NEWS FROM THE US
NEWS FROM THE UNITED STATES
BY KRISTEN WRIGHT
EDITOR IN CHIEF, PEI
Kristen Wright is editor in chief of the PEI Journal. Reach her at
firstname.lastname@example.org. The Petroleum Equipment Institute is a trade
association whose more than 1,600 member companies in 80-
plus countries manufacture, distribute and service petroleum
marketing and liquid handling equipment.
Rick Long shares PEI members’ top 10
conversation topics of the first quarter.
NACS releases its 2018 survey of fuel
customers. And Trump restores a 2016
biodiesel tax credit. These are petroleum
industry stories from the U.S.
PEI EVP SHARES TOP 10 TOPICS
PEI Executive Vice President Rick long
recently shared in his “TulsaLetter” the top
10 takeaways from conversations during the
first quarter of 2018.
During that time, PEI staff engaged with
hundreds of distributors, contractors, manufacturers
and fuel marketers during committee
meetings, conferences, regional trade
shows and presentations.
1. Tax reform is a big win. Owners of both
large and small companies are excited
about recent federal tax reforms. Lower tax
rates and accelerated depreciation will help
PEI members reduce debt and increase investments
in revenue-producing equipment
2. Inspection and testing services are
booming. As fuel marketers rush to meet underground
storage tank (UST) system compliance
deadlines, testing and inspection
providers scramble, too. Even distributors
and contractors that don’t offer those services
benefit; inspections uncover problems,
and failed tests 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 evident, the
trend likely will accelerate.
4. EMV in the forecourt is coming, but
mobile pay is an option. Half or more of dispensers
are EMV-ready, and software certifications
are expected soon. That means
outdoor EMV processing will pick up later
this year. Nevertheless, some marketers
wonder if promoting mobile payment options
will allow them to bypass or delay expensive
5. E15’s future is uncertain. Major chains
are testing E15 in select markets, but few
stores are selling the higher-level blend. A
federal waiver of summertime emission restrictions,
which would make possible the
year-round, nationwide sale of E15, might
accelerate adoption of the fuel.
6. Ultralow sulfur diesel (ULSD) remains
a frustration. PEI members are disappointed
that after years of discussion and research,
ULSD-related corrosion persists. They said
their biggest frustration is 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?” This is the No.1
question that PEI members ask staff. Liquid
fuels will dominate for years, but EV sales
are growing faster than most observers anticipated
even in 2017. Last year EVs represented
1.15 percent of all light-duty vehicle
sales in the U.S. Some projections show
EVs’ making significant inroads by 2040.
8. The industry needs service technicians.
Delaying the outdoor EMV liability
shift until 2020 eased the industry-wide
service technician shortage. Because EMV
upgrades are accelerating and UST compliance
dates are approaching in many states,
the shortage of skilled technical professionals
is a pain point again.
9. Consolidation is picking up. A growing
number of outside investors and strategic
industry buyers see the advantages of building
a greater distribution footprint. Many distributor
owners are close to retirement and
receptive to offers to buy their businesses.
More acquisitions and mergers are coming.
10. Tank replacements will hit. The 30-
year anniversary of the 1988 federal UST
regulations means many of the nation’s 30-
year UST warranties will expire. PEI members
expect a wave of tank replacements to
begin in the next couple of years, although
some wonder whether insurance companies
will develop attractive insurance products to
help owners defer replacement.
NACS SURVEY: 4 WEAKNESSES COULD
BECOME BIG CHALLENGES
The January 2018 NACS Consumer Fuels
Survey revealed four weaknesses that could
become big challenges.
1. Consumers are used to low gas prices
at the pump, and more of them expect only
minor price increases over a year.
2. Consumers are twice as likely to purchase
fuel from a retailer based on the
brand’s reputation - not price - than they
were six years ago.
3. Consumers value their time, and they’re
less likely to change their habits. Today,
consumers might not drive as far as they
did four years ago to save a little money. To
them, it’s not worth it.
4. Consumers are selecting their fueling
stations based on what’s inside the stores —
again, not on fuel prices. Clean restrooms,
drink selections and healthy options matter
PRESIDENT TRUMP RESTORES BIODIESEL
President Donald Trump signed legislation
on Feb. 9 to extend retroactively the $1
per gallon biodiesel blenders tax credit that
expired Dec. 31, 2016.
The extension reinstates the credit for
2017 but does not carry the credit forward
into 2018 and beyond, as biodiesel advocates
According to the Environmental Protection
Agency, 2.6 billion gallons of biodiesel
were sold in the United States in 2017 with
domestic production of 1.8 billion gallons.
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