September 26, 2001
Dear PEI Member:
What are likely to be the short-term effects on the petroleum equipment industry from the crisis touched off by the terrorist attacks on New York and Washington? No one knows for sure how it will play out, but here are our judgments based on what members told us last week.
Gasoline sales may increase. For the time being, people would just as soon drive as fly. They also may want to stay closer to home. Some members speculate that gasoline marketers will sell more product as a result.
Sale of equipment to the military should grow. The demand for fuel storage and transfer equipment will depend on the kind of conflict in which the United States and its allies are involved.
The decline in air travel may lower prices for heating oil. Refiners have some flexibility to mix jet-fuel supplies into heating oil and diesel fuel. This has pushed down prices for those products. That bodes well for fuel oil dealers--and the companies that supply their trucks and equipment--as they gear up for cooler weather.
The slow economy will keep a lid on pay raises in 2002. As the economy slips into recession, more companies will turn to lengthening the time between salary increases from the typical 12 months to 14, 16 or even 18 months. The labor pool should also improve, as layoffs increase in other industries.
If gasoline inventories tighten, expect commercial and industrial customers to request additional storage and to consider the purchase of fleet fueling equipment.
It costs less to borrow money. The Federal Reserve was quick to move out of the blocks after the attack, with the Fed cutting its key short-term interest rate from 3.5 percent to 3 percent.
The nation’s economy, already stalling before September 11, is heading into recession. The consensus of forecasters surveyed last week by Blue Chip Economic Indicators is that the recession will last through the end of this year. What happens then is in dispute. Three-quarters of the forecasters think the recession will be no worse than the mild 1990-91 downturn; a quarter think it will be worse. There are questions that we don’t have answers for at this time. For example, will any government stimulus be enough to revive the economy? And just as important, will the now-inevitable military action, and the terrorists’ response to it, boost the nation’s confidence, or undermine it further?
Unease spells trouble for any economy: Businesses delay large orders, potential merger partners put their talks on ice, companies hold off on expansion plans, and consumers save rather than buy. What happens as tensions escalate, and how we react to it, is certain to affect us all.
OIL MARKETING NEWS
Phillips Petroleum Co. closed its $7.36 billion stock acquisition of Tosco Corp. without being required by federal regulators to divest any assets. Phillips now owns 10 U.S. refineries with a combined capacity of 1.7 million barrels per day, and 12,400 branded gasoline stations that market primarily under the Phillips 66, ’76 and Circle K brands. The new company will be the third-largest gasoline retailer, based on volume of gasoline sold. Phillips now markets in 46 states. The marketing operations are based in Tempe, Arizona.
Tesoro has expanded its retail presence on the West Coast with the purchase of 46 refueling facilities from Gull Industries. Of the 46 sites, 37 are retail fuel stations with convenience stores and 9 are commercial card lock facilities. Most of the sites are in the state of Washington, with some in Oregon and Idaho. The acquisition of the retail sites from Gull boosts the total number of sites in Tesoro’s marketing system to approximately 650.
The Federal Trade Commission (FTC) has approved a consent order that will allow Chevron Corp. and Texaco Inc. to complete their previously announced merger. As expected, Texaco will divest its 44 percent stake in Equilon Enterprises and 31 percent stake in Motiva Enterprises. If Texaco is not able to complete a sale of its interest in Motiva to Shell and Saudi Refining, Inc., and its interest in Equilon to Shell prior to the merger, it will place the stock of the Texaco subsidiaries that hold those interests in a divestiture trust. The trust would have eight months to unload the assets. The new company will be known as Chevron Texaco Corporation. Chevron and Texaco will seek approval of the merger by their respective stockholders at separate stockholder meetings on October 9.
Tokheim Corporation, Fort Wayne, Indiana, has announced the appointment of John S. Hamilton as president and chief executive officer, succeeding George A.
Helland, Jr., P.E., acting president and chief executive officer. Concurrent with Hamilton’s appointment, George Helland was appointed chairman of the board of directors.
Vapor Systems Technologies, Inc., (VST) Dayton, Ohio, has appointed two new manufacturer representatives. Yeager Engineered Systems has been named to represent VST in the Northeast and On-Site Marketing Group will represent VST in Texas, Louisiana and Oklahoma.
CALIFORNIA COURT UPHOLDS STATE MTBE BAN
Producers of the gasoline additive methyl tertiary butyl ether (MTBE) suffered a major setback earlier this month when a federal court in California upheld the state’s decision to ban the use of MTBE by the end of next year. The federal district court found that the Clean Air Act grants California broad authority to set its own standards for motor vehicle fuels and additives because the state "regulated automobile emissions before Congress entered the field." The Oxygenated Fuels Association, which represents MTBE manufacturers, will appeal the decision.
California Governor Gray Davis ordered the phase-out of MTBE in 1999 following a series of studies that concluded MTBE was an environmental and public health threat. The studies were conducted after MTBE was found to have leaked from underground storage tanks, contaminating drinking water supplies throughout the state.
CONVEX 2001 CREDENTIALS COMMITTEE APPOINTED
Sam DaMommio of Rice-Christ, Inc., Grand Prairie, Texas, is chairman of the 2001 Convex Credentials Committee. He has appointed the following people to serve as committee members: Mark Aiken, OPW-FC, Brighton, CO; Bryan Chambers, Chambers, Brownwood, TX; Terry Christ, RiceChrist, Grand Prairie, TX; Lucas Ford III, LucasFord, Atlanta, GA; Les Gray, Gray&Co,
Garland, TX; Mark Hodges, SourceIL, Grand Prairie, TX; Douglas L. Jones, PumpMaster, Tyler, TX; David Langford, Langford, Sherman, TX; Mark Lipa, LipaAscs, St. Louis, MO; J. R. Massay, RiceChrist, Tulsa, OK; Kevin Milbourn, Windward, Overland Park, KS; John Murchison, RiceChrist, Houston, TX; Dan Pittman, PittmanAsc, Norcross, GA; Steve Svoboda, D&HPumpSer, El Paso, TX; Wally Watson, WatcoTanks, Floresville, TX; Roy Meyer, RamcoIN, Angola, IN; and Rob Shephard, LaneSupply, Arlington, TX.
Modern Welding Company has purchased the assets of ITEQ Storage Systems, Inc. The company has been renamed Modern Custom Fabrication, Inc. Modern Custom Fabrication is a wholly owned subsidiary of Modern Welding Co.
Petroleum Equipment Marketing Co., Inc., headquartered in Placentia, California, has purchased Titan Rubber and Supply Co. Inc. from Dave Rodrigues. The new entity, known as Titan-PME Equipment Sales, has offices in San Jose and West Sacramento, California, and Sparks, Nevada. Ann Thomas is president of Petroleum Equipment Marketing and Titan-PME Equipment Sales.
Donna B. Cooper, co-founder of Petroleum Equipment & Service, Inc., Marion, Iowa, died September 11 after a long illness. She founded the company in 1958 with her husband, H. E. Cooper, who preceded her in death. Her son, B. D. Cooper, is chairman of the firm while her grandson, Terry Cooper, serves as the company’s president.
ALTERNATIVE FUEL NOTES
The Japanese Land, Infrastructure and Transport Ministry has announced plans to create a subsidy program in Japan’s three largest urban areas--Tokyo, Osaka and Nagoya--to cover the incremental cost of purchasing natural gas trucks and buses in an effort to cut nitrogen oxide emissions.
Vice mayor Liu Hayian recently announced that Beijing will adopt Euro standards in 2008 and will promote the use of natural gas vehicles to meet the stricter standards. Liu said the city aims to have 8,000 natural gas buses, 40,000 natural gas taxis, and more than 160 natural gas fueling stations by 2007. There are currently 1.6 million vehicles in Beijing.
Eight of Germany’s sixteen major gas groups announced plans to form a joint venture by year’s end aimed at installing natural gas pumps at existing retail gasoline stations.
Holland distributor. TSE Fueling Supplies, Koggewagen 60, Blaricum, Holland 1261 KD, has applied for distributor division membership. Peter Bus is owner of the firm, which was established in 1999. TSE Fueling
Supplies represents EnvironPro, Fibrelite, RedJacket, ASFThomas and Roncol
in Belgium, Germany and Holland. Nominated for PEI membership by Rick Whately, EnvironPro, Smithfield, NC; Trevor Pardoe, Fibrelite, North Yorkshire, England; and John Myers, RedJacket, Davenport, IA.
Remote monitoring and control system manufacturer. Yaron Logistics & Oil Technologies Ltd., P. O. Box 131, Hadera, Israel 38101, has applied for manufacturer division membership. Benny Yaron is owner of the firm, which was established in 1997. Yaron Logistics & Oil Technologies manufactures a remote monitoring and control system for petrol retail service which is sold through distributors. Nominated for PEI membership by Joseph Lipschitz, LBL Trading, Tel Aviv, Israel; Itzhak Shalev, NadirMktg, Rosh Haayin, Israel; and Steve Trabilsy, PetroVend, Hodgkins, IL.
Piping and fittings manufacturer. FGS Brasil Industria E Comércio Ltda., Av. Min. Laudo F de Camargo 32, São Paulo, Brazil 05537-000, has applied for manufacturer division membership. Sergio Luiz Morelli is owner of the firm, which was established in 1997. The company manufactures piping with an internal lining, fittings, flexible connectors, flexible entry boots, check valves and manholes. This equipment is sold through distributors. Nominated for PEI membership by Ricardo Britto, ExcelProd, Cranston, RI; Sergio Morelli, Sollitta, São Paulo, Brazil; and Tanya Townsend, Tanknology, Austin, TX.
Georgia installation contractor. HARCO Services, L.L.C., 4492 Acworth Industrial Drive, Suite 103, Acworth, Georgia 30101, has applied for affiliate division membership. Carlos Arnaud is an owner of the firm, which was established in 1996. HARCO Services is an installation and building contractor of fueling facilities. Nominated for PEI membership by Dann R. Stapp, AdaptEng, Westlake, OH; Bobby Dutcher, AtlPtrEqp, Tucker, GA; and F. R. Scudder, MecoAtl, Doraville, GA.
Illinois POS hardware refurbishing firm. Illinois Wholesale Cash Register, 2495 Pembroke Avenue, Hoffman Estates, Illinois 60195, has applied for affiliate division membership. Greg Manhoff is convenience and drug store specialist for the firm, which was established in 1976. Illinois Wholesale Cash Register maintains and refurbishes POS hardware. Nominated for PEI membership by Robert A. Becker, Becker, Lombard, IL; Harvey Stokes, UntdPtrSer, St. Louis, MO; and Glen Corkill, SourceIL, Arlington Heights, IL.
Oklahoma insurance company. Mid-Continent Group, P. O. Box 1409, Tulsa, Oklahoma 74101, has applied for affiliate division membership. Mike Coon is senior vice president of the company, which was established in 1955. Nominated for PEI membership by three members from Texas: Bryan Chambers, Chambers, Brownwood; Fred Monroe, Monroe, Arlington; and Bill R White, WhitesPump, Lubbock.
Taiwan installation and service firm. Tai-Shing Industrial Co., Ltd. No. 235-I, Chyuan Shing Road, Tay-Shan Hsiang, Taipei, Taiwan 243, has applied for affiliate division membership. Custer Liao is president of the company, which was established in 1979. The company was nominated for PEI membership by Dennis O’Dea, Durapipe, Birmingham, England; W. S. Hockman, HockmnLews, West Orange, NJ; and Grenville G. Sutcliffe, HuskyCorp, Pacific, MO.
Admitted Tecvenam LC, Miami, FL (dis)
to PEI Gro-Mor LLC, Tulsa, OK (dis)