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March 12, 2015 | Vol. 65, No. 5

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In This Issue

Dear PEI Member:

We had a great opportunity to talk with more than 160 members and their customers from February 16 to March 5 at two PEI committee meetings and the annual conventions of the Western Petroleum Marketers Association (WPMA), the Petroleum and Convenience Store Exposition of Mid-America (PACE), the Georgia Tank and Environmental Contractors Association (GTEC), and the Southeast Petro-Food Marketing Exposition (SE Petro). Based on what they told us, here’s our take on the prospects for the rest of 2015.

Overall, the year is shaping up to be a smidgen better than 2014 across all membership divisions. Construction of new retail fueling stations is steady across the larger convenience store chains. The same holds true for building new commercial and governmental fueling sites. Emergency generator business continues to be strong and profitable.

Expect continued merger and acquisition activity among PEI members. Owners of profitable PEI companies are finding willing buyers, although it takes patience to put the deals together. We expect to lose about 2 percent of our domestic PEI distributors in 2015 due to acquisitions and mergers.

Customers of all sizes will continue to merge as the strong grow stronger and smaller companies try to keep up. Despite the wheeling and dealing by marketers in recent years, the U.S. convenience store industry is still in the consolidation phase. Improved motor fuel margins help. So does the availability of relatively cheap money.

Interest in CNG refueling facilities has leveled off as a result of lower gasoline prices. It hasn’t gone away, but it isn’t generating the same buzz as it did in the last few years.      

2015 Business Outlook

Why Are We Waiting For the RFS

DFW Airport Study on ULSD Issue


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The hiring, training and retention of service technicians is a top issue among distributor and service companies. Members have talked about it for so many years now that the problems seem chronic. Everyone handles issues involving service techs a little differently, but all seem to struggle with the problem at some time or another every year.

Distributors are NOT counting on E15 equipment sales and upgrade projects to boost their numbers in 2015. Confusion about what the RFS requirements will be—and when they will be released—has the alternative fuel industry biding time until something more definitive comes out of Washington.   

More from our conversations:

  • The switch (pun intended) to LED lighting is a bright spot (pun intended) throughout the country.
  • Manufacturers tell us that their accounts receivable are better than usual. Distributors are paying on time, which is probably related to distributors’ customers having money available and paying our distributor members on time. Having said that, some distributors in every part of the country are having a difficult time making a profit—for a number of reasons.
  • Service companies are waiting to see when and to what extent they will participate in the sale, installation and service of EMV equipment.
  • Many members are anxiously waiting for EPA to release its new underground storage tank regulations. We are told the regulations are close—two months?—to being issued. There is no telling how long the states will have to work on their regulations before they become effective.

Gasoline demand in the U.S. hit its all-time high in 2007.

Congress responded to the demand uptick by updating the Renewable Fuel Standard (RFS), requiring refiners to add increasing amounts of ethanol and other biofuels to motor fuels through 2022. In the lawmakers’ view, something had to be done to reduce U.S. dependence on foreign oil.

Then the Great Recession hit. Gasoline demand declined, imports began to drop precipitously, and advanced drilling technologies encouraged the U.S. to produce more of its own oil.

Despite the decline in oil imports, the RFS requires the Environmental Protection Agency (EPA) to find ways to add ever-growing volumes of biofuels to the nation’s motor fuels. In 2013, however, refiners hit the “blend wall”—the point at which all gallons of gasoline can be blended with 10 percent ethanol.

In order to avoid Congressional action, on November 15, 2013, EPA proposed a relaxation of the 2014 RFS mandate. Corn ethanol’s portion would be only 13 billion gallons instead of the previously prescribed 14.4 billion gallons. In response to EPA’s proposal, pro-ethanol groups demanded an increase in ethanol, while petroleum refiners and many petroleum marketing groups warned of the equipment costs and hazards associated with adding more ethanol to gasoline. Unable to make a decision, EPA punted. On November 21, 2014, EPA said that the 2014, 2015 and 2016 ethanol requirements would be revealed in 2015.

We have been talking with PEI members and their customers about the RFS since 2007. We understand the volumes, the published deadlines, the blend wall and the equipment issues involved when fuels like E15, E25 and E85 are introduced into the marketplace. So do most PEI members. But when we are asked about why EPA delayed its decision, we are at a loss to come up with a plausible explanation.

The editors at Lundberg Letter investigated this issue and met it head on in the publication’s February 13, 2014, issue. The answers provided by the Lundberg editors are the most comprehensive we have seen and are worth sharing with TulsaLetter readers.

“Why, with the power to reduce, leave the same, or increase the RFS, has the EPA been repeatedly delaying its decision? In the [Lundberg] Letter’s interviews of industry people, and review of press articles, several theories emerged.

“The most reasonable rationale behind EPA’s irrational-looking frozen stance would be to set the RFS volume at the blend wall. That would mean it has to wait for the prior year’s final demand data to emerge. It’s ridiculous, but is the most reasonable excuse for EPA’s delay. Choosing RFS volume to match the blend-wall would remove any need to force more ethanol into the gasoline pool by way of higher percentage blends. The need for E15, E85, etc., would be chocked off. Ethanol use would only grow, or shrink, with gasoline demand.

If it is not to set volume at the blend-wall, is it incompetence? No, not in this case, observers opine. It is likely a calculated move by EPA and the Obama Administration.

What politics could be behind this unending delay to name the sales quota? There is speculation that not releasing the RFS allows the White House, in control of EPA, to bargain with Congress, both sides of the renewable fuels debate, and dangle the RFS in front of them to gain concessions. The RFS is a bargaining chip that goes away once the volume is mandated. For now, having EPA delay determining its sales mandate lets the Administration thumb its nose at Congress and torture the oil industry with uncertainty at the same time.

Is part of EPA’s paralysis caused by anti-petroleum sentiment? It’s part of the mix. Sticking it to Big Oil is a favorite pastime as evidenced by Keystone. Delaying the RFS again and again forces the oil industry to get on their knees and beg to be told how much ethanol they are forced to buy and sell. The delay is an added punishment retroactively, which is even more fun for the anti-oil crowd than plain punishment in current time.

Since Big Ethanol is also champing for a decision, does this mean EPA is dissing the ethanol industry? The ethanol industry and its political benefactors got hit hard by the blow up in RIN prices. That was terrible PR for them. The public knew about it and became restive. EPA knows that if it issues any renewable fuels sales standard above the blend-wall, another round of PR damage to ethanol advocates and the EPA would emerge.”

Increased fuel-related issues in underground tanks storing ultra low sulfur diesel (ULSD) at the DFW airport caused authorities there to investigate if ULSD is prone to cause excessive corrosion. The investigation resulted in an excellent 13-page paper entitled Preliminary Investigation Summary of Deterioration of Fuel and Fuel Systems Storing and Dispensing ULSD Fuel at DFW Airport.

The authors of the DFW study made it clear that they “were not compelled by regulatory compliance to address this issue, but an aggressive approach is necessary to curtail contamination and halt excessive corrosion of components of the system.” Program recommendations include shocking a contaminated system with biocide; removing the tank and cleaning it thoroughly, including the walls and ceilings; filtering the product as it is put back into the system; and treating the fuel with a maintenance dose of biocide to dispatch residual microorganisms and prevent future propagation. Monthly recommendations include sampling the tank bottoms and cleaning the tank for water removal if the bottom sample is cloudy or has visible water in it. An annual tank cleaning is also recommended.

The Independent Lubricant Manufacturers Association
(ILTA) announced March 4 the appointment of Holly Alfano as the new executive director of the association. She has more than 20 years of experience working with associations representing the petroleum industry. Most recently, she served for eight years as vice president of government affairs for NATSO, an association representing truck stops and travel plazas.
Ohio is suing BP for $33 million, alleging BP fraudulently accepted state funding to clean up underground storage tank leaks. The lawsuit, filed March 2, charges BP with “double-dipping” by seeking cleanup money from the state’s Petroleum Financial Assurance Fund while receiving insurance money for the same leaks.
The California Department of Food and Agriculture is proposing legislation that would change how the state regulates alternative fuels. Included in the proposal are the expansion of alternative fuels definitions, testing and certification of DEF, the inclusion of ACEA motor oil classifications where appropriate, and the ability to oversee signage for electric charging lanes.
Iowa House Study Bill 186, which would expand funding opportunities for petroleum retailers who wish to install E15 blending pumps, passed the Agriculture Committee by a 22-0 vote on March 5. The bill would expand the state’s renewable fuel infrastructure program that now supports installation of E85 pumps to also support E15 pumps. Iowa’s cost-share program provides grants for up to 70 percent of the cost of installation or $50,000, whichever is lower.

Alabama distributor. Superior Performance Petroleum Equipment Sales LLC, 2050 West Point Parkway, Opelika, Alabama 36801, has applied for distributor division membership. Stephen E. Wilson is president of the company, which was established in 2011. The company represents Alemite, Bennett, ESCO, HuskyCorp, MetalProd, PMPCorp, RDMElec, TurnerTanks and VeriFone. The firm sells and repairs all types of petroleum equipment. Sponsored for PEI membership by Kevin R. McKinney, McKinney, Mobile, AL.
Vapor processing equipment manufacturer. Fuel Management Technologies, 3 Broughton Business Centre, Causeway Road, Broughton, Huntingdon, Cambridgeshire, United Kingdom PE28 3AR, has applied for manufacturer division membership in PEI. Paul Howson is a director for the firm, which was established in 2011. Fuel Management Technologies manufactures an advanced system that uses condensation technology to process gasoline volatile organic compounds at the service station during fuel transfer. The system is sold through distributors. Sponsored for PEI membership by Betty West, EmcoWheatn, Wilson, NC. www.vrrefiner.com
Canopy and signage provider. Comet Signs, 235 West Turbo, San Antonio, Texas 78216, has applied for affiliate division membership. Marvin Miller is vice president, national accounts for the firm, which was established in 1956. Comet Signs is a full service manufacturer of canopies, electrical signage, pump toppers and pump door skins. Sponsored for PEI membership by Chris Monroe, Monroe, Arlington, TX. www.cometsigns.com    
Florida manufacturers’ representative. FMG-LLC/SFICO, 821 West Forest Brook Road, Maitland, Florida 32751, has applied for affiliate division membership. David Fiala is sales manager and owner of the firm, which was established in 1995. The company represents manufacturers from the United States, Canada, India and Malaysia in Mexico, the Caribbean, Central America and South America. Sponsored for PEI membership by William Moldenhauer, BareDev, Countryside, IL. www.sficopetro.com
Pennsylvania cloud-based business solutions provider. Petrosoft, 2025 Greentree Road, Pittsburgh, Pennsylvania 15220, has applied for affiliate division membership. Melanie Widman is marketing manager for the firm, which was established in 2003. The company provides cloud-based business solutions for the retail petroleum industry. Sponsored for PEI membership by Lucy Sackett, Gilbarco, Greensboro, NC. www.petrosoftinc.com
Washington general contractor
. PNE Construction, 1121 Columbia Boulevard, Longview, Washington 98632, has applied for service and construction division membership. Bret Hagdahl is project manager for the firm, which was established in 1989. The company is a general contractor specializing in petroleum installations and convenience stores. Sponsored for PEI membership by Gregg Miller, NWPump, Portland, OR. www.pnecorp.com


  • Apex Mechanical Engineering LLC, Azaiba, Oman (dis)
  • Lube-Tech ESI, Golden Valley, MN (dis)
  • Coxreels, Inc., Tempe, AZ (mfr)
  • Diamond Shine Inc., Wickcliffe, OH (aff)
  • National Testing Contractors Association, North Royalton, OH (aff)
  • PetrolPlaza, Villingen-Schwenningen, Germany (aff)
  • Tank Solutions Pty. Ltd., Tomago, NSW, Australia (aff)
  • World Source Filtration Inc., Sarnia, Ontario, Canada (aff)
  • CJM Development Inc., Eloy, AZ (S&C)
  • Environmental Laboratories, Inc., Travelers Rest, SC (S&C)
  • Gold Eagle Contracting, Inc., Meredith, NH (S&C)
  • L. A. Perks Petroleum Specialists, Inc., Sparks, NV (S&C)
  • Rite-Way Industrial Service, Inc., Groveport, OH (S&C)
  • Kerry L. Nisson, Idaho National Laboratory, Idaho Falls, ID (O&E)
  • Angela M. Pimental, Cumberland Gulf Group of Companies, Framingham, MA (O&E)
  • Jerry Schueller, Jacobus Energy, Milwaukee, WI (O&E)


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© 2015
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.