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Dear PEI Member:

The full Senate is considering major energy legislation this week with the aim of passing a bill before the July recess.

The 277-page bill (The Renewable Fuels, Consumer Protection and Energy Efficiency Act of 2007) is the result of four committees—Energy and Natural Resources, Environment and Public Works, Foreign Relations, and Commerce—and includes provisions on energy security, transportation, efficiency, carbon sequestration, price gouging and vehicle fuel-efficiency standards.

The proposed legislation would mandate annual production of 36 billion gallons of bioethanol and other alternative fuels by 2022. At least 60 percent of the renewable fuel standard would have to be satisfied with non-corn-based ethanol. The bill provides grants and other incentives for developing alternative fuels from plant fibers as well as funds for retail dispensers and other infrastructure.

One aspect of any proposed energy legislation that is certain to receive a cold shoulder from the petroleum marketing community is a mandate that requires retailers to install E-85 compatible equipment. The National Association of Convenience Stores (NACS) and the Society of Independent Gasoline Marketers of America (SIGMA) testified last week before the Subcommittee on Energy and Air Quality, Committee on Energy and Commerce, that an E-85 equipment mandate “is anti-free market; it will put retailers in significant economic jeopardy; it is an extreme overreaching by the federal government into private enterprise; and it is unsupported by existing or anticipated market conditions.” The National Ethanol Vehicle Coalition’s executive director Phil Lampert voiced essentially the same sentiments when he testified on April 18. With little or no support for the mandate from any segment of the motor fuels industry, we don’t expect to see such a provision in any piece of final legislation.

HOUSE HOLDS HEARING ON TEMPERATURE COMPENSATION
The House Oversight and Government Reform Subcommittee on Domestic Policy held a hearing June 8 on the issue of temperature compensation at the retail level. The hearing examined the impact on consumers and attitudes of industry toward the effect of the thermal expansion of gasoline on the price of gas at the dispenser. Subcommittee members and witnesses discussed:

• How the petroleum industry in the United States addresses temperature compensation, including both wholesale and retail transactions;
• Steps underway at the government level, including matters before the meeting next month of the National Conference on Weights and Measures; and
• How government and industry in Canada have addressed temperature compensation, and what steps, if any, the federal government should take.

PEI member Martin Gafinowitz of Gilbarco Veeder-Root testified at the hearing, a video of which is available online.

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The Committee released a Congressional report a day earlier that looked at the economic effects of hot fuel nationwide between June and September. It found the average temperature of gas at the pump was 66.6 degrees and that drivers would pay an additional $1.5 billion to fill their tanks during that time period. Dennis Kucinich (D-OH), chairman of the oversight subcommittee on domestic policy, said after the meeting that he plans to push the industry to consider voluntary steps before taking up the possibility of national automatic temperature compensation.

In other recent related temperature compensation developments, Bart Gordon (D-TN) chairman of the U.S. House of Representatives Committee on Science and Technology, asked the National Academy of Sciences May 30 to conduct a scientific analysis to determine if a problem exists and whether the broad use of automatic temperature compensation devices is warranted. On June 4, the Texas Petroleum Marketers and Convenience Store Association reported that an automatic temperature compensation bill introduced in the Texas House did not pass.

PETROLEUM MARKETING NOTES
Petro Stopping Centers, a chain of 69 truck stops based in El Paso, Texas, sold 40 truck stops to Hospitality Properties Trust. The trust has leased those truck stops to its subsidiary, TravelCenters of America, which also acquired 24 Petro franchise agreements and five other Petro sites.
Chevron has sold its fuels marketing businesses in Belgium, the Netherlands and Luxembourg to a subsidiary of Israeli group Delek Petroleum in a $460 million deal. The operations include 803 Texaco-branded service stations, two fuel terminals in Belgium and Luxembourg, interests in six joint venture retailers in the Netherlands, as well as other related assets.
Thailand will require the use of B2 palm oil biodiesel for all diesel vehicles nationwide beginning in April 2008, and B5 shortly thereafter, according to the Thai Energy Ministry.
Colony Capital LLC, Los Angeles, California, has acquired Libya’s Tamoil SA for $5.4 billion. Tamoil, based in Switzerland and 100 percent owned by the Libyan government under the name Oilinvest BV, owns three refineries in Germany, Italy and Switzerland, and 2,500 refueling stations in Italy. Libya’s government will retain 35 percent of the company.

PROMOTIONS AND APPOINTMENTS
Petro Energy, Inc., Houston, Texas, has hired Tom Case as territory manager for the North Texas region.
IRPCO, Poca, West Virginia, has appointed H & H Sales Associates, Inc., Andover, Minnesota, to represent their line of hose products in Wisconsin, Minnesota, North Dakota and South Dakota. IRPCO also appointed Peiker/Piatchek Associates Inc., St. Louis, Missouri, to represent the line in Illinois and Iowa.
Computrol Fuel Systems Inc., Vancouver, British Columbia, has appointed Richard van Ettinger as regional manager for Quebec and Northeastern Ontario. Contact van Ettinger via email richardv@computrolfuel.com or telephone: (613) 360-8249.
Far West Sales & Marketing, Tempe, Arizona, has hired Ray Exum has a full associate. Based in Phoenix, Exum will be responsible for the Las Vegas, Arizona, and New Mexico markets. Bill Converse will continue to represent the company in the northern Rocky Mountain states.
Emco Wheaton Retail, Wilson, North Carolina, has appointed Ken Turcotte as its director of sales and marketing. He has held various positions in the petroleum industry over the last 13 years, including eastern regional sales manager for Emco Wheaton Retail.

DISTRIBUTOR PROFITABILITY SURVEY
”There is an ongoing need among PEI members to achieve adequate sales growth. The trick is how to make it happen.” This is what Dr. Al Bates of the Profit Planning Group says about sales growth in a recent Profit Improvement Report prepared for PEI members:

Financial benchmarking results compiled for PEI and other distribution industries indicate that the most profitable firms in almost every industry are those that are able to grow slightly faster than the industry as a whole. The obvious problem is that every firm cannot grow faster than average.

The quest to grow "faster than the other guy" has led most firms to look outside the firm's existing operation for that growth, which focuses on new customers. Since every other firm is looking to add the same new customers, the process is time consuming, expensive and difficult. Analysts have argued for years that a more profitable approach is to focus inside the firm in driving additional sales volume from existing accounts. The only problem with that logic is identifying where such opportunities arise.

If you are a PEI distributor member who is looking for tools to use in planning sales growth, you are encouraged to participate in the Distributor Profitability Survey that is currently underway. Participants in the survey will receive an Online Profit Toolkit that will assist in their planning. This is available only to distributors who participate in the survey. Deadline for submission is June 30. The Distributor Profitability Report generated from the responses to the survey is the best benchmarking source in our industry. If you need to know more about this program and its benefits to your firm, call PEI (918) 494-9696 or the Profit Planning Group (303) 444-6212.

TENNESSEE UST RULE CHANGES COMING SOON
New rules for underground storage tanks will take effect soon. On June 19, new installation requirements will take effect. On July 24, secondary containment rules will take effect for new and replacement tanks, piping and dispensers.
The new installation rules mandate that:

• A pre-installation notification form and fee payment must be submitted to the Division of Underground Storage Tanks at least 15 days prior to the installation of any tank and/or new UST construction activities at the site.
• Before petroleum is placed in the tank an air pressure test or a vacuum test must be conducted in accordance with the manufacturer’s recommendation and the test results kept for the operational life of the tank.

The new secondary rules require that:

• All new tanks must be double-walled or jacketed and must have an interstitial space.
• Interstitial monitoring must be performed monthly on all new tanks.
• All new pressurized piping must be double-walled or secondarily contained.
• Interstitial monitoring must be performed monthly on all new pressurized piping.
• All new motor fuel dispensers must have a liquid tight containment sump, designed to allow for visual inspections, which must be done quarterly. A log of the inspections must be kept showing the inspections done during the past 12 months.
• If a tank, a piping run or a motor fuel dispenser is being replaced, the tank owner must install secondary containment and interstitial monitoring for the replaced tanks and pressurized lines and secondary containment for the replaced dispenser.

REQUEST FOR COMMENTS: OVERFILL PREVENTION FOR ASTS
A draft of PEI’s Recommended Practices for Overfill Prevention for Shop-Fabricated Aboveground Tanks (PEI-RP600-07) is available for comment and can be viewed at www.pei.org/RP600. Written comments suggesting changes to the document must be returned to PEI by July 6, 2007, for consideration by the AST Overfill Prevention committee.

SAE STANDARDIZES COLOR AND VERBIAGE FOR FUEL CAPS
The Society of Automotive Engineers (SAE) has issued a recommended practice (Standardization of Color and Verbiage for Fuel Inlet Closures, SAE J2785) developed to standardize fuel inlet closure (e.g., fuel cap) colors and verbiage by fuel type. While the recommended practice specifically applies to passenger cars and trucks, it can also be used in marine, industrial, lawn and garden, and similar applications. The basic system is:

• Black for gasoline
• Yellow for E-85
• Green for diesel

SAE believes that the recommended practice will avoid instances of refueling vehicles with the wrong fuel which can lead to damage to the vehicle engine and its emission control system.

PEI BOARD ELECTION DEADLINE
It is time to begin the process of electing members to the PEI Board of Directors. Under PEI’s election procedure, the official representative or a duly appointed alternate must request to have his/her name included on the ballot. A form for that purpose was mailed May 25 to the official representatives of PEI member companies from the odd-numbered membership districts of the distributor and manufacturer divisions and from the entire affiliate division. The form must be received in Tulsa by the close of business by Friday, June 15, for the name to appear on the ballot.

BAIRD COMPANIES MERGE
Baird Petroleum Equipment Corporation and F.W. Baird, LLC, have completed their merger, forming a new company known as Baird Petroleum Equipment, LLC, located in Richmond, Virginia. Officers include Peter Baird (chief executive officer), Forrest Allen (executive vice president of operations), Bobby Watkins (vice president of sales), and Mike Durkin (vice president of service). Tom McCollum has joined Baird as vice president of the company’s newly-formed car wash division, representing Ryko Manufacturing.

DEATHS
Louis R. Witt, Jr., passed away on May 27, 2007, from complications after suffering a heart attack on May 4. He was 84. He began his career in the petroleum equipment industry in 1950, working for Allen U. Bevier, Inc. He went to work for Petroleum Services, Inc., in Baltimore in 1971 and served as the company’s president from 1981 to 1990. Lou served on the PEI Board of Directors from 1982 to 1984.

MEMBERSHIP APPLICATIONS
New York distributor. Innovative Petroleum Equipment LLC, 6681 Commerce Boulevard, Syracuse, New York 13211, has applied for distributor division membership. Ronald Ritchey is general manager for the firm, which was established in 2006. The company is a distributor for AustnMohwk, BetaLight, B&KTkGauge, Blueline, BravoInc, Catlow, Cim-Tek, CntmtSoltn, EmcoWheatn, Empro, ESCO, FairfldInd, Federal, Fibrelite, Formex, Gasboy, Global, HighlandTk, HoseMaster, Krueger, MorganBros, Moormann, Natl-Spncr, Omntec, PMPCorp, Pnemercatr, RedJacket, Richards, Samson, TotlConSys, TMS, Universal, Vaporless and VeederR. Nominated for PEI membership by Michael VanLenten, HighlandTk, Stoystown, PA.

Admitted to PEI

• Alvic Mexico, Delegación Cuauhtemoc, Mexico, D.F., Mexico (mfr)
• Torco de la Laguna S.A., Torreon, Coah., Mexico (mfr)
• J.E.B. Petroleum Contractors Inc., Hialeah, FL (aff)
• Advantage Environmental Consultants, LLC, Jessup, MD (aff)
• Diversified Industries, Goodview, VA (aff)

©2007
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.