November 6, 2018 | Vol. 68, No. 21

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Dear PEI Member:

When it comes to vehicle fuels, the U.S. is in the early stages of a major, if as yet undefined, transition. To prove the point, here’s a summary of major fuel-related developments since our Oct. 17 TulsaLetter—less than three weeks ago:

E15. The U.S. Environmental Protection Agency (EPA) issued the timeline for its rulemaking to allow nationwide, year-round sales of E15. According to the plan, the rule could be in place by summer 2019. Several major retailers quickly announced they will consider adding E15 when the rulemaking is complete.

The American Petroleum Institute (API), however, signaled it might challenge year-round E15 sales in court. API also released a nationwide survey it said shows widespread concern E15 will lead to misfueling, engine damage and increased consumer costs. The Renewable Fuels Association (RFA) called the survey nothing more than a “push poll,” with the questions slanted to ensure the answers API wanted. RFA then released its own study showing that E15 is approved for use in more than 93 percent of all 2019 model cars.

Renewable Fuel Volumes. The EPA sent its 2019 renewable fuel volume obligations (RVOs) to the White House. The total renewable fuel target is 19.86 billion gallons, an increase of 590 million gallons over 2018. The EPA also announced the timeline for a new rulemaking to reset total renewable fuel volume targets for 2020 to 2022.

Electric Vehicles (EVs). General Motors (GM) proposed that all U.S. car manufacturers dedicate 7 percent of their new car output to EVs by 2021, and 25 percent by 2030. Honda and GM urged the administration to abandon its proposed rollback of fuel economy standards. And GM released plans for an e-bicycle designed to ease urban transportation gridlock.

Outside the U.S., Britain’s Department of Transport cut subsidies to EV purchasers. Effective Nov. 9, plug-in hybrid subsidies will be eliminated and pure EV subsidies will be reduced by 22 percent. Just two months ago, Britain declared its intent to ban the sale of new gasoline- and diesel-powered vehicles by 2040.

The Future of Fuels

Virginia Limits Mobile Fueling

PEI-Sponsored Events

PEI Convention Presentations Online

Respond to this Newsletter

by e-mail to the editor, Rick Long at rlong@pei.org

or join the discussion in the Petroleum Equipment Forum

Other Alternative Fuels. The United States Council for Automotive Research (USCAR), a collaborative effort of major U.S. car manufacturers, neared completion of a proposal to require higher-octane fuel in all new gasoline-powered vehicles by 2023. If such a move occurs, dispensing equipment will have to be configured to prevent misfueling of legacy vehicles.

Again, all of these developments occurred in just the past three weeks.

At this stage, it’s too early to draw any conclusions about what’s ahead. The signs are inconsistent. Rapid growth in E15—or not? More renewable fuels—or less? Significantly more EV sales? Higher octane fuel? Where we are headed and when we will get there (wherever “there” is) remains unclear.

So, how should PEI distributors and service contractors respond during this transitional time? I offer three simple suggestions.

1. Expect and plan for change. In one way or another, fueling and fuel handling equipment will evolve. The past we have known will influence the future, but it won’t define it. So, build flexibility into your plans. Network with and learn from fellow PEI members. Devote time and money to developing your strategies. Keep your options open.

2. Steer customers toward strategic investments. Fuel retailers are experiencing exceptional profitability. Many have money to upgrade and expand. When appropriate, encourage equipment and technologies that will position their businesses for the future, not the past: storage and dispensing equipment capable of handling E15; site plans that allow for the addition of EV charging equipment; payment systems that can be upgraded as new means of payment become more common.

3. Diversify. Even as EMV upgrades, tank closures and regulatory compliance work boost traditional retail fueling revenue, forward-looking distributors and contractors are creating new revenue streams. Data from the State of the Industry presentation at the 2018 PEI Convention shows traditional retail fueling work is declining as a percentage of distributors’ and contractors’ total sales—from 56 percent of total revenue in 2017 to 52 percent this year. Even more telling, an impressive 72 percent of distributors and contractors are at least open to installing and/or servicing EV charging stations.

VIRGINIA LIMITS MOBILE FUELING
According to the Oct. 19 Oil Express News Alert, recent amendments to Virginia's fire prevention code prohibit mobile fueling except for emergencies, farm operations and off-road use. Mike O'Connor, president of the Virginia Petroleum, Convenience and Grocery Association (VPCGA), said the revisions align the state’s fire code with Virginia law, which already prohibits mobile fueling on the state’s public highways and roads.

UPCOMING PEI-SPONSORED EVENTS
During times of intense change, education can be the key to success. Here are four exceptional opportunities to develop your strategies, hone your skills and deepen your base of knowledge.

How Distributors Should Respond to Amazon Business (Dec. 4-6, Denver). With Amazon Business on track to achieve $10 billion in sales this year, how should PEI distributors respond? This cross-industry forum presented by Modern Distribution Management will explore how to leverage Amazon's massive platform while differentiating and protecting customer relationships. PEI members receive a $100 discount by using the promotional code "MDMA" on the registration form. The early bird deadline is Friday, Nov. 9.

UST Installer Training (Dec. 7, Winchester, Virginia). For licensed Maryland underground storage tank (UST) technicians who need to meet their 2018 continuing education requirements, PEI is offering an eight-hour installer refresher course. For details, contact Melinda Whitney at mwhitney@pei.org or 918-236-3977.

PEI Young Executives Winter Conference (Feb. 6-8, Long Beach, California). Spend two days on the Queen Mary with other emerging leaders. This year’s event includes a panel of industry legends discussing “What Worked and What I’d Never Do Again,” as well as a session on the disruptive forces impacting our industry, including EMV, EVs, mobile fueling and service-as-a-subscription distribution programs.

University of Innovative Distribution (UID), (March 10-13, Indianapolis). Now in its 25th year, UID is the premier educational program for wholesale distribution industry professionals. CEOs, branch managers, sales and marketing professionals, inventory managers, operations staff and other professionals can choose from more than 40 classes to design a schedule perfectly suited to their needs. PEI is offering $600 scholarships to the first 30 members who register. To receive the scholarship, select “Association Member” as your Registration Type on the online registration form and enter “PEI19” in the Promo Code section.

PEI CONVENTION PRESENTATIONS AVAILABLE
Slides from educational sessions at the 2018 PEI Convention are now available on the PEI website. Download presentations on safety, the economy, UST regulations, fuel quality and many other topics. You also can view a live recording of PEI Executive Vice President Rick Long’s 2018 State of the Industry presentation.

MEMBER NEWS
AssetWorks will present a free half-hour webinar for PEI members on emerging trends in the fuel management industry at 2 p.m. EST, Nov. 7. Pre-registration is required.
Dover Fueling Solutions announced a three-year agreement to provide wetstock management services to Moore Oil Co.

BRIEFLY NOTED
“In Washington, more than 93 percent of 2019 model year (MY) vehicles are explicitly approved by the manufacturer to use 15 percent ethanol blends (E15), according to the results of an annual analysis of warranty statements and owner’s manuals conducted by the Renewable Fuels Association (RFA). That is up from last year, when approximately 89 percent of MY 2018 vehicles were formally approved by automakers to use E15.”—Biofuels Digest, Oct. 25, 2018
“The top executive at Marathon Petroleum Corp. has downplayed plans to sell E15. … Asked during Marathon Petroleum’s third-quarter 2018 earnings call about the potential of selling E15, Chairman and CEO Gary Heminger said the company continues to analyze E15, but will not make any decisions until the U.S. Environmental Protection Agency (EPA) finishes a rulemaking that would allow the 15% ethanol blend to be sold year-round.”—CSP, Nov. 2, 2018
“Real GDP growth continues to be on track for 3 percent growth in 2018, the best year since 2005, with tax reform and a changed regulatory environment helping to propel increased activity this year.”—Monday Economic Report, Oct. 29, 2018
“The U.S. economy added 250,000 jobs in October, well above estimates, as the labor market maintains its momentum ahead of Tuesday's midterm elections. The unemployment rate held at 3.7 percent, the lowest level since December 1969, the Labor Department reported on Friday. Wages rose 3.1 percent, the first time since April of 2009 that growth has topped 3 percent.”—The Hill, Nov. 2, 2018

MEMBERSHIP APPLICATIONS
Idaho distributor. Leonard Petroleum Equipment of Boise LLC, P.O. Box 170219, Boise, ID 83717, applied for Distributor division membership. Steve King is owner of the company, which was established in 1999. Leonard Petroleum Equipment of Boise provides sales, service, construction, electrical work and compliance testing. Sponsored for PEI membership by Bill Mascott, Mascott Equipment Co., Portland, Oregon.
www.leonardequipment.com

Pennsylvania construction company. Total Tank Works, P.O. Box 303, East Butler, PA 16029, applied for Service and Construction division membership. TJ Tosadori is owner of the firm, which was established in 2016. Total Tank Works is a sales, service, construction and compliance provider for UST and aboveground storage tank (AST) systems. Sponsored for PEI membership by Craig Smith, Francis Smith & Sons Inc., Scott Township, Pennsylvania.

Philippines service company. Joytrade Industrial Marketing, 9B Charity St., Teresa Village, BGY, Bahay Toro, Quezon City, Metro Manila, Philippines, applied for Service and Construction division membership. Vicente Basa is general manager of the firm, which was established in 2004. Joytrade Industrial Marketing services dispensers and other gas station equipment. Sponsored for PEI membership by Amos Hu, Hongyang Group Co. Ltd., Wenzhou, Zhejiang, China.
www.joytrade.com.ph

Colombian distributor. SYZ Colombia SAS, Aut. Medellin KM 7, LT 7, LC 5, Funza, Cundinamarca, 250027, Colombia, applied for Distributor division membership. Carlos Zambrano is president of the firm, which was established in 2004. SYZ Colombia SAS represents manufacturers of equipment for the storage, consumption and delivery of crude oil, fuel, biofuels and lubes. Sponsored for PEI membership by Shawn Kiefer, Total Control Systems, Fort Wayne, Indiana.
www.grupo-syz.com

Texas affiliate. TesTank Inc., 117 S. Hampshire, Saginaw, TX 76179, applied for Affiliate division membership. Rodney Dwaine Saltkill is president of the company, which was established in 1992. TesTank Inc. performs testing, inspection, investigation and compliance services for UST and AST systems. Sponsored for PEI membership by Steven Magallanes, C & L Pump Service Inc., El Paso, Texas.
www.testank.com

New York affiliate. Green Enviro Machine LLC, 2366 Algonquin Rd., Schenectady, New York 12309, applied for affiliate division membership. Janice Lachman is founder of the firm, which was established in 2009. Green Enviro Machine manufactures a self-service nitrogen tire inflation system. Sponsored for PEI membership by Patrick Vuchetich, Williams & Company Consulting Inc./Petro Classroom, Kansas City, Missouri.
www.kiwigem.com

ADMITTED TO PEI

ISA, Montevideo, Uruguay (affiliate)
MSI Data, Bayside, Wisconsin (affiliate)

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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.