Flying J to Buy Bakersfield Refinery
Arizona Looks to Cut E-Cigarette Sales
Group Wants State to Run Fuels In California
Record Gasoline Prices Predicted
Laser Beams Shined Into Hazmat Trucks

FLYING J TO BUY BAKERSFIELD REFINERY

BAKERSFIELD, CA. — Ending months of speculation and concern about fuel supply in California's Central Valley, Flying J Inc., has agreed to purchase the Shell Bakersfield Refinery. The refinery will be held by Flying J's Big West Oil LLC division which currently operates the company's North Salt Lake, UT., refinery.

The price tag on the deal, which is expected to close by the end of March, was reported to be $130 million.

Flying J officials say they plan to use the refinery as the base for expanding their truck stop operations in California. The company currently has six truck stops in California — including two in the Bakersfield area — and may add up to six more in the territory.

Under the terms of the agreement, Flying J will own and operate the refinery and Shell will continue to own and operate pipelines that serve the refinery. Shell will also keep its ownership of the Bakersfield Products terminal which will operated by Flying J under a long-term lease.

Flying J agreed to continue to supply Shell with refined products from the Bakersfield facility and Shell says it will be able to "continue to meet its supply obligations to branded customers and contracted diesel customers in the Central Valley through the Bakersfield Products terminal and its West Coast supply network."

"We're pleased to reach this sale agreement, which we recognize is important to many people in Bakersfield and beyond," said Lynn Laverty Elsenhans, president of Shell Oil Company, announcing the deal. "While the facility is no longer strategic to Shell and does not meet our criteria for continued investment, Flying J sees an opportunity. With this sale, the refinery will continue to make gasoline and diesel for the California Central Valley and provide employment opportunities in the region."

The Bakersfield Refinery, which began production in 1932 as the Mohawk Refinery, has a 70,000 barrel per day capacity and primarily refines diesel fuel. The addition of the Bakersfield facility more than doubles the refining capacity of Big West Oil; it currently produces 35,000 barrels per day from its Utah refinery primarly to supply operations in Utah, Wyoming, Colorado, and Utah.

ARIZONA LOOKS TO CUT E-CIGARETTE SALES

TUCSON, AZ. — Arizona is looking to crack down on people who are buying cigarettes via the Internet, mail order, or telephone to avoid paying state taxes to tobacco.

The new state law seeks to "recover lost revenue and protect minors" who might be able to buy cigarettes without proving they are of legal age.

Consumers or businesses who import cigarettes into Arizona without paying the state's cigarette taxes will be subject to a minimum fine of $1,000 for breaking the law.

The Arizona Department of Revenue estimates that the state is currently losing up to $12 million annually in lost cigarette taxes to consumers purchasing products over the Internet or from other alternative sources.

Arizona's state cigarette tax is $1.18 per pack.

GROUP WANTS STATE TO RUN FUELS IN CALIFORNIA

SACRAMENTO, CA. — A group of Californians may be looking to regulate all petroleum sales in the state, including setting prices, altering marketing arrangements, and granting licenses to operate for petroleum producers and marketers.

According to a recent discovery by Denise Duncan, the legislative advocate for the California Independent Oil Marketers Association, a group has filed an initiative proposal with the Attorney General to put a measure on the California Ballot to regulate petroleum marketing in the state.

CIOMA reports that "The initiative proposal would establish a Petroleum Commission comprised of seven members, three of which would be appointed by the Governor, four of which would be elected.

"The Commission would assume broad authority over sale of petroleum products and operation of facilities, for example:

* Establish maximum prices for products, allowing no more than 5% profit 'over costs.'

* Granting licenses to operate for petroleum producers and facilities (facilities definition left to the Commission).

* Determination of need for new facilities and ability to require new facilities.

* Ability to order modification of marketing arrangements or practices.

* Promotion of alternative fuels to 'reduce the dependence of California on petroleum.'

"The initiative also allows the Commission to hire staff as needed and requires the Budget Act to provide whatever funding is necessary," reports CIOMA. The regulatory commissioners would receive salaries commensurate with PUC commission member salaries.

Jay McKeeman, executive director of CIOMA, encouraged jobbers and others interested in a free marketplace to watch for progress of the initiative.

RECORD GASOLINE PRICES PREDICTED

WASHINGTON, D.C. — Petroleum supply will continue to be a major issue in the United States as demand for gasoline is rising faster than refiners can increase production.

According to a report by the U.S. Energy Department, refineries are continuing to expand production with their available facilities. However, consumption is forecast to grow three times faster than refinery growth in 2005.

Joanne Shore, petroleum team leader at the Energy Information Administration stated that "We fully expect refining capacity to continue to expand." However, the EIA is also predicting gasoline prices in July 2005 to exceed the all-time-high of $2.06 per gallon set last May.

Fuel prices in the West — especially in California and Hawaii — are generally substantially higher than the national average.

The prediction of all-time-high street prices do not take into account any unforeseen problems such as refinery shut-downs, pipeline breaks, or other supply chain breakdowns.

LASER BEAMS SHINED INTO HAZMAT TRUCKS

WASHINGTON, D.C. — Tanker truck drivers and other transporting hazardous chemicals are being warned that green laser lights have been flashed into the cabins of trucks in West Virginia.

According to a report from the Department of Homeland Security, two hazmat trucks that were driving together experienced green laser lights shined into their cabins as they drove their cargo after midnight.

The drivers said they were able to keep full control of their vehicles despite the fact that the laser light was trained on their cabins for an extended period of time.

While the Department of Homeland Security said there was no indication of a terrorist threat from the incident, which occurred in December, they asked that any similar incidents be reported.

Originally published in the February 2005 issue of O&A Marketing News.
Copyright 2005 by KAL Publications Inc.