Investor Group Looks to Re-Open Shuttered Powerine Refinery
Fresno in the Middle of a Gasoline Price War
Veeder-Root to Acquire Marley Pump
Tesoro to Buy BP Salt Lake City Refinery

INVESTOR GROUP LOOKS TO RE-OPEN SHUTTERED POWERINE REFINERY

SANTA FE SPRINGS, CA. — A group of investors, led by televangelist Pat Robertson, is seeking to re-open the shuttered Powerine Refinery here, despite concerns from local residents and regulatory agencies about potential pollution problems from the site.

The refinery, now owned by Cenco Refining Inc., would process 50,000 barrels of oil per day and would include a plant to generate electricity to run the facility.

A public meeting held in August brought the two sides together to discuss the issue and little progress was made toward agreement.

Cenco Refining was represented by the Robertson Charitable Remainder Unitrust which met with the opposition group Communities for a Better Environment, which sponsored the meeting.

Local residents appear to be divided on the issue of the refinery. They would like the income and jobs created by the re-opening of the refinery — which has been shuttered for over a decade — but do not want the return of environmental problems such as ammonia and sulfur leaks.

Robertson’s liaison Don Brown said, "This is a small plant. It really doesn’t take up any space. It isn’t going to be noticed by the public." He noted that Brown said Cenco plans to spend $170 million to install state-of-the-art pollution controls and monitoring equipment. He also said the state’s conditional-use permit makes it clear that gas leaks or other problems could close the plant.

The Environmental Protection Agency and the Justice Department reached an agreement last January with Cenco to install "cutting edge air pollution controls, reducing emissions up to 85%," at the facility, according to an EPA announcement. The deal went through because Cenco had agreed to produce the reformulated gasoline required by the California Air Resources Board, looking to ease shortages in the state.

"These are people already fighting pollution problems," said Scott Kuhn, an attorney for Communities for a Better Environment. The residents group sued Robertson’s company last year, looking to keep the refinery closed. The group argues that reopening the plant would expose residents to increased pollution and the threat of toxic gases.

Robertson’s family trust bought the closed Powerine Refinery Inc. in 1998, using money from the sale of some of his family’s broadcasting interests. He said he has been seeking bank financing to reopen it ever since, renaming it Cenco Refining Co.

FRESNO IN THE MIDDLE OF A GASOLINE PRICE WAR

FRESNO, CA. — Fresno and the surrounding Tulare County has been involved in a gasoline price war at the end of the summer, one that many locals believe is designed to force the independents out of the market.

The market is so inverted that, according to the Lundberg Survey, the gasoline prices in the Fresno area were the lowest in the United States at the end of August.

As evidence of this trend, the Shell station, a company-operated site located at the corner of Herndon Avenue and Highway 99 in Fresno, has been selling gasoline for approximately $1.00 a gallon, moving between 99 cents per gallon and $1.01 for regular unleaded.

It is worth noting that, according to the Automobile Club of Southern California, the average price of gasoline in Visalia in mid-June was $1.85.

"We’re doing the best we can," Jack Jameson, president of Jack’s Git-n-Go, Tulare, CA., told local reporters, explaining his situation. "The big guys are able to do this. They’re trying to gain market share." Jameson was retailing his gasoline at $1.49 per gallon.

Jobber Shelly Gill, Julien Oil Company, Visalia, CA., who supplies many of the independents in Tulare County said that the price for the independent jobbers and retailers went up steadily during the month of August while the price at major oil stations was dropping steadily.

"I was selling 4,000 gallons a week," said Paul Singh, Paige Mini-Mart, Tulare. "Now I’m down to 1,000." Singh, who operates his station off Highway 99, said he was keeping his retail gasoline price at $1.49 per gallon even though his wholesale price was $1.70 per gallon., losing 21 cents on every gallon sold.

The USA station, which opened in June at the corner of Prosperity Avenue and Hillman Street in Tulare, quit selling gasoline as its way of dealing with the price inversion, keeping its c-store open to try and meet costs.

Bruce Binesh, the dealer at Mooney Shell in Visalia, told local reporters that he was beginning to "ease" his prices up at the end of August. During the month, he had been selling fuel for $1.13 per gallon of regular unleaded, but he had been hit with three price increases by the end of the month. At the end of August, Binesh was retailing at $1.23 per gallon.

The low price strategy had been successful for his station, noted Binesh, who said that his "business tripled" during the month of August.

VEEDER-ROOT TO ACQUIRE MARLEY PUMP

SIMSBURY, CT. — Veeder-Root has signed a letter of intent to acquire Marley Pump, the manufacturer of the Red Jacket pump line.

When the deal closes, the approximately 100 Red Jacket employees will be integrated into Veeder-Root. The Red Jacket line will continue to be marketed by Veeder-Root after the acquisition.

"Veeder-Root has the resources and strategic commitment to help the Red Jacket brand with continued growth and success in the markets we serve, " said Scott Clawson, president of Veeder-Root, announcing the deal. "This acquisition will enable us to enhance fuel management technology by closely integrating the key system components from both companies and provide our customers with improvements in both performance and cost. "

TESORO TO BUY BP SALT LAKE CITY REFINERY

SAN ANTONIO, TX. — Tesoro Petroleum Corp. will acquire BP’s refinery in Salt Lake City, Utah as well as a second facility in North Dakota, along with associated storage, pipeline, distribution and gasoline marketing operations, for $677 million.

The deal includes 45 service stations in the area which will be transferred to Tesoro. It is expected that these stations will be rebranded to Tesoro’s name and image.

Tesoro will also gain contracts to supply approximately 300 Amoco-branded stations that are owned by about 80 Amoco-branded gasoline jobbers in the territory.

With these latest additions, Tesoro will operate five refineries and approximately 640 service stations.

The deal is expected to close by October.

Originally published in the September 2001 issue of O&A Marketing News.
Copyright 2001 by KAL Publications Inc.