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June 17, 2015 | Vol. 65, No. 11

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In This Issue

Dear PEI Member:

Every once in a while I have occasion to thumb through old PEI Directories. Earlier this week, I was reviewing the directory entries of distributors who were members back in 1971. As I encountered members who were no longer in business, I jotted down the reason—if I knew—that they were out of business. I went through the same exercise for companies in the 1981, 1991, 2001 and 2011 PEI Directories.

What I determined through my completely unscientific survey is that some companies did not survive for reasons we all feel good about, like their company merged with another or left our industry for even greener pastures. But scores and scores of PEI distributors/contractors did not make it for other reasons. What follows are the top reasons distributors and contractors failed in our industry, based on my observations over the last 36 years.

Didn’t know their costs. Some members could not turn a decent profit year in and year out because they didn’t know what was going on cost-wise. With bad numbers, or no numbers, companies flew blind. Some companies didn’t know they were going broke until their accountant told them the bad news at the end of the year. This used to be the number one reason PEI members failed—fortunately members have a better handle on their costs today and price accordingly.   

Cared more about the top line than the bottom line. How many times have we heard a member brag that his company hit the $1 million, $5 million or $10 million sales mark and went broke soon after that? Too many. They concentrated their efforts on sales, not profits.   

Employees checked out. Employees didn’t mentally show up for work. The company’s checked-out employees conveyed a bad impression to customers, made more mistakes and, worst of all, they became models of disengagement for co-workers and new employees. The owner didn’t recognize the problem until it was too late to do anything about it. Many times, the owner was the last to know.

Why PEI Members Fail

EPA Issues PVI Guide

Future of Ethanol

Navy’s Plans for Red Hill

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Owner burnout. Priorities changed. As they aged, owners got tired, lost their drive, became bored and/or didn’t want to deal with the tough issues anymore. They did not spend a full day in the office like they did in the past. As a result, employees didn’t feed off the owner’s energy and excitement, and the business died.

Too many relatives. This is a toughie, but let’s face it: All relatives are not created equal. Our industry lost members who had too many people with the same last name on the payroll. Collectively, the family took too much money home. Sometimes it was the owner who should have retired long ago (see preceding paragraph). Most of our owners work in a lifestyle business. I get that. But there is only so much money to go around.

Inadequate cash reserves/access to capital. Bad things happened over time—the loss of an important customer or critical employee, inadequate bids for construction jobs, the arrival of a new competitor, employee embezzlement, involvement in a lawsuit, etc. These things stressed the finances of a company. The company—with no cash and very limited borrowing potential—turned to bankruptcy as its only protection. 

Overreliance on one customer. Companies devoted all of their time and attention to one or two clients and put themselves in a very vulnerable position. When that business dried up or went elsewhere, the loss of income was oftentimes catastrophic. We haven’t had many of these, but they are doozies when they happen.

Illness/incapacity/death of the owner. Some of our former members didn’t have a deep bench. When a significant contributor was replaced by a person (or people) who got in over his or her head, the company took on lots of water.

Looking for some good news? We aren’t faced with a declining market. PEI members don’t serve book stores, music stores, film processing businesses or the printing industry. Instead, we are in a vibrant industry centered on liquids and fuels. Review the examples above and you’ll see that very, very few members lost their businesses because demand for their products and services went out the window. The demise of many members was not due to the market, but to mismanagement. And that’s something most members can control.  

On June 11, the U.S. Environmental Protection Agency (EPA) released its 123-page guide for addressing petroleum vapor intrusion (PVI) at leaking underground storage tank (UST) sites. The guide provides technical information to regulatory personnel from federal, state, tribal and local agencies responsible for investigating and assessing PVI. The document provides a description of EPA’s recommended approach for addressing PVI and also gives detailed technical information supporting the recommendations. 

An Ohio man has been indicted
on two counts of tampering with records, two counts of a violation of a Division of State Fire Marshal Bureau of Underground Storage Tank Regulation (BUSTR) statute and one count of forgery. Daniel L. Wilson of Canton, Ohio, was working as a subcontractor at two UST sites when he allegedly submitted false reports to BUSTR.    
Getty Realty Corp. has acquired fee simple interests in 77 convenience stores and retail motor fuel stations located in Northern California, Southern California, Colorado, Washington, Nevada and Oregon for approximately $214 million. The 77 properties were acquired from affiliates of Pacific Convenience and Fuels LLC and simultaneously leased to United Oil, a regional convenience store and gas station operator that now operates approximately 400 stations. Getty Realty owns and leases approximately 930 properties nationwide.
OmegaFlex, Inc., Exton, Pennsylvania, has named Jimco Sales & Manufacturing, Inc., Fort Worth, Texas, to represent its DoubleTrac, DEFTrac and SolarTrac lines in Texas, Oklahoma, Arkansas, Louisiana and Mississippi.

“Don’t expect any of the presidential candidates to campaign against ethanol
too aggressively. Though some in Congress are sponsoring legislation that would dial back the federal mandate that requires blending corn-based ethanol into gasoline, presidential contenders won’t push for it. Ethanol is big business in Iowa and other farm states that no candidate wants to alienate early in the campaigning. But several states are rethinking their ethanol rules. California, Oregon and Washington are moving to a more flexible system to encourage the use of more renewable fuels and to foster cellulosic ethanol and other alternatives to regular, corn-based ethanol. Hawaii, for example, is nixing its ethanol mandate, which hasn’t proved to be the boon for sugar growers that state lawmakers expected when the rule took effect in 2006.”—The Kiplinger Letter, June 5, 2015.
Lawmakers renewed calls to revise the renewable fuel standard after the Environmental Protection Agency again proposed sharp reductions in the amount of biofuels required by law, but several analysts said congressional action was unlikely until after the 2016 presidential election.”—Bloomberg BNA Environmental Report, June 5, 2015. 

The U.S. Navy and Defense Logistics Agency anticipate spending “tens of millions of dollars” to upgrade USTs with an estimated capacity of 250 million gallons near Pearl Harbor, according to a proposed settlement with EPA and the State of Hawaii.

The proposed Administrative Order on Consent, reached under Section 7003 of the Resource Conservation and Recovery Act, commits the military to install additional release prevention and detection technologies at the Red Hill Fuel Storage facility on Oahu.

The agreement, announced June 1, also requires the military to conduct a feasibility study within two years for a range of storage tank upgrades that could be implemented, in phases, over the following 20 years. Other actions the Navy agreed to include are:

  • Increasing the frequency of tank tightness testing from biennial to annual;
  • Conducting an analysis of the hydrogeology of the surrounding area to study the extent of a 2014 spill, evaluate cleanup options and assess the risks posed to Oahu drinking water; and
  • Potentially installing additional groundwater monitoring wells.

Comments of the proposed Administrative Order on Consent are due by July 1.

Richard “Rick” Duval
, president of KW Petroleum Ltd., Saskatoon, Saskatchewan, died March 22. Born in Calgary in 1954, Rick had an opportunity to buy KW Petroleum in 1991 and served there as president and CEO until his passing. He was a founding member of the Saskatchewan Retail Petroleum Contractors Association and was instrumental in forming the Canadian Petroleum Contractors Association. Survivors include his wife, Carol; a son, Michael; and his mother, Maxine.
Jackie “Jack” Lee Bales, Jr., of Hot Springs, Arkansas, died June 12. He was 65. Jack had only one employer for 42 years, starting with A.O. Smith Corporation in 1973 and retiring from NOV Fiber Glass Systems in May 2015. He spent those years living and working in Little Rock, Dallas and finally returning home to Hot Springs in 2007. In addition to his parents, he is survived by his wife of 33 years, Judy Bales of Hot Springs, a stepson and a granddaughter.     

Fuel management system manufacturer
. Cardlock Vending Inc., 14253 169th Drive SE, Unit 773, Monroe, Washington 98272, has applied for manufacturer division membership. Bob Hartle is sales and marketing manager for the firm, which was established in 1994. The company manufactures fuel management systems that are sold through distributors. Sponsored for PEI membership by William J. Mascott, MascottEqp, Portland, OR. www.cardlockvending.com
California consulting firm. Thomas N Thomas, P. O. Box 899, El Dorado, California 95623, has applied for affiliate division membership. Allen Thomas is COO of the firm, which was established in 2010. The company provides designated operator services in California. Sponsored for PEI membership by Gregg Miller, NWPump, Portland, OR and B. A. Scowley, ShldsHarpr, Martinez, CA.
China service station equipment provider. Jiangyin Furen High-Tech Co., Ltd., No. 8, Xin Yuan Road, Jiang Yin, Jiang Su, China 214432, has applied for affiliate division membership. Zhou Xu is assistant to the general manager for the firm, which was established in 2001. The company provides integrated solutions for the entire petroleum conveyance system. Sponsored for PEI membership by Wenli Chi, ZMaideMach, Wenzhou, Zhejiang, China. www.furentech.com


  • Gas Trailer Petro2Go, LLC, De Pere, WI (mfr)
  • Advanced Fuel Services, Morro Bay, CA (S&C)
  • Capital Petroleum Services Ltd., Regina, SK, Canada (S&C)


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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.