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.
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.)
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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
PROMOTIONS AND APPOINTMENTS
- 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
- 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.
PetroClear, 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
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
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.
ALGAE-X INTERNATIONAL ACQUIRED BY AXI INTERNATIONAL HOLDINGS
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.
PETROLEUM MARKETING NOTES
Hess 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
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.
ATLANTA DISTRIBUTION AND SERVICE BUSINESS FOR SALE
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
PEI FOUNDATION SCHOLARSHIP APPLICATION PERIOD CLOSES MARCH 31
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 ENCOURAGED BY GM'S AKERSON
"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,
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.
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.
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.
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.
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.
ADMITTED TO PEI
- 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)