March 12, 2013 | Vol. 63, No. 05

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Dear PEI Member:

We have a great opportunity each year to meet and talk with more than 200 members and their customers from February 19 through March 7 at four PEI committee meetings, as well as various industry meetings, including annual conventions sponsored by the Western Petroleum Marketers Association (WPMA), Petroleum and Convenience-Store Exposition of Mid-America (PACE), and the Southeast Petro-Food Marketing Expo (SE Petro). Based on what they told us, here's our take on the prospects for the rest of the year.

Overall, members characterized business as "pretty good" across all PEI membership divisions. Ground-up retail fueling stations are on the rise in many areas of the United States, and most construction firms have retail station business booked through May or June. Interestingly, while petroleum marketers claim to be increasingly interested in alternative fuels, so far very few are incorporating alternative fuel storage and dispensing into the designs of their new stores.

Construction of new commercial refueling locations is holding its own. Installation of diesel exhaust fluid storage and dispensing equipment has finally trickled down to the smaller retail truck stops, and it has grown by leaps and bounds with commercial fleet accounts. Emergency generator business continues to be strong. Petroleum marketing equipment sales are good but competitive, especially on the retail end of the industry.

The price of ethanol RINS (ethanol blending credits) dominated talk among marketers at the PACE show in Kansas City. The blending credits were trading in the 70- to 80-cents/RIN range during the convention, up from the mid-20 cents per RIN when the credits were traded at the end of January. Last year, RINS traded in the 2- to 3-cents/RIN range. RIN traders with whom we talked in Kansas City said the rise in value was tied to an unwillingness among blenders and others who use RINS to risk being short for calendar year 2014, as concerns grow about how to meet federal mandates for blending renewable fuels. The high RIN prices today indicate that companies are having trouble trying to get past the blend wall in 2013/14. (NOTE: The price for traded RINS settled March 8 at $1.02 for 2013 RINS after hitting a high mark of $1.10/RIN earlier that day.)

Industry Outlook

Petroleum Marketing Notes

PEI Foundation Scholarship Program







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So far, only a handful of retail stations carry E15. Factors dampening the market for the fuel include liability issues relating to misfueling; the cost of outfitting a retail station to carry the fuel; and concerns raised by some automobile manufacturers who won't honor warranties if E15 is used. The industry has several options at this point. The best scenario for the oil industry would be to repeal the ethanol mandate required by the Renewable Fuel Standard. If that doesn't work, then they will face a real dilemma: either make less profit because they will be paying more for RINS, charge the consumer more for the product to offset the RIN cost, or go to the expense and trouble to outfit their stations to store and dispense E15.

Other takeaways from our conversations:

  • Manufacturers tell us that smaller PEI distributors and installation/service contractors are having a little more trouble paying their bills than their larger competitors. This is nothing new, but more than the usual number of manufacturers specifically brought this to our attention.
  • The competition for trained and certified service technicians is fierce in some areas of the country and even cut-throat in a few pockets.
  • Interest in CNG refueling facilities is picking up steam although the number of CNG stations currently being built is still relatively small. That said, those petroleum marketers installing CNG stations are having some success in reaching out to owners of heavy-duty vehicle fleets that run on CNG to serve as the initial customer base, with the hope that the light-duty vehicle owners will become customers as CNG vehicles gain acceptance.     
  • Manufacturers expect the price of many key metals to go up over the course of the year, making price increases inevitable.
  • The service side of the industry is good for most service contractors. Some of the equipment installed during the PCI upgrade period is now out of warranty. Vapor recovery equipment is expected to begin to disappear as it is decommissioned per PEI/RP300 in different nonattainment areas―except California―at various times this year and next. Petroleum marketers with multiple locations may elect to move the more expensive Stage II vapor recovery equipment from one location to another as they work through the decommissioning process, creating service opportunities as they go.
  • Manufacturers report that as domestic usage of Stage II declines, this equipment continues to have a strong international upside.
  • Distributor and affiliate members who have jumped into electric vehicle charging stations report that the pace of installation is slow. The few placements that are occurring are at hotels, hospitals and similar settings, rather than traditional convenience stores. To be successful in this new niche, PEI members have to penetrate a completely new set of customers. It is not an add-on sale to an existing convenience store account.
, Perrysburg, Ohio, has appointed Dwight Rutledge to the position of master account agent. In this role, he will be responsible for PetroClear's distributor network, as well as its OE and national sales accounts. He will report to John Foley, business director of industrial filtration and director of international business development for Fram Filtration.
P.D. McLaren Limited, headquartered in Burnaby, British Columbia, has hired John Thomson to be responsible for business development in Alberta, Saskatchewan and Manitoba, focusing on McLaren's entire product offering, as well as new product development. He can be contacted at the company's Calgary office.
IRPCO, LLC, Poca, West Virginia, has named Joel Richards and Associates to represent IRPCO in Tennessee, Mississippi, Georgia and Alabama. In addition, IRPCO has hired Doug Duff as business development manager. Office: 877-624-1791. Cell: 423-620-8431.
President Barack Obama has nominated Ernest Moniz to head the Energy Department and Gina McCarthy, currently director of the U.S. Environmental Protection Agency's Office of Air and Radiation, to head that agency.
Walton Signage, San Antonio, Texas, has promoted Marvin Miller from regional vice president of sales to vice president of business development.

AXI International, manufacturer of ALGAE-X, has been acquired by AXI International Holdings. AXI International manufactures diesel fuel optimization and maintenance systems. The new executive management team includes Islam Nahdi, president; Wessel van Tonder, CEO; and Bill O'Connell, executive vice president. Wout Lisseveld, AXI founder, will continue as a consultant to the company, focusing on international business development.

chairman and chief executive John Hess announced last week that the company will exit its downstream business, including retail, energy marketing and energy trading, and become a pure-play exploration and production company.
Energy Transfer Partners LP (ETP) has "no plans at all" to sell its recently acquired Sunoco Inc. retail business, ETP chairman and CEO Kelcy Warren said during the company's 2012 fiscal fourth-quarter earning call February 21. "We like the retail business," Warren said.

BJ Benton, president of United Pump and Controls, Inc., desires to realign the business in order to focus solely on its cargo tank services division in Chattanooga, Tennessee. He is therefore seeking an indication of interest from industry participants in acquiring the company's 29-year-old metropolitan Atlanta branch office's accounts and inventory. He would be available to the new owner for a period of time to assist in the transition of those accounts and personnel relationships while concurrently continuing to oversee the Chattanooga operation. The company's objective is to conclude due diligence and the final structure of a proposed transaction by May 1, 2013. Interested parties should direct their inquiries to Mark Smith of Vantage Point Advisory, Inc. Phone: 404-643-8410 or mark.smith@vantagepointadvisory.com.

The application period for the 2013-2014 PEI Foundation Charles D. Kemp Scholarships will close March 31, 2013. Scholarship recipients are selected on academic achievement, leadership, character, financial need and the applicant's intent to contribute to the future of the petroleum and energy handling industry. Eligible applicants must be a dependent of a full-time employee of a PEI member company and have a pre-declared major of business, engineering, distribution studies or similar degree program. The scholarship awards are $1,000 each. All eligible applicants are invited to review the scholarship guidelines and complete an application.

"Natural gas as a motor fuel represents a huge and largely untapped opportunity for commercial fleets and long-haul truckers to save money and contribute to cleaner air. The bigger the truck and the more it's driven, the bigger the savings. For example, a typical 5,000-vehicle light-duty fleet could save $10 million or more annually by switching to CNG. By contrast, a typical Class 8 operator could save $2,500 to $3,000 per month by switching to LNG. That means the ROI can turn positive in as little as a year or two despite the higher cost of the equipment. Companies will line up for savings like this―provided the fuels are available. For example, there are only about 1,200 CNG stations nationwide and half of them are in just five states. LNG is even scarcer: there are only about 66 stations in 10 states. More work needs to be done to ensure that CNG and LNG aren't relegated to niche standards."―Excerpts of Dan Akerson's (General Motors chairman and CEO) speech to CERAWeek Energy Conference, March 6, 2013.

Car wash manufacturer
. Oasis Car Wash Systems, 1909 East 12th Street, Galena, Kansas 66739, has applied for manufacturer division membership. Troy Wade is director of marketing for the firm, which was established in 1964. The company manufactures touch-free, in-bay automatic car washes, self-service car washes and dryers. The equipment is sold through distributors. Sponsored for PEI membership by Paul Fazio, SonnysEnt, Tamarac, FL. www.oasiscarwashsystems.com
Emergency power fuel system manufacturer
. Earthsafe Systems, Inc., 7320 South Madison, Suite 1300, Willowbrook, Illinois 60527, has applied for manufacturer division membership. William Edwards is president of the firm, which was established in 1990. The company provides emergency power systems for critical facilities. The systems are sold through distributors. Sponsored for PEI membership by Glen Corkill, SourceIL, Addison, IL. www.earthsafe.com 
Delaware environmental consulting and engineering firm. Environmental Alliance, Inc., 5341 Limestone Road, Wilmington, Delaware 19808, has applied for affiliate division membership. Mike Vanderslice is director of sales and marketing for the firm, which was established in 1991. The company specializes in UST and AST investigation and closure, site sampling and investigation, and insurance claim/litigation support services. Sponsored for PEI membership by Mike Schammel, MDPumpTank, Baltimore, MD.  www.envalliance.com
Florida distribution company
. Manufacturers Distributor, Inc., P. O. Box 341706, Tampa, Florida 33694, has applied for affiliate division membership. Taylor Ashley is marketing manager for the firm, which was established in 2002. The company supports and supplies all types of rotary equipment. Sponsored for PEI membership by J. Wayne Anthony, Leotek, Milpitas, CA. www.mdisales.com
New York installation and service firm. Monroe Mechanical Services, Inc., P. O. Box 398, Weedsport, New York 13166, has applied for service and construction division membership. Mark Kinney is vice president of the firm, which was established in 1990. The company installs and services petroleum equipment, and also provides site work for commercial construction. Sponsored for PEI membership by Glen Corkill, SourceIL, Addison, IL.


  • Capstone Fuel Services, Fort Worth, TX (dis)
  • Icon Containment Solutions LLC, North Salt Lake City, UT (mfr)
  • PetraTec International Ltd., Hod Hasharon, Israel (mfr)
  • Turbines, Inc., Altus, OK (mfr)
  • Petroleum Equipment International, Paramount, CA (aff)
  • Vantiv, Cincinnati, OH (aff)
  • Caribbean Services & Development Inc. Ltd., George Town, Grand Cayman, Cayman Islands (S&C)
  • Environmental Logistics Company, McKinney, TX (S&C)
  • Protective Technologies, Inc., Camden, SC (S&C)


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© 2013
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.