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Dear PEI Member:

The voters have spoken. But what are the results of last week’s U.S. presidential election likely to mean for PEI members? One short week after the ballots were counted, that’s an impossible question to answer completely.

Predicting how a new president—any new president—will govern is always an inexact science. Unexpected events at home or abroad can intervene. Policies a candidate loudly proclaimed may take a backseat to more pressing needs once that candidate takes office. And even high-priority policy goals may be watered down, tweaked or radically transformed during the give-and-take of the legislative process.

But the uncertainty after this year’s election is even greater than usual.

For one thing, President-elect Donald Trump begins his transition without the clear support of all segments of his party. Some normally stalwart Republicans deserted him altogether during the campaign. Others, including Speaker of the House Paul Ryan and Senate Majority Leader Mitch McConnell, offered at best tepid endorsements. Now that the election is over, all of the major players are smiling and talking about unity. But will the new president and congressional leaders be able to come together with a consensus set of legislative priorities? We just don’t know. Yet.

Moreover, while the Republicans held both houses of Congress, their Senate majority (51 or 52 seats, depending on the outcome of a runoff election in Louisiana) falls well short of the 60 votes needed to completely control the agenda in that chamber. And intense post-election disappointment on the other side of the aisle suggests that Democrats won’t hesitate to resist Trump-backed legislation they oppose.

Election Effects on PEI Members

University of Innovative Distribution

Nationwide Electric Vehicle Corridor Launched

EMV Migration Pace

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But the biggest barrier to making specific predictions at this early stage is that the new administration's known legislative priorities—especially in the business realm—are few in number and lacking in much detail.

With those cautions in mind, here are broad outlines of what may lie ahead in five areas of importance to PEI members.

1.  Taxes
President-elect Trump’s tax proposals are mostly consistent with ideas advocated by congressional Republicans. So, some sort of tax reform package is almost certainly coming—with the likely result that many PEI members will be paying less in federal income taxes.

The incoming president has proposed a simpler tax code, with three tax brackets instead of today’s seven.  A top rate of 33 percent—a substantial reduction from the current 39.6 percent maximum—would kick in at $112,500 of taxable income for singles and $225,000 for married people filing joint returns.

Childcare tax credits and an increase in the standard deduction would help many low- and mid-range earners. And Trump has pledged to eliminate a 3.8 percent surcharge on investment income added by the Obama administration to help fund the Affordable Care Act (ACA).

Business owners have the potential for even more savings. The Trump plan would reduce the corporate income tax rate from 35 percent to 15 percent. And, owners of small businesses organized as S corporations would be allowed to take advantage of that low rate—rather than having business income taxed at their (often higher) personal income tax rate, as is the case under present law.

Last, manufacturers that are willing to give up interest deductions on business debt would be able to immediately deduct capital expenses, a provision that encourages both business expansion and sensible borrowing. PEI manufacturers with a strong cash position will find this to be a significant spur to growth.

2.  Wages and Hours
Candidate Trump did not say he would reverse the recent Department of Labor (DOL) rule expanding overtime protection to those earning up to $47,476 (see Oct. 28, 2016 TL). He did, however, suggest the possibility of carving out an exception for small businesses—a move that would help many PEI members and some of their customers. Because the new overtime rules, scheduled to take effect Dec. 1, are a regulatory action, changes in this area would not require legislative involvement.

During the campaign, Trump came out strongly against any increase in the $7.25 per hour federal minimum wage—and it’s hard to see how the new Republican-dominated Congress will feel any different.

Even so, upward wage pressure will be a reality in many jurisdictions. Twenty-nine states and the District of Columbia have already set their minimum wages above the federal level. Last Tuesday, four of those states (Arizona, Colorado, Maine and Washington) raised their state minimum wage even more. Others are likely to follow. And as any business owner knows, increases at the bottom of the wage scale will “trickle up” to those who are higher on the scale.

3.  Fuels and Fuel Storage Systems
Candidate Trump pledged to remove upstream restrictions on U.S. clean coal, oil and natural gas production. There’s every reason to believe he’ll deliver on those promises.

But he spoke very little about downstream matters involving fueling, vehicles and fuel economy standards. No wonder. With the average price of gasoline at a low $2.22 per gallon during this election season, the voting public wasn’t thinking much about those issues either.

True, President-elect Trump has proclaimed his support for the Renewable Fuels Standard (RFS). What this endorsement will mean in practice, however, is less certain. Can we expect increases to the RFS biofuels targets? Relaxation of regulatory constraints on mid-level blends? Additional equipment grant programs? Continuation of the status quo? We’ll see.

His free-market philosophy and endorsement of traditional energy sources also suggest that electric vehicles won’t receive the same kind of government subsidies they did during the Obama administration. That’s welcome news for PEI members who depend largely on liquid fueling systems.

4.  The Regulatory Environment
As a candidate, Trump got lots of applause when he railed against burdensome federal regulations at campaign rallies. But how will this anti-regulatory bent be translated into policies?

We certainly can expect that political appointees at the U.S. Environmental Protection Agency (EPA) will bring a different set of priorities to their work than did their predecessors.

However, my guess is that the biggest regulatory rollbacks on the environmental front are likely to be far removed from those with which PEI members deal every day. For example, the incoming president has specifically pledged to kill the Obama’s administration’s controversial Clean Power Plan, a proposal that would compel power companies to dramatically lower greenhouse gas emissions.

The EPA’s underground storage tank (UST) regulations, on the other hand, are well established, widely accepted in most segments of the industry, and have proved their value in the installation and operation of safe and environmentally-friendly fuel storage systems. So, it’s unlikely that the primary regulatory framework governing PEI members and their customers will be a major target in the new administration.

5.  Trade
In the campaign, no hot-button issue received more attention from candidate Trump than global trade. And his stated plans in this area are both specific and dramatic. At various points during the course of the campaign, he pledged to renegotiate the North American Free Trade Agreement (NAFTA), impose 45 percent tariffs on goods from China, brand China as a currency manipulator, and reject the proposed Trans Pacific Partnership (a free-trade plan that opponents say does not adequately protect U.S. manufacturers and jobs).

After such a public commitment to protectionism during the campaign, it’s hard to imagine that the new Trump administration will simply reverse course. But it’s just as hard to imagine that the new administration’s trade policies will be as severe as those promised during the campaign.

Best guess? U.S. manufacturers will gain some new trade protections and consumers may end up paying a little more for imported goods. However, other developments—like inflation and the strengthening or weakening of the U.S. dollar against other currencies—could be the primary determinants of who the big winners and losers are in the trade arena.

UID EARLY-BIRD REGISTRATION NOW OPEN
Early-bird registration is now open for the 2017 University of Innovative Distribution (UID), March 5-8, at the JW Marriott in Indianapolis.

Now in its 24^th year, UID is a concentrated educational program tailored specifically for professionals in the wholesale distribution industry. PEI members who have attended in recent years have given the event rave reviews. As a proud sponsor of the program, PEI will offer $600 scholarships to the first 30 PEI members to register.

Attendees can choose from more than 40 separate classes to plan a program that is perfectly suited to each individual’s needs. CEOs, branch managers, sales and marketing professionals, operations managers, purchasing and inventory personnel, and manufacturers can all benefit from UID. To view the full menu of courses and register online, visit www.pei.org/uid. Note: Many UID classes sell out well in advance, so early registration is strongly encouraged.

EPA PUBLIC HEARING SET FOR DEC. 6
The EPA will hold a public hearing for its proposed Renewables Enhancement and Growth Support Rule at 9:00 a.m. on Dec. 6, at the Palmer House Hotel in Chicago. Among other things, the proposed rule would reclassify ethanol fuel blends from E16 to E83 as flex fuels, a move that might accelerate their adoption and use in the marketplace. Additional information on the rule and the hearing can be found on the EPA’s website.

EV CHARGING CORRIDOR ANNOUNCED
On Nov. 3, the Obama administration announced that the U.S. Department of Transportation (DOT) is establishing 48 electric vehicle charging corridors along interstate highway routes spanning some 25,000 miles. Twenty-eight states and a group of industry stakeholders including car manufacturers and utilities have agreed to partner in a buildout which, when complete, will feature an electric vehicle charging station at least every 50 miles along the corridors. 

EMV MIGRATION UPDATE
According to a survey of PEI members presented at the 2016 PEI Convention, only 1.12 percent of fuel marketers have completed or scheduled the installation of EMV equipment on the dispenser island in advance of the October 2017 deadline. In an Oct. 27 Bloomberg.com article, Allen Friedman, vice president of payment solutions at Ingenico Group S.A., gave a similar assessment, saying of the installation numbers, “I think we are close to zero.” In that same article, Chiro Aikat, senior vice president at Mastercard, was quoted as saying that Mastercard had no plans to extend the deadline but will, instead, continue to work with marketers to facilitate the migration.

APPOINTMENT
P. D. McLaren Limited has named John Allen the company’s president and CEO. Allen has served as vice president of the company since 2013. He joined P. D. McLaren in 1997 as manager of the Ajax, Ontario branch, which manufactures the company’s high-speed refueling RDR pump line. He also has been instrumental in the development of new products and the company’s expansion into new markets.

MEMBERSHIP APPLICATIONS
Mexico distributor.  Econoequip S.A. de C.V., Cazon 238, Boca Del Rio, Veracruz 94299, Mexico, has applied for distributor division membership. Alvaro Coronado is CEO of the firm, which was established in 2005. The company represents B&KTkGauge, Catlow, Coxreels, Cree and PetroClear in Mexico. Nominated for PEI membership by Dan Quagliato, Petrorep, Sarasota, FL.
United Kingdom dispenser manufacturer.  Tokheim, Unit 3 Baker Road, Dundee, Angus DD5 3RT, United Kingdom, has applied for manufacturer division membership. Joanna Rice is the global marketing communications manager for the firm, which was established in 1898. The company manufacturers fuel dispensing and automation equipment worldwide and the products are sold through distributors. Nominated for PEI membership by Keith Moye, OPW-FC, Hamilton, OH. www.tokheim.com

ADMITTED TO PEI

• Gas Equipment & Services Co., Qatar Ltd., Doha, Qatar (dis)
• Sublime Industries Ltd., St. Albert, AB (S&C)
• Petro Works LLC, Hillsboro, OR (S&C)
• Ted Leaf, Lincoln Oil Co., Inc., Kensington, CT (O&E)
• Josephine Brown, New York City Metropolitan Transit Authority, Brooklyn, NY (O&E)
• Sean Baltrusitis, New York City Metropolitan Transit Authority, Brooklyn, NY (O&E)

 

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© 2016
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. Richard C. Long, Editor. Opinions expressed are the opinions of the Editor. Basic circulation confined to PEI members.