Alliance Petroleum Group Annual Meeting
Western Petroleum Marketers Association Convention
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Biodiesel and Ethanol Sales
Mandated by Washington
Hawaii May End Price Cap Law
Grassroots Movement Begins to Save the 76
Balls
Environ Signs Deal with Z&Z Enterprises
Cigarettes Must Be "Fire-Safe"
Fire Destroys ABF Biodiesel Plant
OLYMPIA, WA. — A bill mandating biodiesel and ethanol fuel sales by jobbers in the state of Washington has been signed into law by Governor Christine Gregoire.
Under the terms of Senate Bill 6508, jobbers are required to sell at least two percent biodiesel out of their total volume of diesel sales. In addition, two percent of their total volume of gasoline sales must be ethanol.
The Legislature stated that they passed the bill because "it is in the public interest to establish a market for alternative fuels in Washington."
They added, "The legislature intends for consumers to have a choice of fuels and to encourage and promote the development, availability, and use of a diversity of renewable fuels and fuel blends."
All fuel distributors must meet the two percent volume sales requirements of the alternative fuels by the end of November 2008 or when the state determines that the amount of feedstock grown in Washington state can satisfy a 2% requirement — whichever is sooner.
The new law also requires state agencies use biodiesel as an additive to Ultra Low Sulfur Diesel fuel for lubricity, effective as of June 1, 2006. The amount of biodiesel added to the ULSD must be at least 2%, according to the law. The biodiesel/petroleum diesel blend must be utilized in all of the state's diesel-powered vessels, vehicles, and construction equipment.
In addition, as of June 1, all Washington agencies must report their use of biodiesel and a description of any and all problems encountered with the fuel and how those problems were resolved.
Also under the new law, all Washington state agencies are required to purchase at least 20% of their total diesel volume in biodiesel by June 1, 2009.
It is worth noting to petroleum suppliers that Washington state fuel buyers are empowered by the act to "use long-term contracts of up to 10 years when purchasing from in-state suppliers who use predominantly in-state feedstock to secure a sufficient and stable supply of biodiesel for use by state agencies."
HONOLULU, HI. — A bill is moving through the Hawaii Legislature that would suspend enforcement of the state's controversial gasoline price cap law as of July 1 and repeal the law at the end of 2007.
While it effectively ends the price cap, the bill increases monitoring of petroleum companies operating in Hawaii. Oil companies would be required to disclose crude oil costs and sources, refinery operating expenses, marketing and distribution expenses and corporate overhead expenses to the State.
The measure "breezed through" House committees and has the support of the House majority leader, according to Hawaii political reporters. It is expected the bill will face opposition in the Senate, however, where backing for the gasoline cap was stronger. Governor Linda Lingle has come out in support of the bill to eliminate the price cap in favor of more market information from the oil companies.
Hawaii adopted a gasoline price cap on Sept. 1, 2005. Under the law, no manufacturer, wholesaler or jobber may sell regular unleaded gasoline to a dealer retail station, an independent retail station, or to another jobber or wholesaler at a price above the maximum pre-tax wholesale price.
The maximum price is set for each Hawaiian Island weekly by the Hawaii Public Utilities Commission and posted on the agency's website.
Because the prices were posted weekly, consumers kept a close eye on the mandated price shifts for the upcoming week. Station owners reported that their customers would fill up on Sunday if prices were going up or wait until Monday when a new cap took effect if prices were going down. This led to long lines and some fuel shortages in some parts of the state.
Opponents noted that the law only caps wholesale prices. A Hawaiian state study released at the end of February found that retail gasoline prices have not fallen as quickly as wholesale prices, providing fewer benefits to drivers.
"It's not working," Joe Rosa, a retired state employee in Lihu'e, Hawaii, told the Honolulu Advertiser . "I don't think anybody liked it." Rosa said he didn't like the pricing volatility and the "games" that gasoline stations and drivers played.
"When you put these limits on it, it messes up the economics of it," Alexander LeBon, a University of Hawaii student in Kailua, told the newspaper. "If you let the market be, it should work out for the best."
LOS ANGELES, CA. — A grassroots movement has begun to save the "76 Balls," the large, bright orange signs that have hovered over 76 stations since 1955. The group is asking ConocoPhillips to change their policy and leave the signature 76 balls at their branded 76 gasoline stations.
"I'd say we're definitely having great success in terms of media interest and public support," said Kim Cooper, one of the founders of the www.savethe76ball.com campaign. "When people hear about this, they uniformly express a fondness for the balls and shock that a corporation could be foolish enough to trash such a perfect branding device."
Cooper, along with Nathan Marsak, launched the www.savethe76ball.com campaign in February. "ConocoPhillips is removing the iconic 76 Balls and replacing them with boring rectangular signs that aren't even orange!" they stated. "Our petition and boycott asks that they stop this and leave the remaining 76 Balls on their poles, where they belong." The group is asking consumers to contact ConocoPhillips directly to protest their rebranding campaign, sign a petition to save the 76 ball signage, increase on-line awareness of the "save the 76 ball" movement, and protest the sign change at the dealer level.
"If your local 76 gas station still has its ball, tell them 'if that ball goes, so does this customer!' And if your local 76 station has already switched to the liver-colored tombstone sign, don't buy gas there and be sure to tell the owner why."
Their on-line petition includes statements of support such as the comment from Charles Vaughan who states that because of the 76 ball removal, "$300 in personal gasoline expense a month and well over $1000 for my company is now being spent at Exxon."
Among those who have joined the campaign is the designer of the 76 Ball, Ray Pedersen. Pedersen created the design in 1955 for the Seattle World's Fair. His prototype ball was made out of hand-blown glass with hand-painted numbers. When it was seen by Union Oil President Fred Hartley, the orange 76 ball became the signature logo and signage for the oil company.
One fan of the 76 ball signage tracked down many of the removed orange balls to their current resting place in the yard of Nelson Sign Service on Golden State Highway in Fresno, CA., and posted photos of the balls currently in the company's yard. The discovery "bodes well for those of us who believe ConocoPhillips needs to replace the 76 balls that they've taken down from their poles," the group notes.
The "Save the 76 Ball" campaign has generated response not only from the public but from the media as well. The story has been covered by Los Angeles TV and radio reporters, newspapers and magazines as well as the BBC and other European news outlets.
As part of the results of the campaign, the preservation of the 76 ball has become part of the "new business" of the Los Angeles Conservancy, an historic preservation group.
In response to the growing protests, ConocoPhillips Spokesman Lara Campbell issued the following statement, "ConocoPhillips is implementing a nationwide transition of its 76, Phillips 66 and Conoco branded stations to a common image. The intent of this transition is to leverage the strengths of each brand while also offering consistency in appearance across our brands. Thus, the formerly orange 76 logo is now red."
Campbell continued, "We appreciate motorists' loyalty to the orange and blue ball, and hope they will continue to use ConocoPhillips' gasolines and motor products. Though our look is a little different, the quality of our products and our commitment to our customers remains the same."
"ConocoPhillips doesn't seem to be listening," said Cooper. "But we think of this campaign like the one that started when 'New Coke' was introduced. If Coca-Cola can change their minds, so can ConocoPhillips."
SMITHFIELD, NC. — Petroleum equipment company Environ has signed a deal with Z&Z Enterprises of Sacramento, CA.
Under the terms of the agreement, finalized in mid-March, Z&Z will house a logistics center for Environ as well as serving as an Environ distribution center and warehouse for the company's product line.
Environ's Western regional offices, managed by Keith Simon, will also be maintained in Sacramento.
Patrick Schultz, president of Environ Holdings, said he is "excited about this new partnership and the positive improvements it means for EnvironÉEnviron has listened to their customers and has addressed a need for more efficient distribution by partnering with Z&Z Enterprises. Z&Z Enterprises also has the capability for customization and assembly, which will be another asset to Environ Products."
Heading Z&Z Enterprises are Bob Zieske, owner and president; Operations manager Mark Baptista; and Production Manager Dave Robinson.
SACRAMENTO, CA. — California has become the third state, after New York and Vermont, to require tobacco companies to use cigarette paper that meets fire-safety standards.
All cigarettes sold in the state must be made with paper that will put itself out if they are not used within about two minutes. The cigarettes must also extinguish themselves when the flame gets close to the butt end.
With implementation of the California's law, it is estimated that 20 percent of smokers in the United States will be using the self-extinguishing cigarettes.
R.J. Reynolds reports that they have received calls from consumers who do not like the new cigarettes. They also reported a drop in cigarette sales in New York, where the "fire-safe" cigarettes were first mandated.
Advocates of the "fire-safe" cigarette laws say the new cigarettes will save hundreds of lives. The National Fire Protection Association (NFPA) estimates approximately 26,000 home fires annually are cigarette-related, causing $300 million in damage.
R.J. Reynolds Tobacco spokesman David Howard stated, "We continue to believe 'fire safe' cigarettes are not an effective means to address the needs of accidental fires attributed to the mishandling of cigarettes." He noted that the cigarette company's position is that consumer education is the answer.
BAKERSFIELD, CA. — A fire has shuttered the American Biofuels, L.L.C. (ABF) Bakersfield Biodiesel Plant site.
The incident began on Feb. 17 outside of the plant building when, during a transfer of methanol, a small spill occurred and ignited. The plant owners say static electricity is the probable cause of the ignition.
The plant was in full production mode when the outside fire spread into the building. The operators were unable to contain the blaze and left the premises, shutting down operations. All of the employees escaped without harm although the plant burned violently for several hours.
As a result, the entire plant was destroyed including five biodiesel tanks (containing approx. 30,000 gallons). The company said that 6,000 gallons of methanol were saved and approximately 90,000 gallons of corn oil stored in railroad cars were moved back safely with only some minor fire damage to the exterior of the cars.
Company officials stated, "The accident occurred at a most unfortunate time since ABF had finally reached a point where the biodiesel plant was in full operation. ABF was ready to process 125,000 gallons of on-hand feedstock and was negotiating an order to supply 100,000 gallons to the Royal Caribbean Cruise Line on March 11th, and had many other marketing opportunities this year."
ABF said they will keep their production crew on staff and use their skills to fabricate the main components for a new plant at a new site, 15 miles away from the current location.
Originally published in the April 2006 issue of O&A Marketing News.
Copyright 2006 by KAL Publications Inc.
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