FUELSNews 360° - Q4 2020 Market Report by FUELSNews

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N E W S

I N F O R M A T I O N

OCTOBER-DECEMBER Q1 Q2

4TH QUARTER Q3 Q4

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Table of Contents FUELSNews 360° Quarterly Report Q4 2020 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

Regional Views continued

Overview

October through December 2020

Prices in Review

Rack-to-Retail Spreads

PADD 3 Gulf Coast Matthew Smith

PADD 4 Rocky Mountain Nate Kovacevich

PADD 5 West Coast Brent Fergeson

Economy & Demand 30

Fundamentals

Alternative Fuels 30

Sara Bonario

Oil Futures Turn Bullish

Oil Production

Global Oil Inventories

Reﬁnery Activity

Candidates Spar on Oil

US Dollar Creates Oil Tailwinds

Viewpoints 37

LTL Fuel: Solutions for Small, Medium, and Large Fleets Brian Hazzard

PADD 1 East Coast 40

Gabe Aucar

COVID-19 Impact on Driver Shortage Nikki Booth

Regional Views 23

Natural Gas Martin Trotter

38 23

Renewables

PADD 2 Midwest

Supply Team Forecasts WTI Average Price for 2021

Chris Carter

FUELSNews 360˚ National Supply Team Contributors

Q4 2020 Executive Summary For many, 2020 was a year of total upheaval and chaos.

2021 will see even more growth. Economic recovery helped

That description is ﬁtting for oil markets as well, though 2020

drive rising consumption, with the world bouncing back much

brought more than just chaos. It also demonstrated the

more quickly than anticipated months ago. Read why the

remarkable resilience of the petroleum supply chain, from

economy recovered so quickly on page 13.

production to reﬁning to distribution. Thousands of producers

Looking ahead, there remain many variables that may affect

and marketers faced difﬁcult choices, and the outcome showed

fuel prices in 2021. The world faces a new US political adminis-

both restraint and a commitment to maintaining balance.

tration, vaccine deployments, OPEC+ supply decisions, and

From aluminum cans to semiconductors, many industries

many more factors that could propel prices in one way or

experienced shortages during the COVID downturn as

another. Mansﬁeld’s supply team wades through these issues

consumer behavior changed. Yet the petroleum industry came

and provides forecasts on the future. Turn to page 40 to

through for customers, fueling the US economy.

In many ways, Q4 was the perfect ending to an abnormal year.

In regional markets, reﬁnery outages and utilization dominated

After months of a raging pandemic, a vaccine was approved

headlines. Around the country, reﬁners struggled to balance

with over 95% efﬁcacy. Months of political strife culminated in

rising crude oil prices and suppressed fuel prices. Some reﬁners

the November election, bringing uncertainty and allegations of

took production ofﬂine for maintenance, some pulled back due

fraud. The OPEC+ alliance extended its production agreement

to market forces, and others were forced to shut down entirely.

into 2021, ensuring balance for global oil markets. Many complex and historic 2020 trends were wrapped up in Q4, providing conﬁdence to oil markets heading into the new year.

Regional inventories showed a wide divergence in trends. Along the East Coast and Gulf Coast, diesel inventories remained more than 30% above ﬁve-year seasonal averages. In the

Along with added certainty came a strong rally for oil markets

Midwest, however, diesel stocks fell 5% below historical levels.

as the year came to an end. Vaccine announcements spurred a

Gasoline stocks were much closer to standard levels, with

multi-week rally that pushed WTI crude from $42 to $48 by

inventories ranging from 1-10% above their local average.

late December.

Read about regional inventories and reﬁnery trends on pages

Although demand was suppressed throughout the year, Q4

16 – 22.

brought a glimmer of hope that consumption may eventually

We hope you enjoy this quarter’s issue of FUELSNews 360°.

return to historical levels. In Q4, global demand grew by

Please feel free to email us at fuelsnews@mansﬁeldoil.com with

2 MMbpd over the previous quarter, and experts anticipate

feedback, questions, or simply to request additional copies. •

OVERVIEW October through December 2020

Q4 Market Summary

$1.4763 $1.4084

$48.52

30,606

Source: New York Mercantile Exchange (NYMEX)

Overview

October – December 2020 WTI Crude Prices

Source: New York Mercantile Exchange (NYMEX)

Overview

October This year has been anything but normal, and the fourth quarter served as a ﬁtting denouement to end the global drama that was 2020.

area was still recovering from recent storms, and Hurricane Delta caused reﬁneries in the area to close once again, causing some local price ﬂuctuations but surprisingly avoiding any national repercussions. Burgeoning fuel inventories across the US ensured no lingering supply affects from the storm.

The ﬁnal quarter of the year began with the news of President Trump becoming infected with the coronavirus. After downplaying the pandemic on some occasions, the President’s infection raised concerns of a second wave, affecting people in the US, Europe, and Asia. If a US president can get sick, who is safe? Further, how might the recovering President change his coronavirus response?

The IEA released its annual World Energy Outlook in October. The report noted that forecasting has become harder than ever because, "The Covid-19 pandemic has caused more disruption to the energy sector than any other event in recent history, leaving impacts that will be felt for years to come." There is no clear path forward; instead, there are many different possible scenarios. The diversity of critical decisions and advancements being made by governments, communities, and businesses makes any forecasting hard.

Crude was dealt a small setback, but it ended up being just a minor blip. The President was given the best care available and recovered quickly. After being discharged from Walter Reed, President Trump told supporters, “Don't let [the virus] dominate your lives, get out there, be careful." Markets viewed this as a signal that President Trump's illness would not change his response to the pandemic or lockdowns. Not long after the news of Trump's infection, Hurricane Delta moved through the Gulf of Mexico, aimed at Louisiana. Nearly 1.5 MMbpd, or 80% of Gulf oil output, was shut in preparation for the storm, and markets reacted bullishly. The

In their baseline scenario, the IEA expects global energy demand to have dropped 5% in 2020, while global energy investment will have fallen by 18% this year. Oil demand in advanced economies is forecast to decline 4 MMbpd between now and 2030. Their analysis continued, "Uncertainty over the duration of the pandemic, its economic and social impacts, and the policy responses open up a wide range of possible energy futures." The annual report accurately portrayed the uncertainty and multitude of variables and scenarios that could arise, given the virus's world-shaking sociopolitical effects. OPEC met in October and reiterated that it would support a balanced market. While Russian Energy Minister Alexander Novak said they were planning to reduce supply restrictions as planned in January, Saudi Arabia stated, "No one should doubt the group's commitment to providing support." In addition, three separate sources from member countries hinted that loosening quotas in January could be reversed if market conditions made it necessary. As October ended, coronavirus cases continued to mount worldwide. Both the US and European countries set records for new cases reported, adding to concerns that lockdowns would be required during the winter. European countries, including Spain, Italy, France, the UK, and Ireland, tightened restrictions, with Ireland issuing a second full lockdown.

Overview

November China's Ministry of Commerce announced a 20% increase in quotas to purchase foreign oil, allowing Chinese non-state entities such as private refineries to take advantage of favorable economics to purchase extra crude oil in 2021. While US and European refinery utilization rates have been low this year, utilization rates for China's private "teapot" refiners have been increasing. The 20% increase in the import quota equates to about 823 kbpd. Prolonged uncertainty in the US election weighed on markets as President Trump suggested the election process did not play out fairly. Although markets can react in different ways based on the political party in charge, they will always abhor uncertainty. Trump filed lawsuits in several states to remedy what he believed were illegal election practices. Although many lawsuits were denied, the continued uncertainty added to market uneasiness. Continuous new lawsuits prolonged the process, but Biden was eventually declared the winner and titled “president-elect.” Biden is expected to take a softer stance with Iran, potentially resulting in global supply growing 1 MMbpd if sanctions are lifted. The highlight of Q4, with the attention of the entire international community, was a vaccine created by Pfizers with a purported 90% effectiveness in preventing the coronavirus.

Experts had been expecting closer to 50% efficacy, more in line with the 40%-60% efficacy of the annual flu vaccine. "It is a great day for science. It is a great day for humanity when you realize your vaccine has 90% effectiveness. That's overwhelming," said Pfizer CEO Albert Bourla. Pfizer expects to produce more than 1 billion doses of the vaccine next year. Despite the positive vaccine development, the IEA downgraded their demand forecast in their November report. Per their analysis, "We now expect demand to decrease by 8.8 MMbpd in 2020 (versus 8.4 MMbpd in last month's Report). Vaccines are unlikely to significantly boost demand until well into next year." The -0.4 MMbpd demand revision in 2020 and warning about vaccines gave traders a reason to pause their rally. The report went on to discuss supply: "Production from countries participating in the OPEC+ agreement held largely steady. Overall compliance was 103%. In November, world oil supply may rise by over 1 MMbpd as the US recovers from hurricanes and Libya continues to bounce back." Another vaccine-related rally touched off after a second COVID-19 vaccine, manufactured by Moderna, was discovered to be 94.5% effective in preventing infections. The Pfizer vaccine faced a daunting distribution challenge – the drug must remain at -70⁰ 9

Celsius until being administered. On the other hand, the Moderna vaccine can last six months at -20⁰ C and up to a month in normal refrigerator conditions. Easier distribution logistics may ultimately win the day – although Pfizer was first, Moderna will be much easier for the medical supply chain to accommodate. Oil traders connected the dots between a highly effective vaccine and future rising demand for fuel and travel – and the rally for oil prices began. After months of WTI crude hovering between $36-$41 per barrel, crude broke higher to $42/bbl on November 20, climbing ever higher as the quarter continued. As November came to a close, Yemen's Houthi rebels fired a Quds-2 cruise missile at a Saudi Arabian Oil Co. facility in Jeddah. The projectile struck a fuel tank at the distribution station and ignited a fire. Thankfully, no injuries were reported. Col. Turki al-Maliki, a spokesman for the Saudiled coalition fighting the Iran-backed Houthis in Yemen, blamed the rebels for what he called a “cowardly attack” on global energy security. While Saudi oil infrastructure suffered minimal damage, any conflict in the area is usually bullish for crude prices. A major attack by Houthi rebels in September 2019 on Saudi Arabia's Abqaiq oil processing facility caused a temporary supply decrease of 5.7 MMbpd and a spike in prices that shook global markets.

Overview

December In the final month of a daunting year, oil prices moved to multi-month highs following OPEC+'s decision to slowly taper its production cuts. Since August, the group adhered to 7.7 MMbpd cuts. When OPEC+ first struck an agreement early in 2020, the plan was to ease cuts to just 5.7 MMbpd in January 2021. Markets suspected that OPEC could change its approach given lockdowns, and that suspicion was proven correct. The alliance announced cuts would only be reduced to 7.2 MMbpd in January, confirming beliefs that the group is taking a cautious approach to unwinding its supply agreement. Looking ahead, the group may hold cuts to the new 7.2 MMbpd level, or they could continue tapering over time. OPEC+ plans to meet monthly to discuss needed changes to its production strategy. According to Iran state media, Iran is planning to increase crude output to full capacity within three months, ahead of a possible easing of US sanctions after President Elect Joe Biden takes office. In 2018, President Trump exited the 2015 nuclear deal and reimposed sanctions on Iran, limiting Iran’s 2 MMbpd of oil exports. President Elect Biden has said he would rejoin the nuclear deal and lift sanctions if Iran returned to strict compliance with the pact. Should the nuclear deal receive new life, millions of barrels of supply will flood an already over-supplied international market. Even if demand returns to pre-COVID levels, OPEC+ may need to take action to balance the market or risk growing inventories and plummeting prices. The United Kingdom began a mass coronavirus vaccination program in December. This program is the first among Western nations and is being watched closely by the US and other countries. The UK program

will be a proving ground for distribution and implementation of the vaccine, which requires special handling and storage. The first recipients of the Pfizer-BioNTech vaccine were health workers and the elderly. A week later, the same vaccine was approved in the US, and the US vaccination program began. Traders are keeping a close watch on the vaccine rollout, and there is optimism that the world is turning the corner on the pandemic. In mid-December, the US government secured an additional 100 million doses of the Moderna vaccine – enough to treat 50 million people – bringing the total number of Pfizer and Moderna vaccines purchased to 300 million (150 million people treated). As vaccine optimism rose, so too did oil prices. Although prices keep rising, the demand picture in the US does not necessarily support much exuberance. Refined fuel demand remains below pre-COVID levels, and weekly gasoline demand fell to its lowest level since May. Jet fuel remained down about 35%. Diesel demand trended at normal levels, but one product cannot lift the entire market. Winter Storm Gail passed through the Northeast, bringing heavy snowfalls and winds. Although the storm had a minimal impact on fueling infrastructure, the inclement weather did impact barge shipments. With limited local refining capacity, the Northeast relies on pipeline imports from the US Southeast and the Chicago region as well as barge shipments from Europe. With shipments delayed due to stormy weather, fuel prices in NY Harbor – the delivery point for NYMEX refined product contracts – did tick a bit higher. That dynamics partially explains why 3:2:1 crack spreads expanded above $11 for the first time in months.•

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Overview

Prices in Review After averaging $40.92/bbl in Q3, WTI crude rose to $42.43 in Q4, marking a 3.7% gain in oil prices during that period. Although the fourth quarter was closer to historical price levels, it is still 25% below the levels seen during Q4 2019. During Q4, prices ﬂuctuated in a range of $13, hitting a low of $35.79 in late October before climbing to $49.10 in late December. Early on, high inventories kept downward pressure on the market, but consumers chipped away at inventories throughout the quarter. OPEC+ cuts helped keep crude stocks in check, so prices could not fall too low. As November ended, a vaccine rally gave the market a boost with each morsel of promising news. Unlike the range-bound trading of Q3, the fourth quarter closed out the year with rallying crude prices.

Quarterly WTI Crude Prices

Source: New York Mercantile Exchange (NYMEX)

Diesel prices were a little more active compared to crude, rising from an average price of $1.20 in Q3 to $1.27 – a gain of 5.8%. Consumers continued to enjoy a reprieve from pre-COVID levels, which trended closer to $2/gal throughout 2019. Diesel experienced a rally to close out the year. Diesel prices ranged from $1.08 to $1.51, a sweeping range of 43 cents for the quarter. Compared to 2019, diesel prices have fallen by over 35% - meaning that even after rallying 43 cents, diesel prices remain at a bargain price compared to historical levels.

The average price for gasoline for the fourth quarter was $1.21. Unlike crude and diesel, gasoline prices dropped by two cents compared to Q3 for a -1.6% drop in average price and is down 26% compared to last year during this period. The low for the quarter was $1.05 and the high for the quarter was $1.40. The product saw price swings of 35 cents, roughly 33%, with a vaccinerelated rally to close out the year. •

Quarterly Gasoline Prices

Quarterly Diesel Prices

Source: New York Mercantile Exchange (NYMEX)

Overview

Rack-to-Retail Spreads Rack-to-retail spreads, the difference between wholesale fuel prices and gas station prices, remained at normal levels in Q4. In Q2, spreads widened as prices fell. When wholesale prices fall rapidly, retail prices tend to remain stable, a phenomenon known as “sticky pump” which causes retail margins to expand. While bulk fuel buyers enjoyed lower prices, retail consumers only saw prices fall moderately.

Gasoline Rack-to-Retail Spreads

Source: Energy Information Administration (EIA), Oil Price Information Service (OPIS)

In Q4, gasoline saw retail margins remain at historically normal levels. Gasoline spreads averaged 23 cents, slightly above the pre-COVID average of 18 cents. Bulk and retail prices varied somewhat, with retail gas prices ﬂuctuating more than 15 cents during Q4.

Diesel Rack-to-Retail Spreads

Source: Energy Information Administration (EIA), Oil Price Information Service (OPIS)

Diesel saw rack-to-retail spreads return close to pre-COVID levels. Unlike gasoline, though, diesel spreads were very close to the average. In Q4, diesel spreads averaged 43 cents, roughly 2% above typical levels of 42 cents. For heavy fuel consumers, rack-to-retail spreads represent the ROI per gallon on installing a bulk tank or switching from fuel cards to mobile fueling. For instance, a customer buying retail diesel who installed a bulk tank would have saved 43 cents per gallon in Q4. For a customer consuming a million gallons over that period, that represents a savings of $430,000 – quickly paying for the cost of a tank installation. • 12

ECONOMY & DEMAND “The sky is falling! Sound the alarm; the end is near!” While hidden behind statistics and analytical jargon, this was the general message early in the COVID-19 crisis, back in March and April when lockdowns sent economies spiraling by -30%. Doomsayers were not merely off by a small margin of error; instead, many predictions have been shown to be widely off track. For instance, back in April, the Congressional Budget Ofﬁce estimated that unemployment would be 11.7% in Q4 2020 and average 10.1% in 2021. In fact, unemployment fell to 6.7% by the end of Q4, shaving years off the recovery. Similarly, the EIA’s May forecast showed crude oil not reaching $40/bbl until April 2021. Prices instead hit $40/bbl in July 2020 and ended 2020 well above that threshold. At a broader level, the Organization for Economic Cooperation & Development (OECD) issued a forecast in June for global GDP to fall 12% in the second quarter of the year, with GDP not returning to preCOVID levels in 2021 at all. In fact, they even evaluated a double-dip scenario in which economic activity remained a full 4% below pre-COVID levels in 2021. In the OECD’s December report, the agency’s baseline forecast showed a much brighter outlook: global GDP will return to pre-COVID levels by Q3 2021. Although global GDP will not catch the 2019 trendline, it will at least dig itself out of the ditch caused by quarantines and medical crises.

OECD December Report Baseline Forecast

Still, the agency’s low-growth scenario, which forecasts a 2-3% drop in GDP for the year, is a sobering reminder that the world has a long way to go in its recovery. The Harvard Business Review tackled the fast recovery in its article, “Why the Global Economy Is Recovering Faster Than Expected.” Cyclical, investment-driven recessions bring an overhang of excess investments and products that must be worked off before growth can continue. With an exogenous shock such as COVID19, though, those systemic harms are not necessarily Source:OECD (2020), “OECD (2020), OECD Economic Outlook, Volume 2020 Issue 2”, OECD Economic Outlook: Statistics and Projections (database). present. Fast-acting policy responses around the world ﬁlled the demand gap during the crisis, preventing The outlook for businesses in 2021 is mixed. Lockdowns may put local pressure on consumer widespread bankruptcies and bank failures that would businesses during the winter, but vaccine deployment will ultimately provide relief in Q1 and Q2 of have prolonged and deepened the crisis. next year. HBR stresses that companies must remain optimistic and invest in long-term growth, rather Even with a fast rebound, the article explains that 38% than succumbing to current fears. of US consumption occurs in industries hit hard by In keeping with an optimistic outlook, US Q4 GDP is forecast to be 8.6% as of December 31, an social distancing measures. These sectors cannot fully astoundingly typical ﬁgure given the vast decline and acceleration of GDP in Q2 and Q3, respectively. recover until the vaccine is widely distributed, so the Below expected industrial production dragged the forecast lower, while supportive housing economy remains exposed to lockdown risks during construction and permitting helped buoy growth. • the winter. 13

Economy & Demand

US GDP Growth

As US GDP returned to normal, so too did unemployment. Although elevated at double pre-COVID levels, unemployment has been cut more than half since peaking at 14.7% in April. In November and December, unemployment fell to just 6.7%. For context, economists generally consider 4-5% unemployment as “full employment”– the rate at which nearly all job seekers can ﬁnd work, and those unemployed are predominantly between roles rather than long-term job seekers. Before COVID, unemployment had fallen to historically low levels, but unemployment need not fall below 4% before the economy is considered fully recovered. A harsh winter of lockdown could cause unemployment to rise in Q1 2021, even as a vaccine is deployed. Moving into Q2 2021 and beyond, though, expect continued improvement in unemployment.

*Estimate

Source: Bureau for Economic Analysis, Federal Reserve Bank of St. Louis, Federal Reserve Bank of Atlanta

US Unemployment Rate

Source: US Bureau of Labor Statistics

Consumers are slowly regaining their optimism, though the December sentiment level of 80.7 is the lowest holiday reading since 2012. Consumers typically become more optimistic late in the year, with Decembers showing a +3% lift over annual average sentiment. This year saw a similar holiday uplift, which speaks to the sharp drop in sentiment earlier this year.

Consumer Sentiment Index

Source: University of Michigan

Economy & Demand

Liquid Fuel Demand Unlike the unified drop and recovery in April and May, refined product demand trends diverged in Q4. Gasoline demand succumbed to seasonal trends, falling from the summer’s higher levels. Since July, gasoline demand has trended roughly 1 million barrels per day (MMbpd), around 10%, below the five-year average. That gap is likely to continue into 2021 until the vaccine is fully deployed and consumers get back to their regular activity. Diesel demand has performed strongly, surpassing the five-year average on several occasions. Although some diesel-heavy sectors, such as public transit and student transportation, experienced reduced demand, rising demand from parcel shippers and beneficiaries of government stimulus has compensated for the loss. Like gasoline, jet fuel demand remains below average levels, though to a greater degree. Demand collapsed by 75% during the worst part of the pandemic and remained 30% below average in Q4.

Reﬁned Fuel Demand & 5-Year Range

In aggregate, fuel demand likely will not fully recover next year from 2020’s sharp losses. Across all products, demand fell 2.4 MMbpd this year. Although 2021 will bring demand closer to average, the EIA expects growth to be 1.6 MMbpd – just two-thirds of the total demand lost this year. Gasoline is the biggest culprit, regaining just 55% of 2020’s losses. As in years past, hydrocarbon gas liquids, or HGLs, will be a major factor for net-new demand growth. HGLs, used both as a fuel and as a feedstock to make plastic, rubber, and fuel additives, are a fast-growing part of the crude barrel. HGL demand remained ﬂat in 2020 when all other products saw sinking demand, and growth will be roughly 0.3 MMbpd in 2021. As developed nations cut back on their petroleum needs through engine efﬁciencies and alternative fuels, rising HGL demand will keep overall petroleum demand steady to higher, supporting crude and fuel prices.

Source: Energy Information Administration (EIA)

*Estimate

US Liquid Fuels Product Supplied (Consumption)

Components of Annual Change

Source: Energy Information Administration (EIA), Short-term Energy Outlook, December 2020

F U N D A M E N TA L S

Despite the infectious rally spread throughout ﬁnancial and commodity markets in Q4, the fundamental outlook for oil markets is less rosy than implied. Although the worst is surely in the rearview mirror, markets have a long, complicated path ahead.

World Liquid Fuels Production and Consumption Balance

Global petroleum fundamentals suggest a small net supply shortage persisting throughout 2021, an intentional imbalance that will force more inventory withdrawals. The world consumed an estimated 95.6 MMbpd of oil in November, still off roughly 6% from November 2019. That’s an improvement over the full 2020 average, which was roughly 8% below 2019. Although demand will rise by 5.8 MMbpd in 2021, that won’t be enough to bring total demand back to pre-COVID levels, meaning continued supply restraint will be necessary. •

Source: Energy Information Administration (EIA), Short-Term Energy Outlook, December 2020

Fundamentals

Futures Move to Bullish Backwardated Structure The end-of-year rally for oil prices brought a transition in oil market pricing. Futures prices began to turn lower even as current “prompt” prices moved higher, resulting in a structure known as backwardation. The backwardation appeared in mid-November, and continued to steepen as the quarter continued. Although the backwardation was not present in the early months of 2021, it suggests more bullish times to come.

WTI Forward Curve Flips to Backwardation

Source: CME

Backwardation seemingly indicates that future prices will move lower, but the structure is actually a bullish sign. Low future prices tell suppliers to empty their inventories now while prices are still high, and they tell oil producers not to invest in new drilling because prices will be lower. As the market responds to these incentives, inventory levels and new production fall, pushing prices higher and higher. It also creates favorable conditions for investors, which can cause a big push to purchase oil contracts for ﬁnancial gains. Only a very small portion of oil trades result in a physical delivery of oil; the other 90+ percent are purely speculation. When oil prices are backwardated, investors can roll their oil contracts from month to month and gain

Oil Production

volume. For instance, an investment bank owning 100 barrels of oil delivered next month can sell their position and buy 102 barrels of oil delivered a few months in the future. Because this strategy can be lucrative, investors ﬂock to backwardated markets, further pushing up near-term prices. •

US Liquid Fuels Product Supplied

Components of Annual Change

(Consumption)

As demand was plummeting in 2020, supplies were cut to keep markets in balance. After limiting production by historic levels, OPEC+ voted in Q4 to maintain deeper cuts in 2021 rather than allowing them to taper slowly. The OPEC+ countries have shown ﬂexibility in amending their quota arrangements in the face of lower demand and Libyan production gains. Since August, the group has been cutting 7.7 MMbpd. When their agreement was struck early in 2020, they planned to reduce cuts to just 5.7 MMbpd in January 2021. In December, the group announced they would only reduce January cuts to 7.2 MMbpd, conﬁrming the group is taking a cautious approach to winding down its supply cuts.

Source: Energy Information Administration (EIA), Short-Term Energy Outlook, December 2020

Despite its restraint, OPEC+ dominates global supply growth in the near term, with virtually all the Q4 2020 gains and 80% in Q1 2021. For 2021 as a whole, non-OPEC+ producers are expected to increase output by 0.4 MMbpd, after falling 1.3 MMbpd in 2020. The EIA forecasts OPEC crude oil production will average 27.5 MMbpd in 2021, up from an estimated 25.6 MMbpd in 2020. 17

Fundamentals US crude oil production in Q4 was the lowest in two years. For much of the fourth quarter, production hovered between 10-11 MMbpd – dipping below that range briefly at the end of October. Only at the end of the year did production begin to climb from its 2020 lows. US rig counts rose steadily throughout the quarter, closing the year with 267 rigs – down 403 rigs from the same time last year. It is the lowest end-of-year figure reported by the Baker-Hughes Company since 2005, when drilling and fracking breakthroughs were just beginning to be deployed in crude fields. Bankruptcies and consolidation permeated the US oil industry. Shale companies remain wary of sinking more money into new wells with crude prices in the $40 to $50 range. Still, at least some new drilling must continue. Adding new wells is the only way for US producers to maintain production levels, as fracking wells are well known to drop off in productivity and efficiency as they age.•

Crude Oil Production Year-over-Year

Source: Energy Information Administration (EIA)

Fundamentals

Global Oil Inventories Return to Historical Range Forecasts for higher crude prices in 2021 reﬂect expectations that, while inventories will remain high, they will decline with rising global oil demand and restrained OPEC+ oil production. EIA expects high global oil inventory levels and surplus crude oil production capacity will limit upward pressure on oil prices through much of 2021.

Organization for Economic Cooperation and Developement (OECD) Commercial Inventories of Crude Oil and Other Liquids

Diesel inventories exploded earlier in the year, but finally moved back within the five-year range in November. Climbing nearly 30% above the five-year average in June, diesel inventories ended the year just 6% above the average.

Diesel Inventories 5-Yr Range Source: Energy Information Administration (EIA), Short-Term Energy Outlook, December 2020

OECD crude and petroleum inventories fell in October by 55.3 MMbbls (1.78 MMbpd) to 3.1 billion barrels, which was 183 MMbbls above the five-year average. Observed global stocks fell by 4.1 MMbpd. IEA analysis suggests that the global crude market will have a stock surplus of 625 MMbbls at the start of 2021 versus December 2019. Assuming neutral Chinese balances in 2021, the market will absorb the 183 MMbbls excess, and by July it will move into deficit versus the end of 2019. The recovery in the second half of 2020 is due largely to China’s fast rebound from lockdown. Oil demand there grew by 0.7 MMbpd in H2 2020. The picture for OECD countries, by contrast, was dreary – in the same period, demand was 5.3 MMbpd lower than a year prior. Europe’s Q4 fuel demand was lower than Q3 as re-imposed lockdowns took their toll. The coronavirus lockdowns and travel restrictions continued to put a dent in demand in Q4. US crude stocks remained above the 5-year range in Q4, continuing the trend seen since Q2. Still, the excess did narrow. In July, the crude overhang surpassed 100 MMbbls; in late November, that number was cut in half. Crude inventories averaged 492 million barrels, compared to a five-year Q4 average of 430 million barrels.

Source: Energy Information Administration (EIA)

Gasoline inventories showed even more improvement than diesel. Gasoline stocks opened the quarter in line with the ﬁve-year average. Although inventories rose slightly faster than they typically do at the end of the year, they did not deviate meaningfully from normal. Any early gains were whittled away, and gasoline ended the quarter at 236.6 million barrels, just below the 237 million barrel average ending inventory. •

Crude Stocks 5-Yr Range

Gasoline Inventories 5-Yr Range

Source: Energy Information Administration (EIA)

Fundamentals

Reﬁnery Activity

US Refinery Utilization Refinery utilization reflected a chaotic and uncertain downstream fuel market landscape. Utilization remained well below the five-year range, with rates below 75% common during the quarter. Some choppy growth occurred later in the quarter, bringing utilization closer to 80%. Refiners have a difficult job: managing higher crude oil prices along with suppressed fuel demand. Refiners saw feedstock cost rise quickly, ending the quarter near $50/bbl. On the other hand, fuel demand has barely been able to keep up. To prevent fuel prices from collapsing while crude prices rose, refiners had to carefully match market demand to ensure fuel inventories did not build too rapidly. •

Source: Energy Information Administration (EIA)

Fundamentals

Candidates Spar on Oil, Biden’s Fuel Price Impact Not Clear The November election brought a change in the White House, and the new administration may take a different approach to fuel markets and oil production. Over the past four years, the Trump administration has taken a markedly pro-oil stance. The President lifted restrictions on oil production, continuing the output growth begun under the Obama administration. Given President Trump’s support for producers, a Trump victory was generally considered more supportive for US shale companies. With Biden’s win of the contested November election, many expect a ban on new fracking permits on federal land, which could impact a small portion of total US output. From a price standpoint, each candidate has a complex relationship with oil price outcomes. President Trump pushed for low fuel prices and increased production during his administration, but he also generated geopolitical uncertainty with his Tweets and restricted global supplies by sanctioning Iran.

short-term demand, given their push for additional stimulus legislation. President Elect Biden may also seek to unwind President Trump’s trade war with China, or at least avoid further escalations in the future.

Although Trump is clearly more supportive for US oil and gas President Elect Biden ran on a platform of transitioning from oil to cleaner energies, producers, the outcome for fuel consumers is less clear. Both suggesting higher prices. Still, he’s clarified the oil transition will last “a long time.” candidates have a complex relationship with oil prices, and the He’s also expected to take a friendlier stance towards Iran, re-joining the nuclear economy will likely overshadow any specific energy policy when it accord and allowing Iranian exports to resume. comes to commodity prices. Moving parts on both sides of the aisle From an economic standpoint, which affects demand, Moody’s Analytics released make it difficult to determine which candidate will have a more a pre-election analysis that pointed to a Democratic win as more supportive for beneficial impact on consumer fuel prices .•

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Fundamentals

US Dollar Creates Oil Tailwinds

An improving long-term outlook for crude markets helped lift prices, yet the short-term fundamentals still appear weak. Why, then, did crude prices gain 25% in Q4? The US Dollar may be a culprit behind the end-of-year rally.

of the world, mixed with political uncertainty in the US, caused investors to move out of the dollar, sending it tumbling to the lowest level since 2018.

Early in 2020, investors ﬂocked to the safety of the US Dollar, and the index spiked to multi-year highs. In Q4, relatively strong recoveries in other areas

The dollar has historically held an inverse relationship with crude prices – when one falls, the other rises. This is true for a number of reasons:

US Dollar Creates Q4 Oil Tailwinds

1Commodities are traded in US Dollar. When traders in other countries buy oil contracts, they must ﬁrst buy US dollars. When the dollar weakens, their money goes farther, meaning they can buy more oil contracts and drive up oil prices.

2 A weaker dollar suggests poor US interest rates. When US interest rates fall, investors look elsewhere for returns. Some investors turn to bonds in other countries (thus selling their USD and causing a decline), while some invest more in commodity markets like oil (causing oil prices to rise).

3 A weak dollar is bullish for the

Source: CME, ICE

20 22

US economy. A falling dollar makes US goods cheaper for other countries to buy, which leads to more exports. This drives up GDP and consumption, stimulating more demand for oil in the US. •

REGIONAL VIEWS Gabe Aucar, Senior Supply Manager See his bio, page 42

PADD 1A, B & C East Coast

Overview PADD 1 continues to be flush with ULSD even with refinery utilization below 70%. Despite the abundance of diesel, a surprising flotilla of ULSD cargoes has found its way to the Northeast in Q4. Even with uninspired demand, US prices have outperformed refining centers in other parts of the world. Continue monitoring lowered northeast refining capacity, which may put upward pressure on prices as NE refiners remain offline. Refiners may be gearing up to move away from gasoline production and blending jet fuel back, switching to distillate outputs to keep up with seasonal demand if cooler than typical weather prevails. •

PBF Reducing Paulsboro Reﬁning Capacity

Continuing Northeast refiners' trend of lowering output, PBF is shutting units at its Paulsboro, NJ refinery, reducing its two East Coast refineries' capacity by 85 kbpd to 260 kbpd by yearend. While the reduction will lower total capacity, it will enable the remaining Paulsboro units and the 190 kbpd Delaware City refinery to operate at higher utilization rates. Paulsboro will continue to produce lubricants and asphalt, while also supplying Delaware City with intermediates that PBF currently purchases from third parties. The refiner will shut the smaller of its two crude units, a fluid catalytic cracking (FCC) unit, alkylation unit and a coker.

PBF acquired the Paulsboro and Delaware City refineries roughly a decade ago when Valero exited the East Coast. Both refineries can process heavy and sour crudes — a rarity for the region, allowing PBF to continue railing light sweet and heavy Canadian crude to its Delaware City refinery. The decision brings this year's volume of idled East Coast refining capacity to at least 415 kbpd – more than 17 million gallons per day. The new owners that acquired Philadelphia Energy Solutions through bankruptcy chose to dismantle the 330-kbpd refinery in Philadelphia and convert the site to other industrial uses rather than restore refining operations. The 115-kbpd Come-by-Chance refinery in Newfoundland and Labrador, another New York Harbor supplier, remains idled after a proposed sale to Irving Oil fell through.• 23

Regional Views

USGC-NYH Diesel Arb to Open in Seasonal Trend The spread between US Gulf Coast and New York Harbor diesel prices is widening, a season trend that comes in Q4. This year, though, coronavirusrelated headwinds for diesel prices have generated questions about whether the two markets could reach the double-digit price spread common over the past two years. Early in the quarter, the GC-NYH spread was trending above 4 cents, mirroring the start of 2019's fall/winter season. Last year, New York ULSD commanded a premium of 2-3 cents in the early weeks of October, rising to 9-10 cents by the end of the month. The widening spread also boosted line space values to more than 3 cents over tariffs by the end of October 2019. Each of the past two years saw New York Harbor ULSD prices average roughly 8 cents per gallon more than the Gulf Coast in the fourth quarter. A seasonal move and repeat of last year, though, will face headwinds this year – seasonal patterns

have been thrown out the window in 2020. Special focus will be on Linden Junction in New Jersey, the end-point for Gulf Coast fuel transported on the Colonial Pipeline. As trading at Linden Junction gains liquidity, traders are taking a closer look at prices to determine if the arb to New York Harbor is indeed open. Linden Junction fuel prices have been, on average, about a half-cent over barged fuel costs. That spread blew out in early September, and since

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October, Linden Junction prices have averaged about a 2 cent premium over barge. The phrase "lower for longer" has been used often to describe oil prices since 2016, but that phrase may now be appropriate for use when discussing diesel demand, and operating in the current low demand environment is proving challenging. Supply is certainly not a concern, with the fourth quarter beginning with near-record levels of total distillates. In fact, current distillates are more than double what they were in October 2019, when Central Atlantic inventories were close to 17.5 million barrels. The EIA is forecasting a 5% increase in US heating degree days this year. That colder weather may help chew into the oversupply of distillate. Based on current inventories, though, the GC-NYH spread may struggle to reach the 11+ cent differences seen in 2019 and 2018. The last time Q4 inventories were above 30 million bbl in the Central Atlantic was in 2017; during that time, the average spread was barely 6 cents per gallon. The Colonial line space market has undoubtedly been unfriendly to its owners, as the Line 2 values have been trading at a discount to the tariff consistently since the end of April. Last year, line space on Line 2 turned positive on Oct. 18 and remained positive until late February. However, the positive move for line space did not emerge until the spread between GC-NYH ULSD spread topped 9cts/gal. For consumers in Q1 2021, fuel spreads will determine whether Gulf Coast fuels are shipped to the Northeast, or whether all that excess diesel will need to ﬁnd a home further south. More diesel in Northeast inventories could have a ripple effect for other regions, causing oversupply throughout the Southeast and Midwest regions. •

Regional Views

Chris Carter, Senior Supply Manager

Overview

PADD 2 Midwest ULSD Stocks

During Q4 2020, PADD 2 diesel prices hit a 3-year high, trading See his bio, page 42 ten cents per gallon over national NYMEX prices. In PADD 2 Midwest addition to rising diesel premiums, PADD 2 ULSD stocks fell to the year’s lowest levels. The higher values and low stocks resulted from reduced reﬁnery utilization and steady diesel demand during the harvest season. In December, regional Chicago ULSD weakened as harvest demand dried up and renewed lockdowns went into effect. Chicago diesel ended the ﬁrst week of December trading 6 cents under the NYMEX. •

Source: Energy Information Administration (EIA)

Husky and Cenovus Merger In October, Husky and Cenovus announced plans to finalize a merger during the first quarter of 2021. Cenovus, a Calgary-based upstream crude production company, will utilize Husky’s refining capacity, reducing Cenovus price risk for their heavy crude oil. Husky is the owner and operator of the refinery in Lima, OH and has 50% ownership with BP in Toledo, OH. Beyond the two operating refineries, Husky is rebuilding a 45-kbpd refinery in Superior, Wisconsin, after an explosion in April 2018. Once the merger is complete, the company will be known as Cenovus Energy •

PADD 2 Reﬁnery Capacity

PADD 2 Midwest Reﬁnery Utilization

PADD 2 refineries faced multiple challenges during the fourth quarter. The BP-Husky refinery in Toledo faced numerous delays trying to restart after planned maintenance in late October. The slow restart put additional pressure on the Ohio markets, resulting in higher netbacks for several months. In addition, Valero shut a 36-kbpd reformer at their Memphis refinery for planned maintenance, lasting roughly 30 days. This added incremental pressure to Kentucky’s river market, on top of already-strong Chicago basis. As a result, an arb opened into the Kentucky markets allowing fuel to be trucked from Colonial Pipeline markets, Nashville and Knoxville.

Source: Energy Information Administration (EIA)

It is still unclear how much of the reﬁnery may shut due to weaker demand from COVID. Some have rumored that BP may completely idle its production at the facility. If true, it will have an enormous impact on PADD 2 fuel production. Whiting, which takes advantage of cheaper Canadian crude to deliver low-cost fuel, is one of the largest reﬁneries in the Chicago region. •

In November, BP announced that layoffs would potentially occur at their Whiting, Indiana reﬁnery. The company was legally required to provide notice to its workers. The layoffs may impact over 200 salaried employees and 100 hourly workers, out of 1,700 total workers. 25

Regional Views

Matthew Smith, Manager, Supply Optimization See his bio, page 42

PADD 3 Gulf Coast

Overview In Q3, we explored the balancing act of supply/demand in the Gulf Coast. In Q4, the market continued its trend towards seeking balance; however, the fourth quarter presented a curveball. Local lockdowns and seasonal forces caused declining gasoline demand. Entering Q4, PADD 3 gasoline basis was trading at a 3.5 cent premium over PADD 3 diesel basis. By the end of October, diesel traded at a premium over gasoline, and markets haven’t looked back. Seasonally speaking, Gulf Coast

Gulf Coast Reﬁned Spot Prices

Going into Q1 of 2021, I forecast a strengthening diesel basis for the Gulf Coast for a few reasons, including: • Higher PADD 1 diesel demand during the winter • Continued PADD 5 diesel demand given the strength of diesel basis in Los Angeles • A return to healthier inventory levels versus 5-year averages. •

Source: CME

diesel should be trading at its weakest value going into the winter season, but 2020 is showing a new hand of cards. Diesel basis values are pennies higher than historical averages.

Regional Views

2020 Atlantic Hurricane Season Recap In 2020 fashion, the Atlantic hurricane season broke records as the most active season ever. With 30 named storms, 13 hurricanes, and 6 major hurricanes (category 3 or higher), it produced over $41 billion in total damage along the Atlantic coast.

Storm Impacts on Gulf Coast USLD Basis

Several storms directly impacted the PADD 3 reﬁner operability, producing brief spikes in Gulf Coast basis values. Had national inventory levels not been thrown higher by pandemic demand weakness, those local price spikes would likely have rippled throughout US supply markets. •

Source: CME

Source: National Oceanographic and Atmospheric Administration (NOAA)

Regional Views

Nate Kovacevich, Senior Supply Manager See his bio, page 42

PADD 4 Rocky Mountain

Overview Seasonally, the Mountain region’s gasoline and diesel prices grow weaker during winter. Reﬁneries return from fall maintenance to ramp up production, and diesel demand drops off following harvest season. However, 2020 is anything but a normal year. National reﬁnery utilization is down considerably, with the quantity of gasoline and diesel being made down 10-15%. This makes sense from a gasoline standpoint – motorists drive less due to stay at home guidance. However, over-the-road diesel demand has been

resilient. The typical winter price swoon may not happen this year as more packages and supplies are delivered to consumers’ front doors – requiring diesel instead of consumer-oriented gasoline. This imbalance creates a predicament for refineries since the gasoline molecule drives refinery utilization. If refineries cut back, they might cause upward pressure on diesel prices this winter. In any case, seasonally cheap gasoline and diesel prices likely will not be a repeat occurrence this year. •

November Supply Outages Spike Winter Fuel Prices Unexpected outages in the Mountain region caused gasoline and diesel prices to track decidedly higher than the rest of the country in early Q4. Supply shocks began improving in mid-to-late November, with regional inventories building.

PADD 4 Reﬁnery Utilization

This season will bring an interesting winter, to say the least. Last year, prices sharply dropped as inventories swelled and demand softened. The question is whether or not we’ll experience a similar occurrence, given all of the diesel outages happening in the Midwest. Looking at PADD 4 reﬁnery utilization, there was a big drop in March caused by COVID and a subsequent return to regular reﬁning activity during the summer. In early November, utilization dropped to 74.1% but has since bounced back to around 80%. •

PADD 4 Inventories Rise Slower than Last Year Weekly gasoline stocks in PADD 4 bottomed out following Labor Day as summer driving season came to an end. Inventories have slowly built since then, but with refinery utilization at 80%, production is far below its 2019 winter highs of 95.7%. While utilization may head higher to close out the year, I anticipate refinery activity stalling as refineries remain hesitant due to spiking COVID cases this winter. Gasoline stocks hit multi-year highs in 2019, but we should see a more normalized build in 2020/2021. If refinery activity stays near 80%, I wouldn’t anticipate much of a diesel build this winter, which could mean some chaos next spring when demand comes back in full force. Similar issues are present in the Midwest – diesel demand remains strong, but refineries aren’t making enough to fend off a demand spike during the next planting season. • 28

Source: U.S. Energy Information Administration, (EIA)

PADD 4 Gasoline Stocks

Source: U.S. Energy Information Administration, (EIA)

PADD 4 Diesel Stocks

Source: U.S. Energy Information Administration, (EIA)

Regional Views

Brent Fergeson Supply Director See his bio, page 42

PADD 5 West Coast

Overview Like many other regions, PADD 5 supplies continued rebalancing in the fourth quarter. CARB gasoline stocks started Q4 with a surplus, sitting at 6.3 MMbbls versus 4.1 MMbbls at the same time last year.

Jet fuel demand remained the weakest of all the reﬁned products in PADD 5. Production was off approximately 44% relative to 2019 levels, with the pandemic as the primary cause.

CARB Diesel was less impacted in Q4, with October inventory levels 26% below last year – sitting at 1.8 MMbbls versus 2.4 MMbbls. Diesel demand remained stable thanks to increased online shopping and rising ﬂeet diesel demand to deliver products to businesses and homeowners.

Another highlight this quarter was Olympic Pipeline’s announcement and subsequent pipeline work that ran the Paciﬁc Northwest basis up from near ﬂat with the NYMEX to 35-cent premiums at one point. •

Combined Challenge of COVID Renewable Fuels Continue and Wildfires Hit California Fuel Winning in California Causing weak demand in California was rampant wildfires throughout the state and rising COVID-19 cases. Forest fires decimated large parts of Northern California and Southern Oregon, including portions of California’s beautiful wine country. Over 4MM acres burned, twice the amount of any previous year, including 2018 when over 2MM acres burned. Positive COVID cases have grown by approximately 750,000 cases in the past 100 days. As a result, Governor Newsome implemented stricter stay-at-home guidelines for most of California, including reimplementing curfews, restricting non-essential travel, and limiting gathering sizes. However, several local sheriffs announced their intention not to enforce parts of the restrictions. Given uneven enforcement, some fuel analysts suggest that the extent of the negative gasoline demand impact could be less severe than that of late spring and early summer.

Renewable diesel and biodiesel remain at the forefront of conversations as California continues aggressively pursuing stricter clean air guidelines. Governor Newsome issued an executive order that all new light-duty vehicle sales be zero-emission by 2035. The California Air Resources Board announced that biodiesel and renewable diesel usage was 18.5% of the total diesel consumption, compared to just 0.5% in 2011. In 2019, California produced and imported approximately 194.5 million gallons of B99/B100. Of that volume, 31% went to B20 sales. As renewable diesel grows in West Coast preeminence, Kinder Morgan pipeline announced they can handle the logistics of shipping and storing renewable diesel in their western pipeline system. •

Currently, CARB gasoline demand is off about 16.5% compared to the same time last year. Along with weak demand, California’s retail gasoline prices averaged around $3.20, well below last year’s prices above $4.00/gallon. Still, California’s prices remained nearly a dollar above the average US retail gasoline price. •

A LT E R N AT I V E F U E L S Sara Bonario, Supply Director See her bio, page 42

RENEWABLES

Introduction What a year! For the readers of this article, 2020 is likely the most challenging year they have faced in their lifetime. You would have to be over 100 years old to remember World War I and the 1918 Flu Pandemic. Certainly, there have been worse years than 2020 when you consider these events, the Great Depression, and World War II, but our generation has only read about these difﬁcult times.

Throughout history, tumultuous times have marked turning points for social, economic, and political trends. The Industrial Revolution in Great Britain brought a rise of coal power that spread rapidly throughout the empire. World War II brought the birth of atomic weaponry – but also a new, clean energy source. With the world once again experiencing global upheaval, how may changes in retail, consumer spending, and travel impact the future of US and global fuel markets and renewable fuels?

Historical Changes Using history as our guide, we should expect to see dramatic changes in society due to the COVID-19 pandemic. For example, the period after the Second World War, known as the “Golden Age of Capitalism,” ushered in a broad period of worldwide economic expansion that lasted from 1945 – 1973. This was a period of tremendous economic prosperity and cultural changes.

The fuel industry saw radical changes as well, facilitated by President Dwight D. Eisenhower authorizing the Federal Aid Highway Act of 1956. Construction began immediately and paved a pathway for interstate transit and a foundation for elevated gasoline and diesel demand seen today.

1955 map: The planned status of US highways in 1965, as a result of the developing Interstate Highway System

Alternative Fuels

Structural Changes to the Reﬁning Industry

COVID-19 Related Reﬁnery Closures

The Post-COVID Period is still in the future, but changes have already occurred or are in flight in the refining sector, which will likely become permanent. The demand destruction for crude oil and refined products caused by widespread lockdowns and business closures crushed refining margins in 2020. Global oil demand shrank by a record 22 MMbpd in April, when 4 billion people were in coronavirus lockdowns, said Arif Mahmood, executive vice president and chief executive of downstream at Malaysia’s Petronas. Overall, global demand is expected to fall by 8.1 MMbpd this year to 91.9 million bpd, the International Energy Agency said. Source: Argus

Refiners and market participants attempted to balance jet fuel supplies by utilizing storage capabilities and retooling assets, lowering jet fuel output as a percentage of the production yield. These changes were helpful but not significant enough to balance the demand shock caused by COVID-19. Refining utilization rates had to be reduced to balance global and US domestic supply.

North American Capacity Cuts

The reality of long-term demand destruction and weak economics of some refineries pre-COVID accelerated the decision-making process behind rationalizing assets. Refiners made the difficult decision to temporarily idle or permanently close plants.

Reﬁners Remain Relevant As the production of petroleum-based transportation fuels declines due to these reﬁnery closures, industry participants are actively debating the role biofuels will play in the post-pandemic period of recovery.

Source: Argus

Renewable Fuel Association (RFA) President Geoff Cooper: “If net-zero emissions are the goal by 2050 and deep reductions in the carbon emissions from transportation is what we are after, we should be using more biofuels in the near-term.” Jacobsen senior analyst John Cusick: “We’ll see renewable diesel conversions as refiners turn the lemons of their unprofitable oil refineries into the lemonade of renewable diesel.” There has been a string of announcements this year of refiners committing to invest significant capital in converting existing refineries to renewable diesel production facilities. If all of the announced projects come to fruition, it will add 102,000 barrels or over 4.2 million gallons per day of renewable diesel. 31

Alternative Fuels

What is Renewable Diesel?

What is Renewable Diesel (RD) ?

Renewable diesel is a relatively new fuel but has experienced rapid adoption in markets such as California, where incentives reward producing and consuming renewable fuels to reduce greenhouse gas (GHG) emissions, limit pollutants, and improve air quality.

Renewable Diesel is made from the same renewable resources as Biodiesel, but uses a different production process. The result is a renewable fuel that is chemically identical to petroleum diesel and meets the same ASTM speciﬁcation.

Renewable diesel is suitable for all diesel engines and requires no additional equipment investments or process changes. Renewable diesel is unlike biodiesel in that it is a drop-in replacement to petroleum diesel. Renewable diesel (RD) is made from the same renewable resources as biodiesel but uses a different production process compatible with the units typically found at a petroleum reﬁnery.

Renewable diesel is a relatively new fuel but has quickly become popular because it reduces emissions, delivers strong performance and has up to 85% less sulfur than ultra-low sulfur diesel (USLD). Renewable diesel is a drop-in replacement to petroleum diesel. It also blends extremely well with biodiesel.

Transportation and Environmental Efﬁciencies

If you switched 100 vehicles, each averaging 110,000 miles at six miles per gallon, your CO2 savings would be the equivalent of taking 4,256 cars off the road for a year. The 80% carbon intensity reduction or that volume of renewable diesel wold also provide the same environmental beneﬁts as 23,462 acres of forests.

Alternative Fuels

Competition for Feedstocks Renewable diesel and biodiesel compete for the same feedstocks. According to the National Biodiesel Board, 46% of US biodiesel comes from soybean oil, and another 46% is derived from waste oils and fats – 14% from animal fats and 17% from used cooking oil (UCO). The primary source for UCO is restaurants and bars. Mandatory lockdowns and partial closures, followed by restrictions to dining capacity or outdoor-only dining, have limited restaurants’ ability to operate, dramatically decreasing UCO and grease production. Data shows a sharp decline in year-over-year seated diners at restaurants on the OpenTable network across all channels: online reservations, phone reservations, and walk-ins. These restrictions have caused an unprecedented string of business failures and Chapter 11 Bankruptcy ﬁlings. Friendly’s, Sweet Tomatoes and other well-known names such as California Pizza Kitchen, Ruby Tuesday, and Brio Italian Grille have all declared bankruptcy due to COVID-19.

Year-over-Year Restaurant Reservations

Source:OpenTable

The Future of Renewable Fuels The collapse of global petroleum demand set the stage for refiners to seek alternative streams of revenue. For years, the world has sought cleaner, more sustainable energy sources. Renewable fuels are one solution, but the transition costs have been prohibitive. With refiner margins collapsing, the opportunity cost of shutting a refinery for conversion has fallen dramatically, enabling more transformations to biodiesel and renewable diesel operations. Renewable fuels will play a prominent role in the post-COVID world. The transition away from petroleum refining towards renewable fuels will accelerate between now and 2050. New feedstocks and good old ingenuity resulting in US farmers growing more food and fuel on fewer acres will pave the way. 33

Alternative Fuels

Martin Trotter, Pricing & Structuring Analyst See his bio, page 42

NATURAL GAS

Demand The continued demand destruction of the energy sector due to economic sluggishness and pandemic uncertainty has made its mark in the tug of war of a transistioning landscape. The EIA expects that energy-related carbon dioxide emissions will fall double digits, down 11% for 2020. Energy consumption and emissions fell to record lows. The urgent push for transitioning to renewable energy may have bought itself some time in this regard, as falling demand is estimated to have reduced power section emissions by nearly two years worth of growth.

Annual US Energy Related Carbon Dioxide (CO2) Emissions 1990–2020

Source: US Energy Information Administration, (EIA), Monthly Energy Review, (STEO) Note: 2020 values are based on data through August and STEO forecast for September through December

Some estimate that the halt and subsequent lull of economic activity has caused an irrepable change in demand for traditional energy sources. The expiration of wind turbine production tax credits at the end of the year are accelerating wind power starts, bringing 9.6 GW online by the end of December. A shift to renewables remains imminent yet unclear, and it stands to reason that natural gas demand will continue to be an important backstop. Natural gas serves as the cheapest, most readily available and abundant source to back up wind turnbines and solar cells in times of seasonal need. Even as emerging markets such as California push towards 100% renewable strategies, reliability remains a chief concern. •

Alternative Fuels

Supply

US Natural Gas Exports to Mexico Have Increased in the First Nine Months of 2020

The effects of COVID-19 and demand destruction reverberated into natural gas production. As domestic travel came to a screeching halt and consumption fell drastically, domestic producers slashed crude oil production rates. This culminated in a temporary reversal of the US’s net petroleum exporter status for the ﬁrst time since August 2019. Reduced petroleum output also generated less associated natural gas, another arena in which the US plays an important export role. Natural gas is the main source of electricity generation in Mexico, and exports from the United States have steadily displaced other supply sources. Mexico’s total consumption, however fell to its lowest level since December 2016 as a result of COVID-19. Demand for exports began recovering in August and surpassed their year-over-year benchmarks. Exports will play an important roles in the US natural gas supply chain, and Mexico seems poised to play a leading part.

Source: U.S. Energy Information Administration, (EIA), based on Genscape, Inc. (a Wood Mackenzie company). Note: Other represents a balancing item to reconcile monthly supply and consumption

With pre-COVID economic levels anticipated to return in Q1 2021, a combined coalition of public and private sector infrastructure plans in Mexico call for nine energy projects totalling $5.8 billion, centered around natural gas. Work on the the ﬁrst and highest value project, Energia Costa Azul, will begins January and will majorly source gas exports from the US. •

Storage After months of clamoring about a record-breaking 4.1 trillion cubic feet storage level at the end of the injection season, the market ended November just shy of the 4 tcf mark, at 3.92 – narrowly missing the standing record set in 2016. Total injections for the period equaled 1.9 bcf, a stark difference to last season, which saw 2.2 bcf in injections. The weak inventory level came despite higher beginning inventories than the 2016 season. The elevated beginning inventory can be attributed to a lack of demand last winter, as well as demand degradation from pandemic slowing. Additionally, excess supply and warmth kept prices suppressed, contributing to

the quick filling nature of this injection season. By the beginning of August, inventories were filled beyond the five-year average. The first two weeks of November, though, saw modest injections – a stark departure from last year when there had already been over 100 bcf in withdrawals. Falling prices thru mid-December would indicate that many have already given up on winter. Still, the EIA report ending December 4 showed stronger than expected demand, exceeding 90 bcf in withdrawals, spurring forward markets higher by nearly 10 cents per dekatherm. •

Monthly Net Injection/Withdrawel

Source: US Energy Information Administration, (EIA)

VIEWPOINTS By Nikki Booth, Senior Logistics Manager, Carrier Relations

COVID-19 Impact on Driver Shortage economy by reducing unnecessary barriers for those interested in obtaining jobs in the trucking industry.” This change is a signiﬁcant win for trucking, providing states more ﬂexibility to test so more drivers can safely enter the market. Prior restrictions prohibited state-authorized third-party CDL instructors from performing instruction training and qualifying testing for the same CDL applicant. This new rule alleviates testing delays and eliminates needless inconvenience and expense to the CDL applicant— without compromising safety.

2020 has been a challenging year in many ways. COVID-19 has affected the world and the US in ways no one could have imagined, changing the way we live, work, shop, and spend time with loved ones. Like everything else, the COVID-19 pandemic has dramatically impacted the transportation logistics industry. Shipping and trucking are necessary for the US economy more than ever, and the country is still facing a signiﬁcant driver shortage. Current statistics show a driver shortage of 80,000.

On top of reducing regulatory barriers for CDL applicants, the FMCSA extended waivers that permit current professional drivers to stay on the road if their current license expires due to an inability to retest. In mid-December, the FMCSA also extended its commercial learning permit (CLP)/Medical Certiﬁcates waiver set to expire at the end of the year. According to an FMCSA ﬁling, a valid license extension was needed because of potential backlogs at some state driver's license agencies across the country. The new waiver takes effect January 1, 2021, and expires on February 28, giving stage agencies discretion over local extensions. With COVID-19 cases on the rise across the country, the FMCSA anticipates more stay-at-home orders this winter, which could cause more economic and logistics disruptions. •

Prior to the COVID-19 pandemic, the trucking industry faced a growing driver shortage fueled by tough working conditions, strict drug testing, and rising insurance costs. COVID-19 has exacerbated this shortage with state-mandated social distancing requirements, limiting how student truck drivers are taught and tested during much of 2020. At the same time as the shortage, federal stimulus checks intended to help those most impacted by the pandemic have worked against the trucking industry. Increasing unemployment beneﬁts have made some drivers realize they can earn the same or even more money not working than they would driving. Additionally, there’s the issue of attracting new drivers into the market. COVID-19 has forced many trucking schools to close or limit the number of students for CDL training. The US Department of Transportation’s Federal Motor Carrier Safety Administration (FMCSA) has focused on keeping the trucking industry moving forward to effectively support the US. In response to the driver shortage and the pandemic, FMCSA announced a ﬁnal rule in midDecember to streamline the process for men and women interested in entering the trucking workforce. The new rule allows states to permit a third-party skills test examiner to administer the CDL test to applicants trained by the examiner. US Secretary of Transportation Elaine L. Chao stated, “During the COVID-19 public health emergency, truckers have been American heroes—and the Department is committed to helping our 37

Nikki A. Booth Senior Logistics Manager, Carrier Relations Nikki manages the strategic direction of Mansﬁeld’s Full Truck Load network across the U.S. and Canada. Her team works closely with fuel transport companies to handle vendor procurement, address logistical concerns, and identify cost-saving solutions for Mansﬁeld Energy and our customers. Nikki has several years’ experience in supply chain management, with the majority of that focused on energy transportation and logistics.

Viewpoints By Brian Hazzard, Director, LTL

LTL Fuel: Solutions for Small, Medium, and Large Fleets As businesses expand and fleet sizes grow, companies have the opportunity to scale their fuel purchasing to minimize costs. Small fleets pay a premium for retail fuel, and their drivers expend time making special stops at retail stations and truck stops. As fleets grow and bring in more revenue, they also have an opportunity to eliminate these excess costs by changing how they purchase fuel. Very small fleets (less than ten vehicles) often utilize a P-card or fleet card to achieve a small discount on fuel purchases at retail stations. Large fleets (over 50 trucks in one location) might install a permanent bulk tank on-site and buy full truckloads of fuel, achieving 30-40 cent savings. For fleets in between, ranging from 6-75 trucks, less-than truckload (LTL) fuel purchases can provide an intermediary step—and significant savings. LTL fuel buyers have two primary options available: small tank deliveries and mobile fueling.

Small Tank Deleveries Putting a small tank on-site can provide some immediate benefits for medium-sized fleets looking to reduce costs. Fleet cards can be a useful purchasing method, but it comes with retail premiums and potential variability in the price paid since drivers likely aren’t searching for the cheapest station. Small tanks provide a variety of benefits that make them appealing for growing fleets. Price Installing a small tank, ranging from 250 gallons up to 5,000 gallons, gives fleets immediate control over their fueling. Prices can be based on a third-party indexed fuel price for transparency and auditing. Rather than retail prices, which are quick to rise but slow to fall, LTL fuel buyers enjoy wholesale-based fuel prices, which are more responsive to oil market conditions. Flexibility Unlike FTL deliveries, which must be made in increments of 7,500 gallons (diesel) or 8,500 gallons (gasoline), small tank LTL purchases can be any amount. Deliveries are made by a tankwagon truck with tank capacities of 2,2005,500 gallons and multiple compartments for dispensing different products. In most cases, buyers can set up a regular “keep-full” schedule to ensure their tanks are always full. Supply Risk Storing fuel on-site is also a good risk mitigation strategy. Supply outages caused by refinery

outages, hurricanes, or pipeline issues can put a strain on local fuel markets. When retail stations are short on fuel, fleets with small tanks have a cushion to ensure business continuity. Driver Convenience Fleet cards require drivers to go off-route to find a station, wasting precious time and fuel to get there. With a small on-site tank, drivers can fill up at the beginning or end of their route, minimizing disruption and saving time. How it Works For companies that do not already have a small tank on-site, tanks can be purchased, leased, or included in fuel prices. Fleets that expect to remain relatively stable can purchase a tank or lease-to-own, which will eventually lower costs even further. For growing fleets, tank leasing allows tank sizes to be right-sized over time without large capital expenditures.

Mobile Fueling Small tank deliveries are not the only method under the LTL service type umbrella. Some fleets want to move away from retail purchases but still prefer not to install a fuel tank on their property. This preference is common in urban locations or highly regulated districts like California. In these cases, deliveries can be made directly into vehicles or equipment, a solution known as mobile fueling. Companies may also choose mobile fueling to keep drivers from fueling their vehicles for financial or safety purposes. In addition to sharing many of the benefits of installing a small tank, mobile fueling offers several other benefits.

When the tank is installed, a fuel management system can be added to capture driver and truck fuel dispensing information. That data, in turn, can be analyzed to yield fuel usage insights such as fuel shrink and volume trends.

Driver Time One of the most notable beneﬁts of mobile fueling is reducing wasted driver time. Studies show that stopping at a retail station requires 2.2 miles of off-route driving and 20 minutes of driver time, which otherwise could have gone towards revenue-generating activities. Depending on labor costs and vehicle tank sizes, mobile fueling can save dollars per transaction, equating to 30-60 cent per gallon savings.

Many fuel suppliers also offer tank monitors for remote inventory management. With detailed insight into inventory levels, suppliers can appropriately space out visits to maximize delivery volumes, keeping freight costs low.

Environmental Risk Whether installing a tank on-site or ﬁlling up at a station, drivers and site personnel handling hazardous materials brings safety and/or environmental risks. Companies can avert this

Viewpoints risk entirely by outsourcing their fueling process, so expert fuel delivery personnel pump fuel into each vehicle. Reduce Fuel Shrink As long as drivers are in charge of dispensing their own fuel, there’s a risk of fuel shrink. Appropriate tank monitors or fuel card controls can reduce the risk, but mobile fueling can eliminate the problem entirely. With mobile fueling, a third-party delivery agent dispenses fuel for each vehicle and provides a detailed delivery ticket on each unit filled. Mobile fueling helps fleets be certain that fuel is going where it is supposed to go. Asset-Level Reporting Fleets can track their fuel purchases down to the individual truck, yielding insights into demand trends and issues. For instance, a truck consuming an inordinate amount of fuel may have engine damage and require maintenance. With online reporting, unusual consumption can be flagged for review.

Choosing a Partner Whenever a fleet changes its fueling program, there are many challenges involved. Whether you’re a single-site fleet looking to optimize purchasing or a national company with small fleets spread out in different areas, making the switch can be difficult. Having a fuel partner with the right capabilities is critical. When picking your fuel partner, considering the following qualities will help ensure a seamless transition. Fueling Mode Neutral Choosing a fuel partner that can support numerous fueling methods will ensure that your fleet receives the right solution for your needs. Look for suppliers with a diverse clientele who can apply best-practices from other geographies, fleet sizes, and buying methods. Versatile fuel suppliers understand each fueling mode's unique benefits and challenges, so they can provide prescriptive solutions matching your fleet’s requirements. Technologically Equipped Capturing fuel data and tracking inventories is useless if the data is not readily available for informed decision-making. Look for a partner that offers online access to your fuel data in a simple, transparent format. Logistically Excellent When buying fuel at retail stations, there’s some comfort in the sheer number of fueling options. Picking a fuel provider requires more trust – a logistics issue could cause your fleet downtime. Make sure your fuel partner has a reliable track record. If a truck goes down or supply is tight, make sure they have redundant delivery capabilities, so your fuel gets delivered.

How it Works Mobile fueling is quick and easy to begin – simply provide a fleet count, the average gallons per fill-up, and a schedule for delivery frequency (daily, every other day, or weekly are common frequencies). The more fuel you receive per delivery, the lower the delivery fee you’ll pay. Group vehicles together, leaving space for a fueling professional to access the fuel tank. A fueling professional will visit your site at the scheduled time, filling each vehicle while drivers are off the clock. Details on each transaction will be provided in print and digitally, allowing for analysis and reporting after the fact. During emergency supply shortages such as hurricanes, some mobile fueling customers choose to order a small on-site tank for short-term protection. This provides the supply reliability of having a tank with the flexibility of mobile fueling. PRO

CON

Small Tank

• Eliminate Retail Premiums • Environmental Risk of a Leak • Flexible Volumes • Reduce Supply Risk • Site Congestion Around Fuel Tank • Price Transparency • Eliminate Out-of-Route Miles

Mobile Fueling

• Eliminate Retail Premiums • Save Drivers Time • Reduce Dispensing Hazard Risks • Control Fuel Shrink • Price Transparency • Eliminate Out-of-Route Miles

• No On-Site Supply During Disruptions • Higher Fuel Cost Per Gallon

Transparent Pricing Unlike the giant price sign at retail stations, wholesale fuel pricing can be complicated. Tracking product prices, freight costs, and applicable fees and taxes can make an invoice difﬁcult to understand. Make sure your fuel partner uses a transparent pricing mechanism, such as a third-party price index, so you can verify prices. Better yet, ask about their invoice validation methods so you can know the price is accurate from the beginning. It’s critical to be sure the price you negotiated is the one you pay. •

Take the Next Step Not sure if LTL is the right solution for your fleet? Mansfield is here to help you sift through your operation's variables to decide which method is best. Mansfield can help you simplify your purchasing, streamline operations, and reduce costs. Reach out to info@mansfieldoil.com to get the conversation started today.

BEST FOR Small-to-medium size fleets with low labor costs and plenty of lot space

Medium-to-large size fleets with high labor costs or limited on-site space

Brian Hazzard Director, LTL Brian leads the LTL Procurement and Fuel All teams and is responsible for vendor relations, procurement, partner technology integration, as well as third party ﬂeet card transactions for LTL. He also spends a signiﬁcant portion of time working on business development and assisting the sales team in solving complex problems for customers. Brian has a Bachelors Degree in Management from Indiana University and has been in the energy industry for 9 years.

Viewpoints

WTI Average Price Forecasts for 2021

s 2020 moves into the rearview mirror, the outlook for 2021 has come increasingly into focus. The word “normal” permeates predictions, and virtually everyone hopes that word will deﬁne the period following the most tumultuous year in recent memory. With a hopeful return to regular market fundamentals and season trends, analysts still have plenty of divergent perspectives on how prices will move in 2021. Mansﬁeld’s supply team provided their estimates of average WTI crude prices in 2021.

51.75

Forecasts range from a low of $47.44 to a high of $62.15, providing a wide array of possible outcomes. With an average of $51.86, Mansﬁeld’s supply team is overall predicting a continuation of the trends seen at the end of 2020. Whose forecast will prove the closest to correct? Read our team projections see whose insights resonate with you.

47.44

54.25

Andy Milton

Brent Fergeson

Nate Kovacevich

Forecasting ahead, I believe oil demand will come back to almost full strength (90-95%) compared to historical levels, but production will not. There has been permanent long-term damage to the upstream world, both crude production and reﬁning. Key factors pushing prices higher in 2021 will include “close” to normal demand, less production, a lower dollar index, and ultimately higher inﬂation.

COVID vaccines will be widely available by the end of the second quarter. COVID cases will be declining and global optimism will slowly start to restore travel habits, increasing demand for refined products. Refiners will maintain the shutdown of numerous unprofitable refineries, while some will be converted to renewable diesel. Supply will be slow to follow the optimism, leading to lower days of supply and overall lower inventories. OPEC will moderate production increases to preserve higher crude prices and further enhance their budgetary concerns.

The markets should start the year on a bullish note as hope builds over positive vaccine news. However, as demand starts returning, we will start seeing OPEC+ increase production to offset rising demand. The return to normalcy will be a long and bumpy road that will likely push into 2022 and beyond.

Viewpoints

.64

Matthew Smith

Gabe Aucar

2020 was a challenging year for many, both personally and professionally. WTI crude crashed when COVID shut down the global economy, and the oil industry felt the ﬁnancial implications. For once, OPEC’s decisions were muted. Looking to 2021, between optimism of COVID vaccines opening back up the world economy and the need for oil companies to return to proﬁtability, I see WTI coming back to near 2020 values.

Record high global cases of COVID-19 and the return of Libyan oil sooner than market participants had expected are the main headwinds to oil prices now. Global inventories should continue falling in the coming months, but high global oil inventory levels and surplus crude oil production capacity will limit upward pressure on oil prices. I expect us to remain tightly range-bound for 2021.

.25

.15

.01

.37

Sara Bonario Successful rollout of several COVID-19 vaccines will support the return of normal seasonal demand in the summer of 2021 as business and travel return to more typical levels. OPEC+ cooperation will continue to manage supply and allow for stronger fundamental balances. Fiscal stimulus and tax breaks in the US and abroad will be enough to motivate international travel as well.

Chris Carter

Alan Apthorp

I’m bullish for 2021 due to continued positive news regarding the vaccine. As we see demand continue to strengthen, I believe it will outpace supply. Reﬁneries have shut down or reduced their rates, and it will take additional time for the supply/demand balance to get back to some level of normalcy.

Prices ended 2020 with a late-breaking rally, giving some foresight into what the “new normal” may look like. The vaccine’s distribution will add fuel demand, creating a robust ﬂoor beneath prices. With demand returning, OPEC+ is unlikely to see a need to maintain 10-20% cuts. Add Iran, Libya, America, and others pumping more, and the rally becomes hard to maintain. The late 2020 rally put prices within a stone’s throw of $50/bbl – but it will be hard to move higher. American shale has been dealt a devastating blow – enough to keep it on the sidelines in 2021. In 2022, though, we may see US crude breakeven prices set a global price ceiling once again.

FUEL PRICE RISK MANAGEMENT Protect your budget. Fuel prices can change without warning. Mansﬁeld’s Risk Management team helps you manage fuel price risk and stay on budget. Reliable Nationwide Supply • Firm Pricing Price Insurance • Price Collars Contact a Risk Management expert today.

678.207.3138 | hedging@mansﬁeldoil.com | www.mansﬁeld.energy 41

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

Sara Bonario

Senior VP of Supply & Distribution

Supply Director

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. •

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. Sara has an MBA in logistics and finance from Ohio State University. •

Chris Carter Senior Supply Manager

Alan Apthorp Corporate Marketing Manager Alan Apthorp leads Mansfield's Corporate Marketing Team and is the lead writer and editor of Mansfield’s FUELSNews publication. Prior to his marketing role, Alan served as Chief of Staff, providing Mansfield's leadership team with insights on market trends and conducting industry analysis to inform business strategies. •

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. •

Brent Fergeson Supply Director

Nate Kovacevich Senior Supply Manager 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. •

Brent has a long history with the oil industry, working for a small energy trading startup, Merchant Energy Group of America, SC Fuels and most recently a 15 year career at IPC (USA), where he was an original founding member. Brent and the team grew IPC to a billion gallon/year company before selling it to TAC Energy earlier this year. •

Gabe Aucar Senior Supply Manager Gabe manages Mansﬁeld’s southeast fuel procurement team with responsibilities for supply contract negotiations as well as providing trading and business development expertise. Gabe holds an MBA from Pace University and has over 12 years’ experience in the energy industry. •

Matthew Smith Manager, Supply Optimization Matthew manages Mansﬁeld’s Gulf Coast fuel procurement team with responsibilities for supply contract negotiations, bulk inventory purchases and hedging. He also manages Mansﬁeld’s Pricing and Data Team’s responsible for various buy side formulas and data insight. Prior to his current role, he served in various Supply and Carrier Relations positions nationwide. Matthew holds a BBA from Georgia State University in Atlanta, GA. •

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. •

* Some of the information provided is owned and licensed by OPIS. In no event shall any user copy, modify, publish, retransmit, or otherwise reproduce information from OPIS. Copyright 2021. All rights reserved. Disclaimer: The information contained herein is derived from sources believed to be reliable; however, this information is not guaranteed as to its accuracy or completeness. Furthermore, no responsibility is assumed for use of this material and no express or implied warranties or guarantees are made. This material and any view or comment expressed herein are provided for informational purposes only and should not be construed in any way as an inducement or recommendation to buy or sell products, commodity futures, or options contract.

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