April 10, 2013 | Vol. 64, No. 07

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Dear PEI Member:

The 2013 Service & Construction Managers Conference, held April 4-6 in St. Louis, Missouri, attracted more than 80 PEI service and construction professionals. Thirteen manufacturers were also on hand to demonstrate new technologies and products of interest to these members.  

Here’s a quick summary of key issues, ideas and opportunities discussed at the conference.

Safety. Safety programs are getting more attention as distributors’ and contractors’ work grows in scope and complexity. Conference attendees spent lots of time comparing notes on their safety processes, the importance of a safety committee, and how best to monitor and keep current on licenses, certifications and other credentials. Attendees also discussed ways to hold subcontractors accountable to high safety standards. While increased regulatory enforcement is partly driving the greater emphasis on safety, even more important is the simple need to protect workers operating in new and unfamiliar situations.

Margins.  Service and construction managers are being called upon to play an increased role in protecting their company’s bottom line. With competition fierce and margins tighter than ever, every penny counts. The top priority is reducing service and construction crews’ “in-shop time” through creative work schedules, automated dispatching and efficient restocking of parts.

Participants also noted that they are now taking greater care to make certain that everything that should be billed is being billed, including consumables (rubber gloves, rags), technology, driving time, and overtime for rush and after-hours work. Whether they are bundled into the company’s hourly rates or specifically broken out as separate line items, educating customers on the reason for these charges is the key to reducing pushback.  

Non-Fuel-Related Revenue. A surprising number of service and construction managers reported they are now actively pursuing non-fuel-related revenue. HVAC, electrical, lighting and plumbing are at the top of that list. These companies have determined that becoming a one-stop solution will strengthen their customers’ loyalty. And, in some cases, the new work can be done at a higher margin.

Compressed Natural Gas (CNG).  Most attendees believe CNG has the potential for real staying power. The biggest question is whether their existing technicians can—and should—be trained to do this new work or whether new technicians with a different skill set will have to be identified and employed.

Service Tech Technology.  The pace at which service managers are equipping techs with laptops and/or tablets is accelerating rapidly. Among the most-often cited advantages are easy software downloads on the jobsite, faster invoicing, better communication with the office, and streamlined parts reorders. Because many younger workers are so comfortable with technology, the learning curve for this shift is surprisingly short.

The upcoming 3rd quarter 2013 issue of the PEI Journal will include additional in-depth coverage on the key takeaways from the conference.

Summary: Service & Construction Managers Conference

EPA Proposes Tier 3 Rulemaking

Discount for Cash Spreading

In This Issue

PEI and Industry News »





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At the just-concluded Service & Construction Managers Conference, PEI announced an important new association initiative—networking groups for service managers. Modeled after PEI’s highly successful 10-Group program for owners and managers, the new groups will provide a forum for similarly situated but non-competing service managers to brainstorm, share knowledge, problem solve and generate new ideas.

At the conference, service managers representing more than 30 member companies expressed interest in participating. If you are a service manager in the distributor or service and construction division and would like to learn more about this exciting new program, email Bob Young (byoung@pei.org) with your name, company name, city/state, phone number and email address. We expect to finalize plans and form the first groups by next month.

The Environmental Protection Agency (EPA) has proposed controversial regulations known as Tier 3 rulemaking that would increase fuel efficiency and tighten controls on sulfur in gasoline by 2017. 

The Tier 3 gasoline rule―the third move by EPA to lower gasoline's sulfur content―would require sulfur to be reduced from 30 parts per million (ppm) to 10 ppm. Tier 2 gasoline rules, phased in from 2004-2007, required a reduction from 300 ppm to 30 ppm.

The 10 ppm standard would make sulfur limits more uniform across international and state boundaries. The proposed Tier 3 gasoline sulfur standards are similar to levels already being achieved in California, Europe, Japan, South Korea and several other countries.

Under the proposed rule, auto manufacturers would need to modify catalytic converters so their vehicles can better process low-sulfur gasoline. Refiners would need to lower the sulfur content of the gasoline they produce and sell. Compliance with the proposed rule could be expensive for the refiners, although cost estimates vary widely.

EPA is also proposing to update the federal emissions test fuel to better match today's in-use gasoline and also to be forward-looking with respect to future ethanol and sulfur content. The updated test fuel specifications would apply to new vehicle certification, assembly line, and in-use testing. EPA is proposing to transition to the new test fuel during the first few years that the Tier 3 tailpipe and evaporative standards are phasing in. Key changes include moving from indolene (E0) to a test fluid containing 15 percent ethanol by volume, lowering octane, and lowering the existing sulfur specification to be consistent with the proposed Tier 3 requirements. EPA is also proposing test fuel specifications for E85 for the first time.

OPW Fueling Components, A Dover Company,
Hamilton, Ohio, has placed three people in new positions within the company. Douglas Olenick has joined the company as product manager for its aboveground products business unit. Erik Shelton was named director, global business development - clean energy. Matt Lauber was promoted to the new leadership position of project manager.
Cree Inc., Racine, Wisconsin, has added new representatives in the Midwest and Southeast. Red Leonard Associates, Inc. will represent Cree throughout Canada and in the midwestern and northeastern parts of the United States. R-J Sales & Associates Inc. has been named to represent Cree in the southeastern United States.   
Cortland Pump & Equipment, Cortland, New York, has promoted Sean Searchfield to serve as the manager of the company's branch office in Rochester, New York.
The Connecticut Energy Marketers Association (CEMA) has named CEMA vice president Chris Herb as acting president of the association. Herb takes over for Gene Guilford, who now serves as CEMA's national and regional policy counsel.
Gilbarco Veeder-Root, Greensboro, North Carolina, has appointed a new retail solutions sales team to help support customers through its retail solutions product portfolio. The new retail solutions sales team will be led by Larry Bowden. Kipp Carlisle and Albert Fernando join Bowden as retail solutions sales managers.
Steel Tank Institute/Steel Plate Fabricators Association (STI/SPFA), Lake Zurich, Illinois, elected its 2013 Board of Directors at the organization's recent annual meeting in Bonita Springs, Florida. Officers for 2013 were then elected by the board at its first meeting of the year, also in Bonita Springs. Sonny Underwood, Mid-South Steel Products, Inc., was elected 2013 STI/SPFA president. Also elected were Kevin Gallagher, Caldwell Tanks (vice president); Steve Meeker, Hamilton Tanks (treasurer); and Tim Woofter, Stanwade Metal Products (board member). Past president Terry Cooper, Acterra Group, was appointed chairman of the board. Other PEI members continuing their terms on the 2013 STI/SPFA board are Tony Honey, Modern Welding Co.; David Watson, Watco Tanks; and Jerry Schollmeyer, Morrison Bros.

Thanks in part to the high credit card fees retailers must pay, 13 percent of all gasoline stations in the United States now offer discounts to motorists paying for gasoline with cash. The percentage of retailers offering discounts for cash (DFC) increased in the past 18 months from 9.7 percent of the station population to 13 percent. Lundberg says that the "practice had been mostly abandoned in the 1990s, after having ballooned to 30 percent of stations in the 1980s."

Once cash discounting emerges in a market, it usually spreads quickly. For example, in both Newark and Long Island, more than half the outlets offer DFC. More than 20 percent of Seattle outlets offer DFC. The most common discount (43 percent of all stations offering DFC) is a dime.―Lundberg Letter, March 26, 2013.

"Key senators appear to be at odds over what is responsible
for recent price swings in the corn ethanol credit market under EPA's renewable fuel standard (RFS) and how to address the issue, differences that are likely to delay oil industry efforts to repeal the agency's program."―INSIDE EPA, March 29, 2013.
"Growth in U.S. natural gas production will continue to exceed consumption growth, providing natural gas with a sustained price advantage over diesel," Tim Fitzgibbon of McKinsey & Co. said at the annual meeting of the American Fuel and Petrochemical Manufacturers (AFPM). The combination of lower costs and environmental benefits will allow natural gas to steal market share from oil-based fuels in the transportation sector, especially for commercial transportation, according to Fitzgibbon. Assuming a concerted effort by the government and industry to shift from oil-based fuels to natural gas in the transportation sector, McKinsey estimates that natural gas could ultimately corner 20 percent of the overall U.S. market, ranging from half of the inter-city trucking market to 5 percent of non-fleet demand.
"Shell Oil and fuel distributor Martin Energy Services plan to set up LNG fuel stations along the Gulf Coast and the Mississippi River, serving both road and marine buyers. Low LNG costs are already convincing a few firms to invest in gas-powered trucks. An expanding network of fueling options will have more of them taking a hard look."―The Kiplinger Letter, March 15, 2013.

A. P. "Bud" Mulligan
, former owner of The Southern Company of North Little Rock, died March 26 at the age of 88. He was a veteran of the U.S. Navy. Following his military service, Bud worked for Shell Oil Company for 25 years. In 1975 he bought his company from The Southern Company in Memphis and sold it 30 years later to Michael Shelby and Philip Grace. He was preceded in death by his wife, Sophie. Survivors include two daughters (Robin Meinert and Barbara Mulligan) and a son (Robert Mulligan).

North Carolina distributor. Petroleum Specialties, Inc., 503 Maverick Road, Kernersville, North Carolina 27284, has applied for distributor division membership. Wayne Henderson is president of the firm, which was established in 2009. The company represents Bennett, EmcoWheatn, HighlandTk, JohnDow, Pneumrcatr, ProgrsElec, RDMElec, TMS and TotlConSys. Sponsored for PEI membership by Brian Travis, GasStaSup, Lynchburg, VA.
NGV fueling equipment manufacturer. WEHTechnologies, 24903 Laguna Edge Drive, Katy, Texas 77494, has applied for manufacturer division membership. Andreas Willfort is managing director for the firm, which was established in 2008. The company has developed products to accommodate NGV refueling at self-service fueling stations. The equipment is sold through distributors. Sponsored for PEI membership by Dev Patel, Kraus, Winnipeg, Manitoba. www.weh.us 
Maryland investment banking firm. Matrix Capital Markets Group, Inc., 100 South Charles Street, Suite 1350, Baltimore, Maryland 21201, has applied for affiliate division membership. Reginald Butler is vice president of the firm, which was established in 1988. The company provides debt and equity capital to the petroleum industry. Sponsored for PEI membership by Kirk N. Mercer, MercerCo, Jackson, MI. www.matrixenergyandretail.com
California installation and maintenance company. Jauregui & Culver, Inc., 959 West Mission Avenue, Escondido, California 92025, has applied for service and construction division membership. Megan Eccles is office manager of the firm, which was established in 1957. The company installs, maintains and repairs fuel systems. Sponsored for PEI membership by Ann Thomas, PtrMktgEqp, Placentia, CA. www.jcincorp.net     



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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.