High Wholesale Prices Cause USA Petroleum To Temporarily Shut Stations
Kinder Morgan to Buy GATX Pipeline, Terminals
Cosby Oil Takes Over 76 Lubricants Direct Serve Business
Intense AST Inspections to Begin
Haycock Petroleum to Acquire Jardine Petroleum

HIGH WHOLESALE PRICES CAUSE USA PETROLEUM TO TEMPORARILY SHUT STATIONS

AGOURA HILLS, CA. — For the second time in the last six months, USA Petroleum has temporarily shut down its Southern California stations because of the high cost of gasoline.

A major player in the independent market in California, USA Petroleum said it closed its gasoline pumps because of the high price of fuel on the Southern California spot market.

USA officials say the prices the company is paying for gasoline on the spot market, plus taxes, are about 12 cents per gallon higher than current Los Angeles street prices, making it impossible to compete in the major-dominated marketplace.

USA is keeping its c-stores open at the stations where fuel is currently not available to keep the facilities generating some income during the price spikes.

USA has approximately 100 stations in California as well as 50 in other states, but has been forced to close only its stations in Southern California.

KINDER MORGAN TO BUY GATX PIPELINE, TERMINALS

HOUSTON, TX. — Kinder Morgan Energy Partners, L.P. has signed a definitive agreement with GATX Corporation to purchase its U.S. pipeline and terminal businesses for approximately $1.15 billion, consisting of cash and assumed debt. higher return finance businesses."

Included in the deal are the CALNEV Pipe Line Company and the Central Florida Pipeline Company (CFPL), which transport petroleum products to markets in Nevada and Florida, respectively. The purchase also includes 12 terminals that store petroleum products and chemicals in a number of key markets including Los Angeles, Portland, OR., San Francisco, and Seattle. higher return finance businesses."

Upon closing this deal, KMP will become the second largest independent petroleum storage operator in the U.S. and the second largest independent chemical terminal operator in the U.S., based on capacity. higher return finance businesses."

"This is a terrific acquisition of premier, fee-based businesses that have significant cost synergies with our existing operations and outstanding growth prospects," said Richard Kinder, chairman and CEO of KMP. Kinder says the pipeline company believes it can increase its earnings by 30 to 40 percent in 2001 because of this purchase.higher return finance businesses."

CALNEV is a 550-mile refined petroleum products pipeline system originating in Colton, CA., and extending to Las Vegas, NV. It transported an average of 112,000 barrels of gasoline, diesel and jet fuel per day in 1999. CALNEV also interconnects in Colton with KMP's Pacific operations, a 3,300-mile pipeline system that transports more than one million barrels per day of gasoline, diesel and jet fuel to markets in Arizona, California, Nevada, New Mexico and Oregon.higher return finance businesses."

"CALNEV is an ideal fit with our existing operations in the West," Kinder said. "We believe rapid population growth in Las Vegas and other western markets will continue to drive consumption of refined petroleum products. As a result, we project volumes on Pacific and CALNEV to grow more than 3 percent annually."higher return finance businesses."

Ronald Zech, chairman of GATX Corporation, stated, "This is an extremely important step in the planned sale of GATX Terminals Corporation. As an experienced leader in the storage and distribution of petroleum products, Kinder Morgan Energy Partners is well positioned to capitalize on GATX Terminals' strong domestic operations. We will work diligently to ensure a smooth closing and transition process. GATX has undertaken a significant and major transformation in the past year, and we are now uniquely positioned to aggressively pursue opportunities in our higher return finance businesses."

COSBY OIL TAKES OVER 76 LUBRICANTS DIRECT SERVE BUSINESS

SANTA FE SPRINGS, CA. — Cosby Oil, based here, has signed two major deals to expand their business. In the first deal, Cosby has taken over the direct-serve lube business for Southern California from 76 Lubricants.

"We closed the deal in September," said Cosby President Larry Clanton. "At that time, 76 was making strategy changes and structural changes as announced by 76 President Garry Rooney. One of the changes was to transition out of direct-serve customer operations in Southern California — the final area the company was still serving with direct operations."

Clanton continued, "They chose Cosby to be the distributor and take over that that business. One of the main reasons they chose Cosby is we were able to make it our number one brand — not necessarily exclusive — but our primary brand. Other marketers they were considering were not in a position to do so. We were willing to market the brand full-bore where they didn't really have a marketer in the L.A. basin who was doing that."

To support the expansion, Cosby Oil hired three salesmen from 76 who had been serving the accounts: Andy Beaucar, Joel Witte, and Pete Kohler. "All three are a tremendous asset to our organization," said Clanton. He added that he is "personally very proud of our staff. We went through the transition very fast, very clean, and with no negative impact on the customer."

The deal also included Cosby's purchase of the 76 Lubricants customer base, outstanding equipment leases, and "numerous items of 76's rolling stock which helped us make a quick transition."

In a separate acquisition, Cosby Oil has purchased five fleet fueling sites in Dallas, TX., "and we're picking up a sixth site," added Clanton.

"We're trying to establish another area that we feel needs to be developed in the U.S. with the CFN network," explained Clanton. "We had an opportunity to go into an area not currently on the network and create a new base. Dallas is a huge metropolitan area, definitely a good growth area, and we feel an area that needs the CFN network."

As part of the expansion, Cosby will open a sales office in Texas but will operate the cardlocks' billing, credit, management, and operations from their Santa Fe Springs headquarters.

The unattended cardlocks are currently being upgraded and are projected to open in the first quarter of 2001. The stations will be unbranded except for the CFN signage. "We're upgrading them, remodeling, and bringing them up to our image," said Clanton.

"INTENSE" AST INSPECTIONS TO BEGIN

SACRAMENTO, CA. — Owners of aboveground storage tanks in California should be prepared for a "round of intense inspections" from government officials looking for leaks and other environmental risks.

The inspectors, who are expected to come from local fire districts or environmental health agencies, will be looking to see if the tanks are compliant with California state law and if they are structurally sound.

The inspectors will also be looking to confirm that all owners of ASTs holding more than 660 gallons have filed a storage statement with their local agencies, have applicable permits, paid their facility fees, are not storing more fuel than their permit gallon limits, and have prepared and implemented a federal Spill Prevention Control and Countermeasure (SPCC) plan.

The California Independent Oil Marketers Association predicts that "The inspections also will be used to collect information about the need for additional regulations that will ensure the tanks are properly protective of public safety and the environment."

HAYCOCK PETROLEUM TO ACQUIRE JARDINE PETROLEUM

LAS VEGAS, NV. — Haycock Petroleum has signed an agreement to acquire Jardine Petroleum of Salt Lake City, UT.

Sterling Jardine will keep an interest in the company, according to Clair Haycock. "He's already on the Board and he will remain in that position." He continued, "We have no intention at this time to change any employees or staff." Clair will serve as CEO of the combined companies and John Haycock will serve as president.

Haycock Petroleum, which markets the Chevron, Quaker State, Tosco, and Arco brands in Nevada and California, believes that the addition of Jardine's assets will provide a major boost to the company.

"We'll be at least double in size," said Haycock. "They're bigger in total volume. We have almost exactly the same amount of employees and we both market in huge areas. He's in Utah and Idaho and we're in Nevada and California, so our operations will merge together well."

Jardine markets the Conoco, Chevron, Texaco and Phillips 66 brands.

Originally published in the December 2000 issue of O&A Marketing News.
Copyright 2000 by KAL Publications Inc.