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June 23, 2008 | Vol. 58, No. 11

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In This Issue

Dear PEI Member:

On December 19, 2007, President Bush signed into law the Energy Independence and Security Act (EISA), expanding the federal renewable fuels standard (RFS) to require the use of 36 billion gallons of qualified renewable fuels by 2022. The trick now is to figure out the best way to comply with this mandate.

Currently, the most common blend of renewable fuel is gasoline blended with ethanol in a concentration not exceeding 10 percent. If every gallon of gasoline were to be blended with 10 percent ethanol, the industry only would be able to accommodate approximately 15 billion gallons of renewable fuel, leaving it 21 billion gallons short of complying with the federal mandate. Even though some believe that E85 will contribute to bridge that gap, it is generally expected that it will not be sufficient to bring an additional 21 billion gallons to market.

In an effort to bring more renewable fuels to the marketplace, regulators are considering allowing mid-level ethanol blends (E15 or E20 are most often mentioned) to increase the potential renewable fuels market. This poses a challenge on the equipment compatibility side, both with the existing U.S. vehicle fleet and petroleum marketing equipment at refueling stations. The vehicle equipment compatibility issue is best left to the vehicle manufacturers in Detroit and elsewhere. But PEI members know more about petroleum marketing equipment than anyone, and federal regulators and Congress need some straight answers for refueling equipment compatibility issues now so they can make informed decisions down the road. Here are the questions they need answered from distributors and installers:

  1. What percentage of the refueling facilities that you are familiar with are presently capable of storing, metering and dispensing E20 without eventual equipment failure due to incompatibility with E20?
  2. If you had to retrofit equipment currently in use at existing refueling sites to accommodate E20, what equipment would have to be retrofitted?
  3. Would your answers to these questions be any different if the systems were accommodating E15 rather than E20? If yes, how?

Manufacturers of petroleum handling equipment should answer this question:

  1. Suppose all new stations had to have equipment that was compatible with E20. How confident are you that your company is producing petroleum marketing equipment systems today that will not fail due to incompatibility with E20?

PEI is partnering with the National Association of Convenience Stores (NACS) to make this information available to federal regulators and legislators interested in this issue. An online survey is now available. All responses are confidential and will be shared with NACS for inclusion in its report. Please respond by July 3. 

Equipment Compatibility Issues with Ethanol Blends

ExxonMobil to Exit Retail Business

EPA Urged To Target Mid-Grade Ethanol

GAO Report on ASTs

In This Issue

2008 Exhibitors

View the exhibitor list and trade show floorplan online!

Can't-Miss Workshops

Learn more about educational workshops you can attend in Chicago.

PEI and Industry Events »


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ExxonMobil has decided to exit the retail gasoline business, announcing earlier this month a plan to sell all of their company-owned stations. ExxonMobil plans to sell 820 service stations in the United States that are both owned and operated by the company. Another 1,400 outlets, owned by ExxonMobil but operated by others, are also for sale. The sale of the ExxonMobil outlets is expected to take several years to complete. The stations will still fly the company flag after they are sold. Imperial Oil Ltd., which is 69.6 percent owned by ExxonMobil, said it has no plans to sell the 700 Esso-branded gasoline stations it owns in Canada.

Unrelenting rain in the Midwest, which threatens to ruin this year's corn crop, could cripple the U.S. biofuel industry as rising corn prices force ethanol plants to curb their production or even close down completely. It is too early to tell what impact the floods will have on ethanol production. Estimates of losses vary widely, from a short-term estimate of 400,000 million gallons per day to a longer-term 5 billion gallons per day. At the extreme end of the forecasts, that means ethanol production could be cut by almost half.--Oil Daily, June 17, 2008.

Automakers and the outdoor power equipment industry are urging EPA to launch an enforcement initiative against gasoline retailers in Minnesota and South Dakota to stop the sale of gasoline with ethanol blends above 10 percent. The Outdoor Power Equipment Institute (OPEI) sent a letter June 4 to EPA air enforcement chief Adam Kushner and air office official Karl Simon saying the agency needs to provide "clear guidance" to retailers using blend pumps. The letter notes that the pumps must be labeled to inform consumers that dispensing fuels with greater than 10 percent ethanol in a non-flexible fuel vehicle (non-FFV) "is a violation of federal law and punishable by substantial fines." Many non-FFV vehicle owners are fueling up with mid-grade blends, because they are less expensive than E10, and gasoline station owners say they do not fear EPA action, according to Minnesota press reports.--INSIDE EPA, June 13, 2008.

The PEI Distributor Profitability Survey
is a service offered by PEI to our distributor division members located in North America. Deadline for submission of industry data (brief questionnaire, income statement and balance sheet) for the survey is June 30. The Distributor Profitability Report generated from the responses to the survey is the best benchmarking source in our industry and is free to participants. Download the survey form here.
Online registration for the PEI Convention, October 5-7, 2008, in Chicago is available at Early and group registration deadline is August 15, with advance registration closing October 1. PEI's headquarters hotel is the Hyatt Regency Chicago, which has a special convention room rate of $229 per night, single/double occupancy. Hotel registration can also be completed online at
PEI District Elections. Ballots used to elect members to the PEI Board of Directors were mailed June 19 to the official representatives of PEI member companies in the even-numbered districts and affiliate division. Ballots must be returned to Kirk Mercer, PEI Election Chairman, by July 10 to be counted.
The deadline for PEI members' comments/suggestions to improve the federal underground tanks regulations has been extended to June 25 at the request of several members. Members who wish to have input into the process should submit suggestions to Bob Renkes

To prevent damage from oil spills, the Environmental Protection Agency (EPA) issued the Spill Prevention, Control, and Countermeasure (SPCC) rule in 1973. EPA estimates that about 571,000 facilities are subject to this rule. Because the facilities subject to the SPCC rule do not have to report to EPA, the agency can only estimate the universe of SPCC-regulated facilities and must try to identify them through such means as oil spill data, state referrals, Internet searches and the Yellow Pages. Then, through an inspection, EPA confirms whether a facility is covered by the rule. Although EPA is currently creating a national database to improve its management of the SPCC program, this database is limited to facilities that have already been inspected. According to GAO's survey, during fiscal years 2004 through 2006, EPA regions conducted 3,359 SPCC inspections, which accounts for less than 1 percent of EPA's estimate of SPCC facilities.

Based on this and other information, GAO recommended that EPA analyze the options for obtaining data on SPCC-regulated facilities, including a nationwide tank registration program. A nationwide database would be a tremendous resource for manufacturers, distributors and installers seeking to serve this market. GAO's report, Aboveground Oil Storage Tanks: More Complete Facility Data Could Improve Implementation of EPA's Spill Prevention Program, is available here.

The Oregon Department of Environmental Quality (DEQ) sent warning letters earlier this month to 95 operators of underground storage tanks throughout the state. DEQ says that most of the operators who received warning letters have failed to provide proof of financial responsibility. Most of these operators are individuals with one facility, according to The Bureau of National Affairs, Inc.


  • Thompson Petroleum Services, Byron, GA (dis)
  • Rhino Tuff Tanks, LLC, Maple Lake, MN (mfr)
  • Fuel Solutions, Inc., Los Angeles, CA (aff)
  • MCD Reps, Inc., Camas, WA (aff)
  • Project Growth Technologies Inc., Dover, DE (S&C)
  • GasTech, Inc., Melbourne, FL (S&C)
  • Optic Fuel Clean of MT, LLC, Wibaux, MT (S&C)


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Petroleum Equipment Institute
P. O. Box 2380
Tulsa, OK 74101-2380

The TulsaLetter (ISSN 0193-9467) is published two or three times each month by the Petroleum Equipment Institute. Robert N. Renkes, Executive Vice President, Editor. Opinions expressed are the opinions of the Editor. Basic circulation confined to PEI members.