March 19, 2018 | Vol. 68, No. 5
Dear PEI Member:
In the past three months, PEI staff has spoken with—and listened to—hundreds of distributors, contractors, manufacturers and fuel marketers during committee meetings, conferences, regional trade shows and presentations across the country. Thanks to all of you who have been willing to discuss your business, share what is on your mind and offer your thoughts on the future of the industry. Here are the “Top 10” takeaways from these recent road trips.
1. Tax reform is a big win. Owners of large and small companies alike are excited about the recent federal tax reforms. Lower tax rates and accelerated depreciation will help members reduce debt and increase investments in revenue-producing equipment and people.
2. Inspection and testing services are booming. With fuel marketers rushing to meet underground storage tank (UST) system compliance deadlines, testing and inspection providers are busier than ever before. But even distributors and contractors that don’t offer these services are benefitting as inspections uncover problems, and test failures drive repair, replacement and maintenance work.
3. The distributor-to-distributor sales channel is growing. Small and mid-sized distributors increasingly are buying from high-volume distributors to lower their costs, reduce inventory, increase cash flow and boost margins. Because the financial advantages of this strategy are so clear, the trend likely will accelerate.
4. EMV in the forecourt is coming, but mobile pay is an increasingly intriguing option. With 50 percent or more of dispensers now EMV-ready and software certifications expected soon, outdoor EMV processing will begin to pick up later this year. However, some marketers wonder if promoting mobile payment options might allow them to bypass or at least delay expensive EMV upgrades.
5. E15’s future is uncertain. Although major chains are testing E15 in select markets, the number of stores selling this higher-level blend remains small. A federal waiver of summertime emission restrictions, which would make possible the year-round, nationwide sale of E15, might accelerate adoption of the fuel, but no one really knows.
6. Ultra low sulfur diesel (ULSD) remains a frustration. Members are disappointed that after years of discussion and research, ULSD-related corrosion persists. The biggest frustration? Having to tell customers that no solution is in sight.
7. Electric vehicles (EVs) are a major concern. “How and when will EVs affect fuel marketers’ businesses?” Members asked us this question more than any other. Our answer: Liquid fuels will dominate for years, but EV sales are growing at a faster pace than most observers anticipated even a year ago. In 2017, EVs represented just 1.15 percent of all light-duty vehicle sales in the U.S. Some plausible projections show EVs making significant inroads in the marketplace by 2040.
8. The industry still needs service technicians. Delaying the outdoor EMV liability shift until 2020 eased the industry-wide service technician shortage a bit. However, with the pace of EMV upgrades accelerating and UST compliance dates rapidly approaching in many states, the need for skilled technical professionals is once again on the rise.
9. Consolidation is picking up. A growing number of outside investors and strategic industry buyers see the advantages of building a greater distribution footprint. And many distributor owners are at an age where they are receptive to offers to buy their businesses. As a result, more acquisitions and mergers are on the horizon.
10. Tank replacements are coming. The 30-year anniversary of the 1988 federal UST regulations is a reminder that many of the nation’s USTs soon will reach the end of their 30-year warranty period. Members expect a wave of tank replacements to begin in the next couple of years, although some wonder whether attractive insurance products will be developed to help owners defer replacement.
by e-mail to the editor, Rick Long at email@example.com
or join the discussion in the Petroleum Equipment Forum
BP, SHELL SETTLE MTBE LITIGATION
FOUNDATION SCHOLARSHIP APPLICATIONS DUE MARCH 31
Applicants must plan to enroll as an entering freshman at an accredited four-year college or university. Scholarship awards are based on academic achievement, leadership, character, financial need and the applicant’s intent to contribute to the future of the fuel and fuel handling equipment industry. Email Teresa Farmer at firstname.lastname@example.org for more information.
FUEL CELL INFRASTRUCTURE GROWING IN JAPAN
RE-RELEASES RECOMMENDED PRACTICE FOR TESTING ELECTRICAL CONTINUITY
RP400 provides a recommended procedure for testing the electrical continuity of fueling hoses, breakaway valves, swivels, nozzles and other hanging hardware. The document addresses when to test, testing equipment, safe work practices, test procedures, pass/fail criteria, locating and correcting problems and documenting test results. Appendices include a sample form for recording continuity data and a photographic summary of the continuity test procedure.
The single-copy price for PEI/RP400-18 is $40 for PEI members ($95 for nonmembers). To learn more and purchase, visit www.pei.org/rp400.
VIRGINIA SET UST INSPECTION DEADLINES
LAUNCH CROSS-INDUSTRY COMPENSATION SURVEY
Primary contacts of U.S. members in the Distributor and Service & Construction divisions will soon receive additional information and instructions on how to participate. To ensure maximum confidentiality, participating PEI members will submit their information directly to Industry Insights. PEI staff, officers and directors will have no access to any member data.
Crompco hired Sandy Carl as manager of environmental compliance services. Carl, a former Sunoco performance and compliance specialist, brings more than 35 years of retail fuel experience to her new Crompco role.
Jones & Frank named Wayne Morrison chief financial officer of the company. Morrison joins Jones & Frank after a long career involving financial leadership roles for multiple public and private companies.
SloanLED named Daniel Bunch director of sales, national accounts. Bunch has more than 10 years of sales and operational leadership experience in previous positions with GE Lighting and GE Capital.
California contracting company. Kern Construction, P.O. Box 6096, Bakersfield, CA 93386, has applied for service and construction division membership. Josh Simmons is vice president of the firm, which was established in 1978. The company is a full-service fuel system general contractor. Sponsored for PEI membership by Bob Mathews, Northwest Pump & Equipment Co., Portland, Oregon.
Tennessee marketing firm. Tindell Marketing LLC, 545 County Road 750, Athens, TN 37303, has applied for affiliate division membership. Bill Tindell is chief manager of the company, which was established in 1998. Tindell Marketing LLC makes and installs fueling site canopies, car wash canopies, building fascia, and atmospheric steel and stainless steel tanks for fuel and oil/water separators. Sponsored for PEI membership by Michael Webb, Duke Hicks Plumbing & Petroleum Inc., Chattanooga, Tennessee.
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The TulsaLetter (ISSN 0193-9467) is published two or three times each month by the Petroleum Equipment Institute. Richard C. Long, Editor. Opinions expressed are the opinions of the Editor. Basic circulation confined to PEI members.