11

The J J

CXIX Edition June 2009

Gasoline Retailers Association of Florida

214 Stevenage Drive Longwood, Florida 32779

http://www.flagas.com

e mail

407-774-9700 SSDA/NCPR-AT

Pat Moricca President Member Service Station Dealers of America

INDEPENDENT BRANDS

VISIT OUR WEB SITE FOR THE LATEST GASOLINE

INDUSTRY INFORMATION AND BENEFITS

www.flagas.com

Gasoline Retailers Association of Florida is a non-profit association representing Independent Gasoline Retailers, Convenience Stores, Gasoline Service Stations, Repair Shops, Tire Retailers, Truck Stops and Associates throughout Florida. Our goal is to improve the interests of these independent businesses and the motoring public. Cooperation with insurance companies provides benefits for our members. These benefits include money-saving programs for group health, workers' compensation, casualty and property and gasoline tank liability insurance. Benefits also include financing to purchase your gasoline station property and much more.

The problems facing our industry today affect every dealer, no matter how large or small. And, since no one individual could possibly begin to solve these problems alone, it remains that each should join in a collective effort to protect his/her business investment.

Join the Gasoline Retailers Association of Florida and help in the fight to keep the

Motor Fuel Marketing Practices Act of Florida (Below Cost) law.

Make an important investment in your business future for less than $1 a day.

Reminder! Time is running out!

Important Notice: Storage Tank Upgrade Deadline

Many gasoline stations around the state of Florida may be forced to shutdown that requires them to have a double-walled underground gasoline storage tank by the end of the year deadline December 31, 2009.

Don’t wait for an extension; the department has never issued an extension for an equipment upgrade deadline since the storage tank rules were adopted in 1984.

Pat Moricca We strongly encourage you to get your upgrades done early! Last-minute upgrades could easily result in higher cost due to increased demands for storage tanks, piping and installation services. Last-minute upgrades could also result in unexpected delays and ultimately expose you to fines and penalties from the Florida Department of Environmental Protection's (FDEP).

For more information: contact our office @ 407-774-9700

State of Emergency

Executive Order 09-114 is in effect

The Governor issued Executive Order 09-114 on May 14. This is a statewide emergency declaration due to wildfires in Volusia County and drought conditions in Central, South and Southwest Florida. The order is in effect until July 13.

Price gouging statute is in effect statewide.

If any of you who incurred the expense of complying with the generator law can not raise retail petroleum prices during state of emergency to aid in recovering that investment. That will get you charged with price gouging; so make sure every “i” is dotted and every “t” is crossed. Documentation of all your expenditures needs to be thorough.

As I have mentioned on many occasions it is absolutely imperative that you maintain accurate records and have them available to respond to inquiries that will no doubt be made in advance of possible subpoenas. Those records should extend back to 30 days prior to the original declaration. Comply with any requests you may receive.

The law requires you to maintain the same margin of profit for each grade of gasoline whether prices go up or down. The ‘State of Emergency’ will end on July 13, 2009 unless the Governor extends the ‘State of Emergency’ with a new Executive Order.

For information contact Pat Moricca @ 407-774-9700

Chevron and Shells 1Q profit

The San Ramon, Calif.-based company said net profit for the first three months of 2009 amounted to $1.84 billion and for the first quarter, Shell said its profits was $3.5 billion,

Chevron, ExxonMobil Corp. ConocoPhillips, BP PLC and Shell collectively earned about $13.3 billion in the first quarter; less than the first quarter of 2008 but still a heafty profit.

Competition At Work

Seattle –Starbucks Corp. is dropping prices on some items in some markets; the strategy is struggling with slowing sales and increased competition. Starbucks had a 77 percent drop in earnings for the quarter ending March 29, with same-store sales falling 8 percent during the quarter. The pricing cuts come right around the time that McDonald’s is getting ready to launch its national advertising campaign for its McCafe coffees, which are coming out across the country. McCafe offers espresso-based drinks in many markets for under $3.

Not to be outdone, Dunkin’ Donuts announced that all participating shops in the New York Tri-State area will roll back prices for its entire line of latte beverages. The rollback applies to all sizes, flavors and varieties of hot and iced lattes, including the Latte Lite, the chain’s DDSMART menu option made with skim milk and Splenda.

Latte prices will be reduced by roughly 15 percent, the company reported.
This rollback allows consumers in the New York Tri-State area to purchase a latte for less than $2.

In the gasoline industry, there isn’t any competition at the wholesale level. The oil companies increase and decrease gasoline prices in concert.

From April 24th to May 15th wholesale gasoline prices increased approximately 38 cents a gallon and 61 cents a gallon from the first of the year.

The consumer has felt the pain of outrageous high gasoline prices and should continue conserving. Each time gasoline prices rise, the consumer should drive less and maybe OPEC and the oil companies will get the message. The consumer has the strongest message to lower gasoline prices, conserve.

Contact your elected official (congress, senator, state legislators) and complain about high gasoline prices!

Gas Prices: Why The Recent Increases?

Alexandria, Va. – In May, retail gas prices have jumped more than 35 cents per gallon (from a weekly average of $2.078 on May 4 to $2.435 on May 26, according to U.S. Energy Information Administration (EIA) data, and consumers and reporters want to know why.

Here is what’s going on:

Crude oil prices are on the rise. The latest numbers from EIA show that spot WTI crude oil prices have jumped about $13 in the past month. A barrel of oil contains 42 gallons, making each $1 increase per barrel the equivalent of a 2.4 cent increase per gallon. That means crude oil prices have contributed more than 30 cents per gallon to the retail price of gasoline in the past month.

Wholesale gas prices have increased even faster than crude oil prices. The latest data from EIA shows that RBOB regular spot prices have increased more than 45 cents per gallon from April 22 ($1.3755) to May 19 ($1.8325). (RBOB is the NYMEX traded wholesale gasoline commodity and is used to produce reformulated gasoline, which represents more than 30 percent of the gasoline consumed in the nation.)

Retail prices have lagged behind wholesale prices. Retail prices have increased 38 cents or 7 cents less than wholesale prices — since April 20, according to EIA data.

The end result is that retailers are not profiting from higher prices. In fact, they are being hurt. The latest numbers from the OPIS Retail Fuel Watch, dated May 21, shows that the average weekly markup on a gallon of gas was 9.4 cents per gallon. The average markup over the past 30 days is even lower 8.7 cents per gallon. NACS estimates that breakeven for gas is 11 to 14 cents per gallon, so retailers have reduced their margins to the point where they have likely lost money selling fuel for the past 30 days — if not longer. This continues a trend that has gone on throughout 2009.

The April 2 OPIS Retail Fuel Watch called retail margins for the first quarter of 2009 “abysmal” and noted that it “had the worse rack-to-retail margins on record” only 9.8 cents per gallon. This is not new. EIA has developed a formula to demonstrate that retailers suffer when wholesale prices increase.

There are two factors that have contributed to rising prices:

Demand is picking up. Since May 1, weekly demand for finished gasoline is up 3.5%. This increase is not uncommon and coincides with the longer days, the end of the school year and the onset of summer activities and vacations.

The seasonal transition to summer-blend fuel is almost complete. Gasoline sold in the summer must meet more stringent environmental controls than that sold in winter. These fuels are more complex and expensive to produce, and fewer gallons can be produced from each barrel of oil. The transition period concludes June 1 when all gasoline sold at the retail level must meet specific requirements, where appropriate. This affects prices across the country. Since the final implementation of the Clean Air Act Amendments in 2000, retail gas prices have risen by an average of 52 cents from the first week in February to their seasonal peak. These increases have ranged from a low of 20.1 cents in 2003 to a high of $1.126 in 2008. This year they have risen by 54 cents per gallon since February 2.

'Hot Fuel' Settlement Leaves Consumers Out in Cold
Agreement likely to achieve little more than payday for trial lawyers, says NATSO

Alexandria, Va. -- A proposed settlement agreement with Costco over "hot fuel" is the latest attempt by trial lawyers to mislead the public, according to Lisa Mullings, CEO of NATSO, the national association representing travel plazas and truckstops.
The proposed class-action lawsuit claims that when consumers buy gasoline in warm-weather states, they get less than they pay for because warmer fuel expands according to trial lawyers. Costco has agreed to "fix hot fuel" in at least 14 states within five years. By that time, they insist, devices installed on Costco fuel pumps will dispense more or less gasoline depending on the temperature. "The trial lawyers can continue their charade, but the cats out of the bag on ATC, it would cost consumers more" Mullings said. She continued, "Despite all the hype, the mere existence of this agreement does not require Costco to install these devices. We believe this is simply a ploy by trial attorneys to induce other defendants into settling frivolous litigation." She noted:

* ATC is not permitted by law. The settlement agreement puts the burden of obtaining legal approval for ATC squarely on the plaintiff's lawyers, not on Costco.

* The agreement states that as long as Costco believes that the devices cannot be installed under any state's law, they do not have to install them in that state. If the settlement agreement directly or indirectly results in higher fuel costs for Costco in any state ("determined solely in the good faith subjective judgment of Costco" in provision 4.8 [emphasis added]), Costco is able to unilaterally rescind or cancel the agreement for that state.

* If any other defendant secures "a more favorable settlement," Costco ("in its sole discretion") can modify its agreement to take advantage of the more favorable terms, according to provision 4.7.

Hot Fuel is Hot Air
Alexandria, Va. -- The National Association of Truck Stop Operators (NATSO), along with the Partnership for Uniform Marketing Practices (P.U.M.P.) coalition, have recently opened a website, www.hotfuelishotair.com, to rebut claims by trial lawyers and others who exaggerate retail fuel temperature facts. The P.U.M.P Coalition was formed in 2007 to ensure fair competition, cost-effective distribution and equitable treatment of consumers in addressing the issue of temperature variation in the sale of gasoline and diesel fuels. Meanwhile, the Northeastern Weights & Measures Association (NEWMA) recently voted to oppose both mandatory and permissive automatic temperature compensation (ATC) for retail fuel dispensers. The decision comes a week after the Central Weights & Measures Association (CWMA) voted to outright oppose both the mandatory and permissive use of ATC. NEWMA also circulated a proposal to ban ATC for retail fuel dispensers and intends to submit its proposal to the National Conference on Weights & Measures (NCWM).

The NCWM will meet July 12-16 in San Antonio, Texas, to decide the fate of ATC for retail fuel dispensers. Two votes will occur: one on permissive ATC use and the second on mandatory ATC use. It will be important that petroleum marketers nationwide attend the meeting to ensure that weights and measures officials understand why retail ATC will have a negative consequence for consumers.

Market oversight

It seems fairly obvious that oil speculators have crept back into the market place. That can be the only explanation for the run-up in crude prices over the past several weeks. Last week in the Senate they once again dragged their feet on a credit card bill. Senate President Harry Reid was supposed to have it on the calendar the prior week.

There is also a strong possibility that the final draft will have language titled “Energy Markets Transparency Act of 2009” which is a step in the right direction to curb oil speculation.

Valero Opens Port Everglades Fuel Terminal
Port Everglades: Valero Energy Corp. held a grand opening and customer appreciation event last week at a new fuel products terminal here that the company said will further enhance Valero’s fuel supplies along Florida’s East Coast.
The opening of the terminal owned and operated by Valero’s business partner, Vecenergy follows the expansion of a similar fuel terminal in West Palm Beach in December 2007. Valero’s involvement in both projects marks the expansion of its marketing efforts in South Florida, according to the oil company.
The Port Everglades fuel products terminal, which is supplied in part by Valero’s Gulf Coast and East Coast refineries, will serve both branded and unbranded customers for gasoline and diesel products, as well as provide jet fuel to the area. Valero also noted that it sells "recreational" gasoline at the Port Everglades terminal to cater to customers of the marine industry, which prefers conventional gasoline.

Victory for Small Franchisees
N.J. assembly and senate pass first right of refusal legislation

Springfield, N.J. -- Legislation (A-3726/S-2553) that will help prevent the sale of hundreds of small motor fuel franchisees and offer those franchisees the ability to purchase their own stations has met with successful legislative completion, said the New Jersey Gasoline, C-Store, Automotive Association (NJGCA).
More commonly known as the "First Right of Refusal Act," this legislation affords franchisees the right to purchase their own stations in any assignment, transfer or sale of a franchised location. This legislation states that when Big Oil is ready to get out of the retail marketing chain, Big Oil must give their franchisees the "First Right of Refusal Act," the station at an amount equal to or greater than any other offer for a franchised premise. It is time to end the abuse of Big Oil upon these small franchisees," said Sal Risalvato, executive director of NJGCA.
"First Right of Refusal is simply a courtesy placed into statute," Risalvato added. "Unfortunately Big Oil continuously falls far short of showing any courtesy towards its franchisees." He argued, "Franchisees have purchased the rights to operate these businesses. These franchisees have spent hundreds of thousands on the business and placed their blood, sweat and tears into making these business what they are today. It is time to afford franchisees the right to purchase their stations."
Risalvato concluded, "Gov. Corzine must sign this legislation immediately. There is very strong evidence that at least one Big Oil company will be closing on a deal this week, and without the signature of the governor, the work of the past week will be impaired. New Jersey has the chance to lead the way in the most comprehensive protection for small businesses offered in decades. We led the way in passing the New Jersey Franchise Practices Act in the 1970s and today we illustrated that New Jersey is leading the country forward again."