenance at the end of Q1 or early Q2 , which will increase refinery run rates and provide ample product to the region. Additional product from the Gulf Coast, Midwest and Canada could also put continued downward pressure on prices. However, as a result of RVP season starting up and driving season right around the corner, I am bullish on gasoline prices in the Northeast for Q2 2018. •

Financial Turbulence Transparent in the Northeast

As reported in last quarter’s FN360, financial troubles in the Northeast have become transparent. Philadelphia Energy Solutions (PES) filed for Chapter 11 bankruptcy in January - blaming the Renewable Fuels Standard and the Renewable Identification Number (RINs) obligation as the primary cause for the bankruptcy. PES operates a 335,000 b/d refinery in Philadelphia, which exceeds the size limitation for a refinery that can file for an RFS exemption (75,000 b/d). The claim that RFS & RINs are to blame for the bankruptcy has stirred a heated debate.Skeptics state proper investments were not made to keep up with the times. Refiners argue RINs obligations are complex and a financial burden on their operations. In March, courts ruled that PES only had to pay roughly half of their 2018 RINs obligation, causing RINs markets to plummet. Lower RIN values reduce the cost of pure gasoline, since refiners have less costs. However, decreasing the price of RINs also increases ethanol prices due to producers receiving less trade value for RINs. For consumers, the net impact is fairly flat. •

RINs Price Trend 2012 – 2018

The Debate Over Reversal Continues

The Laurel Pipeline is another ongoing debate in the Northeast. A decision on the reversal of the pipe segment from Altoona, PA to Pittsburgh, PA was expected by Q1 2018. However, the controversy around this reversal delayed a decision by the state of Pennsylvania. Recently, the PUC (Pennsylvania Utility Commission) recommended a denial of the reversal. Buckeye, however, can appeal this recommendation and drag out the process.

The current flow of the pipeline is from Altoona to Pittsburgh, allowing Midwest refiners to compete with Northeast refiners in Pittsburgh. With the proposal for a partial reversal, Pittsburgh would become a Midwest refiner market while Altoona would become the point of intersection for Midwest and Northeast refiners. Midwest refiners can use cheaper Canadian product, increasing refiner margins while allowing cheaper product to reach Altoona. Northeast refiners state Pittsburgh would lose supply optionality, driving the market up. In other words, cheaper products from the Midwest would not necessarily lead to cheaper options for the consumer. Either way, this decision may take longer if Buckeye appeals the PUC’s recommendation. • Source: Argus

Regional Views

Nate Kovacevich,

Senior Supply Manager See his bio, page 34

Central

The Midwest experienced some divergence in diesel pricing between the Chicago and Group 3 markets in February. A few unplanned refinery issues in Oklahoma and Kansas pushed regional values higher, and the index is now trading above the NYMEX heating oil contract. Diesel values rarely rally in January and February, but Group 3 diesel prices rallied nearly 10 cents relative to NYMEX. This is a bit counter seasonal, so it will be interesting to see if this strength continues as we move closer to planting season. On the other hand, Chicago has been volatile this year, jumping up and down from each shipment cycle with no real direction. In early February, an issue at Exxon’s Joliet refinery led to a short-lived basis jump, but values have since retreated and are now trading 3 to 4 cents below the NYMEX. The weakness in Chicago at the beginning of March is surprising, but as temperatures warm up and construction and agricultural demand increases, we expect a normal seasonal move higher. There will be a few more planned refinery turnarounds in early Q2 that should help support Midwest diesel markets, assuming normal historical trends continue. •

Northern Refineries Benefit from Cheap Canadian Crude

In addition to seasonal influences that traditionally push diesel prices higher during the March-May timeframe, we’ve had an interesting development in the Canadian crude oil market in the last few months that could impact these trends moving forward. Refineries in the northern U.S. are taking advantage of steep discounts in the heavy crude Western Canadian Select market as structural changes have caused prices to weaken substantially. In early March, the discount for heavy WCS crude blend reached $25.50 a barrel below the WTI benchmark crude price. For refineries able to process this particular crude blend, profits have increased more than 100% versus others who are only able to refine lighter crudes. Obviously, when a refinery is able to buy cheaper crude and sell high-value fuels, they are highly incentivized to produce as much gasoline and diesel as possible. The question is whether these refineries are able to find alternative homes for this product to take advantage of the increased refining margins. If not, we may see prices in the Midwest stay depressed relative to the NYMEX heating oil contract. Check out the Canadian regional article of this Quarter’s FUELNews 360° to read more about the Canadian crude oil situation. •

Forecast for Q2

Refined product prices in the Midwest moved higher to end Q4 2017, and this strength continued for most of January before retreating on heavy profit taking as commodity prices moved lower in tandem with other financial markets. From a seasonal standpoint, we anticipate prices to rebound in April and May, before losing some steam heading into the summer. Prices tend to strengthen leading up to big demand events. For diesel, that would be agricultural demand as planting begins. For gasoline, prices rally leading up to summer driving season. I anticipate Q2 diesel prices will start strong but then flatten out, possibly even moving lower as we get into the summer. With that said, there is still a lot of macro-economic noise, which can push the NYMEX in either direction and wreak havoc on seasonality. • 20

Regional Views

Amy Nguyen,

Supply Optimization Supervisor See her bio, page 34

West

California Fights Trump’s Offshore Drilling Proposal

In an effort to expand energy exploration and decrease dependence on imported oil, President Trump and his administration unveiled a proposal to permit drilling in most U.S. continental shelf waters. Several states are against the drilling - raising concerns about environmental disasters and negative impacts on tourism. This includes California, which has restricted offshore drilling after an oil spill in Santa Barbara in 1969. Major oil companies have been reluctant to drill offshore in the region as there are several legislative and political obstacles to overcome. To combat the Trump administration's proposal, California intends to block the transportation of petroleum from new offshore oil rigs within the state by denying pipeline permits. The California State Lands Commission sent a letter to the U.S. Bureau of Ocean Energy Movement urging the bureau to withdraw the draft proposal. This is another example of California’s opposition to the Trump administration's climate and environmental strategies. California has not agreed with the administration's call to lower automobile efficiency standards or the decision to reject the Paris climate deal. •

Fuel prices were on the rise this quarter as a result of the California fuel tax, which took effect late last year - increasing gasoline prices by 12 cents and diesel by 20 cents per gallon. Despite the increase in price, demand was higher than usual this season as weather conditions made it more favorable to drive compared to previous winters. These factors made California the second most expensive state to purchase fuel, second only to Hawaii. As we approach the spring and summer seasons, I expect gas and diesel prices to continue increasing. Refineries will begin performing seasonal maintenance and will prepare for production of summer grade gas, which is priced higher than the winter grade. As a result, drivers should expect higher prices at the pump as the end of winter draws near. •

California’s Low Carbon Fuel Standard

The Low Carbon Fuel Standard (LCFS) took effect in California nearly ten years ago and was focused on fighting climate change by forcing oil companies to lower the "carbon intensity" of fuels sold in the state. The program requires fuel suppliers to reduce their average fuel carbon intensity 10% by 2020. For the past several years, the program has added about three or four cents per gallon due to increased distribution and refinery expenses. However, it is estimated that the cost jumped to 8.5 cents last year as prices for a type of tradable credit increased within the program. This program, along with other climate control initiatives, has played a part in high California gas prices. To alleviate some of this impact, the state agency that runs California's climate change programs has proposed changes to the Low Carbon Fuel Standard – giving fuel suppliers more time to reach the target carbon intensity. However, there is also talk of extending the program to 2030 and setting higher standards as targets. Many oil companies have been fighting the standard since it took effect because it increases production costs, which in turn, increases gas prices. Modifications to the standards will be discussed in April and will play a factor in fuel prices in the future. • 21

Regional Views

Nate Kovacevich,

Senior Supply Manager See his bio, page 34

Canada

The lack of new pipeline expansion in Canada over the last few years has led to steep discounts in the Western Canada Select (WCS) crude oil market relative to the U.S.-based WTI crude oil index. The situation began late last year when the Keystone pipeline was shut down after leaking 5,000 barrels of crude oil in rural South Dakota. The pipeline, which transports 590,000 barrels per day, links Canadian crude oil producers with U.S. refineries in the upper Midwest. Now, the problem is more structural in nature. Crude oil production has increased over the last two years, while the amount of takeaway pipeline capacity has not. In fact, there is a need for additional pipeline capacity for roughly 300,000 barrel per day.

ÂŠ 2018 Mansfield Energy Corp

Regional Views The bottleneck has caused WCS prices to drop sharply, putting enormous pressure on the rail industry to make up the difference. While the costs to rail product from Canada to the Gulf Coast are only one third of the current discount of $25.50 per barrel, new rail car standards and competition from other commodities has kept rail shipments at bay. In the near-term, rail seems to be the only outlet available that can make up the shortfall in pipeline capacity. Several pipeline projects have been announced but still face numerous regulatory and environmental hurdles. At best, we are 2-3 years away from having increased pipeline capacity to meet Canadian producer needs.

ÂŠ 2018 Mansfield Energy Corp

The International Energy Agency (IEA) believes the discount to WTI will narrow as more rail comes online. The Paris-based IEA forecasts crude-by-rail exports will grow from 150,000 bpd in late 2017 to 250,000 bpd in 2018 and then to 390,000 bpd in 2019. The current record for crude-by-rail exports was back in September 2014, when Canada shipped 179,000 bpd of crude to the U.S. Even with the increase in rail exports, until new pipeline expansion occurs, the IEA believes the WCS crude market will trade at a significant discount for the foreseeable future. â&#x20AC;˘

Alternative Fuels Sarah Bonario

Renewable Fuels

Supply Director See her bio, page 34

Solar Panels and Washing Machines, Steel and … Soybeans? The renewable fuels market in the United States is under pressure on many fronts. It is easy to read about a drought or severe flooding and equate that to crop loss or damage that increases the cost of the crop in question. What is less intuitive is understanding the impact global trade decisions and policies have upon biodiesel prices in the United States.

In January 2018, the Trump administration announced tariffs on solar cells and washing machines. According to the Wall Street Journal, the tariffs are aimed mainly at Asian manufacturers – Chinese makers of solar panels and South Korean producers of washing machines. On February 4, 2018, Beijing launched an investigation into alleged American dumping and subsidies on sorghum, which is, in large part, exported to China.

The Wall Street Journal indicated that "some saw China’s move as retaliation against those tariffs.” The article continues with a concern that “bigger crops are at risk, including soybeans, whose exports to China last year reached $12.4 billion.” Soybeans are the primary feedstock for Soy Methyl Ester (SME) Biodiesel. The U.S. and Brazil are the top two exporters of soybeans world-wide and the majority of the demand comes from China. 24

Integrated biodiesel producers in the United States grow their own soybeans and process them into soybean meal and soybean oil through a process known as crushing. The potential profit margin for soybean processors is the difference between the value of the soybeans and its byproducts. Soybean oil is used to produce SME biodiesel. Soybean meal is generally thought to be the most important protein source used to feed farm animals.

Alternative Fuels

China, Canada and Mexico are the Top Destinations for U.S. Agricultural Exports

U.S. biodiesel producers are able to price biodiesel more competitively relative to petroleum-based diesel when they are able to sell their soybean meal into international markets.

Top Five Markets for U.S. Agricultural Exports 2000 – 2016

Chris Clayton, Ag Policy Editor for DTN writes, "Soybean amounts to $14 billion in export value to China, making it the largest U.S. commodity shipped there.” China relies on these imports to keep feed prices low, which in turn keeps the politicallysensitive price of pork low. The meat is China’s staple protein, and a sizable component of household budgets. If China wanted to hit back, soybeans could be a weapon. “That would sting farmers in the U.S., which sold $13.9 billion worth of the commodity to the Asian nation in 2017. While America counts China as its biggest market for the oilseed used in animal feed, swelling global stockpiles and bumper crops forecast from Brazil to Argentina mean Beijing has a choice of sellers to turn to in the event of a retaliation on U.S. imports.” 1 If China implements policies which restrict the flow of soybeans imported from the United States, it could be catastrophic for Midwest farmers and result in soybean crushing facilities and biodiesel producers slowing down or shutting their doors. This will increase the cost of diesel fuel consumed nationwide.

Source: USDA, Economicnresearch Service using data from U.S. Department of Commerce, U.S. Census Bureau, Foreign Trade Database

U.S. Agricultural Exports to China $ billion

35 30

China acceded to WTO: December 11, 2001

25 20 15 10 5 0

Total Ag & Related Products

A recent update at FarmPolicyNews2 focused on the potential dangers of Chinese retaliation that targeted agricultural products like soybeans. Bloomberg writer, Alan Bjerga , reported last week, “U.S. soybean farmers are concerned at the prospect of retaliatory trade measures from China, which has become the biggest buyer of American bulk farm products. But there’s already one category of U.S. agricultural goods that China is buying less of: lightly processed, or ‘intermediate’ items that lie between raw commodities and finished consumer products. That’s mainly due to China’s shunning of U.S. Distiller’s Dried Grains, an ethanol byproduct fed to cattle, and falling demand for animal hides. China, the biggest buyer of intermediate farm goods in 2015, now lags behind Mexico and Canada.”

Soybeans

China Demand Slips $ billion

Source: U.S. Census Bureau Trade Data

Purchases of U.S. Processed Ag Products at Lowest Price Since 2009

5 3 1

2008

2009

2010

2011

2012

2013

As you can see, the economics of renewable fuels are indeed impacted by politics and international policies. •

2014

2015

2016

2017

Source: Bloomberg

https://www.bloomberg.com/news/articles/2018-01-26/the-commodity-flashpoints-when-trump-puts-america-first March 4, 2018: http://farmpolicynews.illinois.edu/2018/03/trade-retaliation-measures-hurt-already-hampered-u-s-farm-sector/ 3 March 2, 2018: https://www.bloomberg.com/news/articles/2018-03-02/china-is-already-importing-less-of-these-u-s-products-chart

1 2

Alternative Fuels

Martin Trotter,

Natural Gas

Pricing & Structuring Analyst See his bio, page 34

NG Forward Calendar Year Strips

FORWARD PRICES Cal’ 18 opened the quarter just north of the $2.83 mark and peaked above $3.07 at the end of January. Over the next two weeks, prices for the current calendar fell more than 30 cents, before beginning a rebound in midFebruary. Cal ’19 operated within a 9 cent band for the period. While this is about 10 cents tighter than it traded last quarter, economic drivers of the period trended closely with those seen for the Cal ’18 strip. Cal’ 20 traded on average below $2.80 dth for the period, with pricing trending downward as March moves toward the traditional end of the trading season. Trading for the 2021 calendar year saw stronger interest than its forward counterparties, settling at highs and averages lower than only the prompt calendar year. •

Source: FuelsNEWS 360˚

Alternative Fuels

SUPPLY

Elk Creek Pipeline P

This January, ONEOK Inc. announced plans for additional infrastructure in the Bakken peninsula. The proposed Elk Creek Pipeline would stretch 900 miles between Montana and Kansas, adding additional transport capabilities specifically for Natural Gas Plant Liquids (NGPL). Processing plants separate NGPLs from natural gas and use them to create other end-use products such as plastic, anti-freeze and detergent. Implementing the additional infrastructure will facilitate increased natural gas production and capture incremental revenue through production and sales of additional NGPL volume, which generally ships at a premium to pipe-ready extracted natural gas in the region. Currently only two pipelines move NGPLs out of the Bakken region by pipe, one of which is already owned by ONEOK Inc. Limited capacity on the existing infrastructure caused natural gas flaring which is stringently regulated in North Dakota. Shortly after announcing plans for Elk Creek, ONEOK Inc. also announced plans to complete additional natural gas processing plants at Demicks Lake in 2019, a project suspended in 2015 as crude prices fell. •

Proposed Elk Creek Pipeline Bakken NGL Pipeline Overland Pass Pipeline (50% ownership interest)

Montana

North Dakota

South Dakota Wyoming

Nebraska

Colorado Kansas

Source: ONEOK

Daily U.S. Natural Gas Consumption and Exports (Jan 1, 2013 – Jan 4, 2018)

DEMAND January ushered in 2018 with substantial demand. Demand was significantly impacted by colder-than-average temperatures across the nation. Demand for natural gas surpassed its previous single day record, which occurred during the polar vortex of 2014, reaching 150.7 billion cubic feet in early January. While commerical and residential burn increased, power generation and exports were the larger contributing factors. China closed 2017 by becoming the second largest importer of LNG, behind Japan. Limited storage facilities within the country lend peak demand to be met by imports, nearly 15% of which are U.S. LNG exports. Last quarter, we reported on the fully approved Delfin offshore export project. The increased exports to China continued in February, with China Natural Petroleum Corporation and Cheniere agreeing to a long term supply deal. The long term sales and purchase agreements are set to kick off later this year with an additional traunch beginning in 2023. The volume will be split between the currently operating Sabine Pass and the currently under construction Corpus Christi Train 3. •

Source: Energy Information Administration (EIA), based on PointLogic

Alternative Fuels

STORAGE Weekly Changes in Lower 48 Working Natural Gas in Underground Storage (2012 – 2018)

Q1’s sustained periods of below-average temperatures put pressure on U.S. national supply. On the coldest days, spot prices tested the $100 mark in some regions, leaving suppliers scambling to optimize their position. As a result, natural gas stock withdrawals reached their all time high. Heating Degree Days (a measure of cold weather related demand) for the first week of the calendar year 2018 reached 273, garnering net withdrawals from inventory of 359 billion cubic feet. The previous record withdrawal occurred during the polar vortex in January of 2014 where 288 bcf of natural gas was withdrawn. January, as a whole, saw just shy of 1,000 bcf in withdrawals. February saw continued demand and withdrawals totaling more than 500 bcf. Inventory levels are below-average despite natural gas inventories ending the 2017 heating season 15% above the five year average and injection season providing larger surpluses than the previous two years. •

Source: U.S. Energy Information Administration, Weekly Natural Gas Storage Report and data from the National Oceanic and Atmospheric Administration

Viewpoints The ELD Debate

By Dan Kemeny, Senior Logistics Manager, LTL

The Electronic Logging Device (ELD) requirement went into effect in late 2017, bringing the transportation industry further into the 21st century while helping to enforce safety regulations such as hours of service requirements. During its multi-year path to enactment, the ELD requirement survived significant opposition as it repeatedly overcame litigation challenges. “Electronic logging devices have been legislated, promulgated and litigated — with Congress voting three times in the past five years in favor of this requirement and a federal court rejecting a challenge to the rule,” said American Trucking Association’s (ATA) President and Chief Executive Officer, Chris Spear. The federal court he refers to is the U.S. Court of Appeals for the Seventh Circuit, which is just a step below the Supreme Court. That result doesn’t bode well for the appeal filed by the Owner-Operator Independent Drivers Association (OOIDA) to the highest court, which as of this writing, had not determined whether to hear the case or not. One of the staunchest opposing parties against the ELD mandate, OOIDA argues that among other problems, there are not enough documented guidelines about the technical specifications and enforcement guidelines. Further, a survey of over 2,000 owneroperators conducted by the association found ELDs increase driver fatigue as well as cause other issues. Over 70% of survey respondents reported an increase in driver fatigue due to feeling pushed to drive longer hours and at a faster pace than before, even when they had time left on the clock. According to one respondent, “Safety has been decreased. You are on a time clock that is always pushing you. I panic when I am at a shipper or receiver and I see the clock running out on my drive time. I refuse to sleep on the side of the road. It is not safe.”

the mandate for years. “The implementation of the ELD mandate is particularly gratifying for the tank truck industry as the NTTC and its carriers strongly endorsed this safety tool for several years under the leadership of former NTTC Chairman Steve Rush. The technology ultimately strengthens the partnership between carriers and shippers by prioritizing safety and compliance in the era of well-documented capacity constraints in the trucking industry,” says NTTC President, Daniel Furth. Chris Spear, ATA President, commented “The time has finally come to retire decades-old, burdensome paper logs that consume countless hours and are susceptible to fraud, and put the safety of all motorists first. The benefits of this rule exceed the costs by more than $1 billion, making it a rule the ATA can firmly support and easily adopt. Today marks the start of a new era of safety and efficiency for our industry and we thank the champions in the Department of Transportation and Congress who have gotten us to this point.” Regardless of which side of the argument someone may fall, the mandate is in place and should help to ensure compliance with existing hours of service rules. •

On the other side of the argument, the National Tank Truck Carriers (NTTC) and the ATA have strongly supported and praised the roll out of 29

Dan Kemeny Senior Logistics Manager, LTL Dan Kemeny leads Mansfield’s LTL department in Denver. His responsibilities include overseeing the logistics and billing for all of Mansfield’s fleet fueling and tank wagon deliveries. Prior to his current role, he spent time handling Mansfield’s FTL and DEF transportation and regional operations.

Viewpoints By Clint Hamlin, Arsenal Fuel Quality Specialist and Madi Burton, Market Intelligence Analyst

Spring Cleaning – Time to Clean Your Tanks

When I was young, my room was a mess. Around this time every year, my mother would start the dreaded “spring cleaning.” Not only did I have to clean my room, but I also had to help clean the rest of the house! I hated the process, but once it was done, it was so much easier to keep my room clean, which helped prevent serious injury from stepping on the terrifying “middle of the night Lego.”

Viewpoints

It’s time to think about your tank’s overall health

Just like my bedroom spring cleaning, your fuel tanks need regular attention. Over time, above and below-ground tanks can accumulate sediment, water and eventually harmful microorganisms. Water is extremely troublesome to fuel tanks, and can actually nurture the growth of microorganisms. These ‘bugs’ live in the layer of water at the bottom of the tank and thrive on the bio content in fuel. The bugs create acidic waste and gases which are released into the tank and cause serious problems with surface corrosion in both steel and fiberglass tanks. Corrosion can lead to sediment accumulation, damage to pumps, probes and fuel lines, or even releases of fuel. The EPA is investigating the potential for fuel to escape containment as a result of the corrosion. Springtime temperature swings can cause condensation to rise and fall daily. Then, warmer summer temperatures create an atmosphere that allows microbial growth to flourish, meaning fuel can go from containing small impurities to heavy contamination in just a few weeks. That’s why spring is an ideal time to take care of business.

What’s in your tank?

Mansfield leverages new camera technologies to see inside our customers’ fuel tanks and the findings have been astonishing. In the past year, between the camera technology and fuel testing, ninety percent of the fuel tanks we've inspected contained water contamination, sludge and microbial bugs. The EPA reports that eighty-three percent of tanks they’ve inspected were beginning to form corrosion in the top of the tank as a result of corrosive vapor condensation.

Viewpoints

What type of cleaning do you need?

The severity of contamination in a tank determines the level of cleaning required. A simple bottom sweep can remove debris and water from the tank. A full cleaning can restore a tank to almost new by removing and filtering the fuel and then physically scrubbing the inside of the tank using water jets. A tank cleaning expert can help you determine what would work best for you.

Treated Diesel Fuel “A” Rating

Take a good look into your tanks this spring and perform the necessary cleaning. But don’t stop there. Just as important as the initial cleaning, we recommend a regular treatment program with Arsenal Fuel additives and periodic fuel quality testing. We also recommend a quarterly biocide treatment - paired with a regular dose of Arsenal Clean365. It’s powerful dispersant keeps water and microbial bugs at bay, as well as effectively removes injector deposits. When your injectors operate well, you will reap other benefits including improved fuel economy, lower DEF use, fewer DPF regens and improved stability. Now’s the time to get a jump on cleaning up your entire fuel system. With a consistent Fuel Quality program, your vehicles, your bottom line and the environment will benefit.

Untreated Diesel “E” Rating

Injectors

5 Steps to Clean Your Tanks 1. Inspect the Tank

The government will conduct a visual inspection of your tank, pumps and containment area on a routine basis. However, performing your own selfinspection every three months is beneficial. Walk around your tank to look for small leaks, damaged parts or dispenser issues. This could save you a major headache down the road.

2. Test the Fuel

After completing the visual inspection, take a fuel sample from the bottom of the tank. Examine the appearance of the fuel - look for separation, sediment or organic growth. If any impurity is present in the sample, an additive expert should prescribe the necessary treatment for the tank. Many harmful microorganisms cannot be seen by the human eye. Fuel samples should be tested in a lab every six months to verify quality and cleanliness.

Filter Plugging

Accumulation of particles on bottom of container

Unplugged Filter Particles dispersed in fuel

3. Change the Filter

4. Treat with Biocide

Treat your fuel with biocide each quarter to prevent detrimental corrosion from forming in tanks. Microbial bugs can be extremely harmful to fuel, tanks and fleets. The bugs feed on fuel and release gases that cause tank corrosion. Proactively fight against microbial bugs to protect your fueling and fleet equipment from corrosion and tank decay.

5. Fortify Fuel with Arsenal Clean365 Additive

Clean365 is a high quality detergency additive. U.S. fuel quality, even when meeting today’s regulatory compliance standards, has not kept pace with emerging heavy duty engine technology. Dirty tanks and poor fuel quality can lead to a number of costly maintenance problems, including injector failure, filter plugging and reduced fuel economy. Treat each fuel delivery with Arsenal Clean365 to safeguard your investments and your bottom lines. •

The dispenser filter should be changed every 3-6 months depending on the rate of fuel consumption. After changing the filter, inspect the used filter for any unusual sediment and blockages. Visual inspection can reveal microbial contaminates clogging your filters – indicating dirty fuel. Regularly changing the dispenser filter will also improve the fuel flow rate, increasing fueling speed.

Clint Hamlin Arsenal Fuel Quality Specialist Clint is responsible for Mansfield’s customer fuel testing program, additive product inventory and logistics, and Arsenal product marketing. He analyzes companies’ fueling methods, geography, and fuel samples to prescribe fuel additives and services that meet their fuel quality needs. Clint has been with Mansfield for over nine years, working previously as an inventory management specialist and operations specialist.

Mansfield National Supply Team Contributors

Mansfield’s supply team brings unique experience and industry expertise to the table. From contract pricing and hedging to trading of fuel, renewables and alternatives such as CNG and LNG, the Mansfield supply team covers the gamut of knowledge required to manage today’s complex national fuel supply chain. Although they work as a national team, each member’s regional focus enables Mansfield to deliver geographic-based supply solutions by more efficiently managing market-specific refining, shipping and terminal/assets.

Andy Milton

Joshua Wakeman

Andy heads the supply group for Mansfield. During his tenure, the company has grown from 1.3 billion gallons to over 3 billion gallons per year. His industry experience spans all aspects of the fuel supply business from truck dispatch, analytics, and index pricing to hedging and bulk purchasing. Andy’s expertise in purchasing via pipeline, vessel, and the coordination via futures and options for hedging purchases enables him to successfully lead a team of experienced and motivated supply personnel at Mansfield. His team handles a wide geographic area of all 50 states and Canada, including all gasoline products, ULSD, kerosene, heating oil, biodiesel, ethanol, and natural gas. •

Joshua joined Mansfield’s Supply Team following the recent acquisition of The Earhart Company. Joshua is responsible for gasoline and diesel supply in the northeast. At Earhart, Joshua managed the company’s gasoline, diesel, and propane hedging and supply needs. •

Supply Manager

Senior VP of Supply & Distribution

Martin Trotter

Pricing & Structuring Analyst

Martin is responsible for handling natural gas and electricity pricing, deal flow, and analytics for Mansfield’s Power & Gas division. Before his current role, he served as the Sales Analytics Supervisor and held various roles on the Risk & Analysis Team. •

Nate Kovacevich

Sara Bonario

Senior Supply Manager

Supply Director

Before joining the company, Nate worked as a Senior Trader, where his responsibilities included managing refined product and renewable fuels procurement, handling all hedging-related activities, and providing risk management tools and strategies. He performed commodity research and analysis for customers with agricultural- and petroleum-related risk, devised and implemented risk management programs, and executed futures and option orders on all the major exchanges. •

Sara manages the team responsible for procurement and optimization of all refined fuels for Mansfield’s Great Lakes, Central, and Western regions. She is also responsible for nationwide purchasing, hedging, and distribution of renewable fuels. Sara has an extensive supply and trading background, with over 25 years of experience in the oil industry. •

Alan Apthorp

Chris Carter

Chief of Staff to President

Supply Manager

Alan is responsible for content editing, research, and data analysis and visualization at Mansfield, and is an editor for FUELSNews Daily andFUELSNews 360. He is responsible for providing insights to the executive team, including market trends and analysis. Before his appointment to Chief of Staff, Alan worked in data analysis and visualization as a Market Intelligence Analyst. •

Amy Nguyen

Madi Burton

Amy is responsible for both refined product purchasing for contract customers and bulk pipeline movements within California, Oregon, Washington, Idaho, Nevada, and Arizona. She is also responsible for scheduling, hedging, supply bids, and other optimization efforts throughout the West Coast. Amy joined Mansfield in 2014 as an optimization analyst. •

Madi is responsible for industry-specific market research and analysis, generating relevant fueling insights based on developing trends. She also works with the Marketing team to create customized solution recommendations for key customers. Madi joined Mansfield in 2016, and has worked closely with teams in business development, operations, and supply. •

Chris is responsible for refined product purchases, including contracts, day deals, and rack purchases in the Northeastern United States. His responsibilities also include supply contracts and current bids. Chris joined Mansfield in 2009 as a Supply Optimization Analyst. •

Market Intelligence Analyst

Supply Optimization Supervisor

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