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February 12, 2009 | Vol. 58, No. 4

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In This Issue

Dear PEI Member:

Nearly every conversation we have had with members the past week includes a comment that this is an unprecedented time, filled with uncertainty and volatility. But then they are quick to add that business is OK, and much better than many other industries are experiencing.

For the majority of PEI members, it's business as usual with sales somewhere ±10 percent compared to the same time last year. With the exception of California which has a looming EVR deadline, PEI members are plugging along, cautiously. Most members are taking the traditional cash management and cost control steps to make sure they can survive if another shoe or two drops (consumer credit and/or commercial real estate). But we are also seeing members recognize the opportunity to gain market share over the next two years by improving inventory management, upgrading employee capabilities, weeding out underperformers, increasing investment in technology, adding inside and outside sales, etc. 

Reduced valuations and less competition for acquisitions have created a golden opportunity for buyers with the cash and courage to make strong strategic moves in a market that may get even tougher. A similar situation presented itself after the 2001/2002 slowdown and some PEI members benefited from well-timed, highly-strategic acquisitions. We expect a repeat in 2009/2010.

SPCC DELAYS
EPA has moved the effective date of the most recent SPCC rule amendments (see December 2, 2008 TL) from February 3, 2009, to April 4, 2009, as part of the Obama administration's 60-day freeze on all "midnight regulations" issued during the last days of the Bush administration. Industry observers do not believe changes to any provisions important to PEI members and their customers will be made, but we'll keep you posted. In a separate but related development, a rule on January 14, 2009, extended the SPCC compliance deadline from July 1, 2009, to November 20, 2009.


Business Conditions

SPCC Delays

Upgrade Fallout in CA and FL

In This Issue

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UPGRADE FALLOUT EXPECTED IN FLORIDA AND CALIFORNIA 
"Hundreds of gas stations around the state of Florida may be forced to shut down because of a new insurance regulation that requires them to have a double-walled underground storage tank by the end of the year, reported CBS 4-TV. Even though the new tank deadline is not until December 31, 2009, insurers have already begun cutting off station owners who will not or cannot upgrade to the new tanks, which can cost up to $400,000. It is illegal to operate in Florida without pollution insurance, and an estimated 20% of the state's approximately 8,000 to 9,000 stations have yet to make the change, the report said."—CSP Daily News, January 27, 2009.

"Dozens, and potentially hundreds, of gas stations around California are choosing to shut down rather than comply with a state mandate that would require owners to purchase new equipment to reduce vapor emissions at the pump, reported The Pasadena Star-News. As of the end of December 2008, the South Coast Air Quality Management District (SCAQMD) had heard back from 3,109 of its 4,500 sites about EVR Phase II: 76, or 2.4%, indicated that they will be shutting down on April 1, 2009, rather than upgrade their sites, Dimitri Stanich, public information officer for the California Air Resources Board (CARB), told the newspaper. Some 1,400 of the SCAQMD's sites have not yet responded. About 12,000 dispensing facilities will be affected statewide."—CSP Daily News, January 28, 2009.

ETHANOL
The United States could replace nearly a third of its gasoline consumption with ethanol, mainly made from plant waste and special energy crops, in about 20 years, according to a study released February 10 by Sandia National Laboratories and General Motors. The study explains that the price of oil would have to rise to about $90 per barrel to make cellulosic ethanol economically competitive.

"A possible attempt by the Senate to raise the federal cap on the amount of ethanol that can be blended into gasoline was quashed this week after a coalition of refiners, automakers and environmentalists voiced opposition to the provision, which could have become part of the economic stimulus bill. The Senate was weighing a provision that would have raised the federal cap on ethanol blending in gasoline past 10%. Automakers have long argued that they cannot issue warranties on car engines that will run on gasoline blended with more than 10% ethanol."—Oil Daily, February 12, 2009.

BIOFUELS IN AIRLINERS
In recent weeks, Air New Zealand, Continental Airlines and Japan Airlines successfully flew commercial airliners partially powered by sustainable, second generation biofuels made from plants that don't affect food or water resources. Air New Zealand used jatropha, Continental operated with a 50 percent biofuel blend derived from algae and jatropha and a 50 percent traditional kerosene jet fuel, and Japan Airlines used a combination of camelina (84%), jatropha (15%), and algae oil (1%).

DIESEL EXHAUST FLUID (DEF) NOTES
Pilot Travel Centers LLC
, Knoxville, Tennessee, announced that it will roll out 25 bulk diesel exhaust fluid (DEF) dispensing centers per quarter, staring the third quarter of 2009 through the second quarter of 2010. Approximately 100 of Pilot's locations will have bulk dispensing capabilities at the fuel island while all 328 truck stops will have packaged quantities available.

APPOINTMENTS AND PROMOTIONS
OPW Fueling Containment Systems
, a division of OPW Fueling Components, Smithfield, North Carolina, has named Greg Kennedy as its director of operations. He has held various positions within OPW Fueling Components in Cincinnati over the past nine years.
Northeast Petroleum Technologies, Inc., headquartered in Schenectady, New York, has appointed Michael Crandall service director for its Schenectady home office and Utica branch. He brings 32 years of industry experience to the new position. Phone: (518) 355-2747. Email: mcrandall@nepetroleumtech.com.
JD2 Environmental, Inc., West Chester, Pennsylvania, announced that Tinamarie V. Smith has joined the company's management team as an associate. Tina brings more than 30 years experience in environmental, safety and health management to JD2. She spent the last 27 years with Sunoco.
OMNTEC Mfg., Inc., Ronkonkoma, New York, named E. L. Shannon and Associates to represent the company in North Carolina, South Carolina and southern Virginia, beginning February 1. OMNTEC also appointed Rice-Christ Inc. to represent the firm in Texas, Oklahoma, New Mexico, Arkansas, Louisiana, Mississippi and Memphis, Tennessee, effective February 10.
OPW announced, effective February 1, 2009, that R&D Marketing, Inc., Issaquah, Washington, will represent OPW Fueling Components, OPW Fuel Management Systems and Richards in Washington, Oregon, Alaska and Hawaii. With this change, OPW district manager Keith Simon will now focus his efforts selling OPW Fueling Components products in California and Nevada. OPW district manager Bob Hyatt will now represent OPW Fueling Components, OPW Fuel Management Systems and Richards in Arizona, Idaho and Montana.
National-Spencer, Inc., Wichita, Kansas, has appointed FMG-LLC/SFICO, Maitland, Florida, as its industrial and petroleum accounts representative for the territory including Mexico, the Caribbean, Central America and South America. National-Spencer has also appointed CAM Associates Inc., New Lenox, Illinois, as its representative in northern Illinois, eastern Wisconsin and western Indiana.
Petroleum Solutions, Inc., headquartered in McAllen, Texas, has hired Les Boren to its sales team. Boren has over 30 years experience in the industry and has worked extensively in sales, service and design of lubrication systems for automotive and industrial applications. Working out of the San Antonio office, he can be reached at (210) 661-2489 or lboren@petroleumsolutionsinc.com.

RETAIL PETROLEUM NOTES
Kum & Go LC
, West Des Moines, Iowa, has signed an agreement to purchase 37 Cody's Convenience Stores in southwest Missouri.
Sunoco Inc., Philadelphia, Pennsylvania, announced that it will sell 165 sites in the eastern United States. Of that number 134 are operating retail sites, 14 are currently non-operating locations but are expected to re-open, and 17 are commercial properties. Sunoco currently has 1,114 stations.
Road Ranger LLC, Rockford, Illinois, has acquired 15 Fast Break Food Market gasoline and convenience stores in the Louisville, Kentucky, area.
Crescent Oil, Independence, Kansas, has filed for Chapter 11 bankruptcy. Crescent said it incurred $12.8 million in losses last year on the back of enormous volatility in fuel prices as well as skyrocketing financing costs associated with acquiring and developing new convenience stores. In related news, Appalachian Oil Co. (Appco), Blountville, Tennessee, also filed for Chapter 11 bankruptcy. Appco operates 55 stores in northeastern Tennessee, southwestern Virginia and southeastern Kentucky. Both Appco and Crescent are owned by Titan Global Holdings.
All 11 Kwik Way Inc. convenience stores in Billings, Montana, were closed last week, reported the Great Falls Tribune.
Hess Corp., New York, New York, has acquired 11 retail sites owned by Christy's of Cape Cod, Hyannis, Massachusetts.
"The Delhi government will soon provide land for 40 CNG filling stations," said Delhi Chief Minister Sheila Dikshit.—PetrolPlaza, February 11, 2009.

DEATHS
P. R. "Renny" Blanchette
, a 35-year industry veteran with Emco Wheaton and Bennett Pump, passed away January 23 after a long battle with heart and kidney disease. He was 69. Survivors include his wife of 48 years, Donna; a son, Gary, who works for On-Site Marketing, Inc. in Houston; another son, Dr. Mark Blanchette; a sister; and three grandchildren.
Gene Robertson
, a 32-year veteran of the petroleum equipment industry in the Seattle area, died January 27 at the age of 65 after a long illness. He worked for SME Solutions for 22 years and the last 10 years at Northwest Pump & Equipment. He is survived by his wife, Bonny, and two children, Tom and Elizabeth.

MEMBERSHIP APPLICATIONS
Alaska service and construction firm
. Alaska Fuel Systems Inc., 11641 Barr Road, Anchorage, Alaska 99516, has applied for service and construction division membership in PEI. Lance Leonard is the owner of the firm, which was established in 1991. The company installs, inspects, tests, maintains and removes underground tanks, aboveground tanks and fueling systems. Sponsored for PEI membership by Gregg Miller, NWPump, Portland, OR.
California service and maintenance firm
. Kaiser Commercial Petroleum, P. O. Box 1058, Linden, California 95236, has applied for service and construction division membership. Greg Kaiser is the owner of the firm, which was established in 2005. Kaiser services and maintains petroleum equipment. Sponsored for PEI membership by Gayla McCormick, RushPtr, Litchfield Park, AZ.
Florida engineering and construction firm
. MDM Services, Inc., 1055 Kathleen Road, Lakeland, Florida 33805, has applied for membership in the service and construction division. Paul Doss is the engineering manager for the firm, which was established in 1986. The company designs and builds commercial, industrial and marina fuel facilities and builds retail convenience stores. Sponsored for PEI membership by Lucas Ford, LucasFord, St. Petersburg, FL.
Florida petroleum construction services provider
. Moonlight Petroleum Services, 4815 East Busch Boulevard, Suite 203B, Tampa, Florida 33617, has applied for service and construction division membership. Abdel Khdair is the primary contact for the company, which was established in 2003. The company specializes in the installation and removal of aboveground and underground storage tanks. Sponsored for PEI membership by Joey D. Batchelor, GuardTech, Jacksonville, FL.
Maryland installation and repair firm. Commercial Fuel Systems, Inc., P. O. Box 71, Mount Airy, Maryland 21771, has applied for membership in PEI's service and construction division. Daniel R. Darragh is vice president of the firm, which was established in 1972. The company installs, maintains and repairs fueling systems for government and private facilities. Sponsored for PEI membership by Glen Corkill, SourceIL, Addison, IL.
Michigan contractor and repair company. Gillhespy Inc., 532 Granvill SW, Grand Rapids, Michigan 49503, has applied for membership in the service and construction division. James Fizer is the owner of the company, which was established in 1922. The firm offers full-service fuel system contracting and repair. Sponsored for PEI membership by Mark A. Leak, LeakPtrEqp, DeWitt, MI.

ADMITTED TO PEI

  • OTI America, Fort Lee, NJ (mfr)
  • Discovery Tank Testing, Inc., North Palm Beach, FL (S&C)
  • McKinney Services, Inc., Chipley, FL (S&C)
  • A & H Petroleum Services, Winnipeg, Manitoba (S&C)
  • SS Innovations, Yorba Linda, CA (aff)
  • Ilyas Baga, Hudson Gas, North Bergen, NJ (O&E)

 

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©2009
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.