Top 5 Fuel Stories of 2017

Samantha Oller, Senior Editor/Fuels, CSP

gas pump

CHICAGO -- For fuel retailers in 2017, the biggest news did not necessarily come from the usual suspects—higher oil prices, changing consumer demand—but rather new, disruptive forces. Whether it was destructive nature, new fuels or new leadership, change seemed to come from every direction.

Here are five of the biggest fuel stories of 2017 ...

1. Trump Administration wrestles with RFS

oil refinery

The future of the Renewable Fuel Standard (RFS) became increasingly hazy in 2017, with reports earlier in the year that the Trump administration was considering shifting the point of obligation—the party responsible for meeting the RFS's blending targets—from refiners and importers downstream to fuel blenders.

The news was alarming for the ethanol industry and large fuel retailers such as QuikTrip, Wawa, Murphy USA and Casey’s General Stores, which earn Renewable Identification Number (RIN) credits for blending biofuels, and then sell them to obligated parties to meet blending targets. Refiners have argued that escalating RIN prices are cutting into their profits and endangering their viability.

Since those initial reports, the U.S. Environmental Protection Agency (EPA) denied petitions to redefine the obligated party, and slightly raised blending volumes for 2018.

But the future of the RFS is still being written, with reports in December that the Trump administration was attempting to broker a deal between Republican oil- and corn-state senators to ease refiners’ RIN burden. Ethanol-industry groups suggested one way to reduce the RIN burden: Allow the year-round sale of E15, the 15% ethanol blend. Current Reid vapor pressure (RVP) regulations restrict its sale in most markets during the summer to flex-fuel vehicles.

“The quickest way to reduce RIN prices is to increase the supply of RINs,” said Brian Jennings, CEO of the American Coalition for Ethanol (ACE), Sioux City, S.D. “The quickest way to increase the supply of RINs is to blend more ethanol. The quickest way to blend more ethanol is to provide RVP relief for E15.”

2. E15 market hits milestones

E15 gas

E15, the 15% ethanol gasoline blend, appeared at the pumps of several more large chains in 2017, including Kwik TripCasey’s General Stores and QuikTrip, joining SheetzRaceTrac and Thorntons, among others

Also in 2017, E15 hit some usage milestones, including 2 billion miles driven and more than 1,150 sites offering the ethanol blend, according to Growth Energy. Its proponents continue to attempt to break down one of the biggest roadblocks to greater growth—seasonal Reid vapor pressure regulations that force retailers in most markets to limit E15’s sale to flex-fuel vehicles only during the summer months.

3. Major oil enters Mexico


In 2017, Mexico’s fuel market opened to foreign companies after decades of control by the state petroleum company, Petrleos Mexicanos (Pemex). U.S. fuel brands wasted no time in opening stores, including BPChevron, Andeavor’s Arco brand, Shell and ExxonMobil’s Mobil brand.

“This is a tremendous opportunity for the oil industry, especially for refiners near the border who will be able to bring product in directly without selling it to Pemex,” wrote CSP columnist Norman Turiano of Turiano Strategic Consulting, Cape Coral, Fla. “Considering that less than half of fueling stations in Mexico have a convenience-store offer, there is clearly an opportunity for our industry—that is, if the Mexican consumer begins to associate the fueling and product shopping occasions as one.”

4. Hurricanes wreak havoc with fuel

houston oil refinery

Harvey, Irma and Rita: In fall of 2017, this trio of hurricanes exposed the weak links in the U.S. energy infrastructure. Harvey knocked off nearly 20% of total U.S. fuel production capacity and pressured national fuel prices. Supply constraints in Florida stymied consumers trying to flee the path of the storm, and Puerto Ricans dealt with extreme fuel outages.

Meanwhile, higher fuel prices during and after the hurricanes led to charges of price gouging. Texas Attorney General Ken Paxton filed lawsuits against several fuel retailers for price gouging during a state of emergency declared for Harvey. In October, the state’s Consumer Protection Division also sent violation letters to businesses representing 127 retail fuel locations, asking them to respond to allegations.

Fuel-retail advocates such as Paul Hardin, president of the Texas Food & Fuel Association, Austin, Texas, said most fuel retailers took warnings by the attorney general not to price gouge during the states of emergency seriously, even to the point of losing money.

Meanwhile, a Florida legislator asked the federal government to consider a gasoline supply reserve for the state, similar to that created for the Northeast after Superstorm Sandy.

5. EVs threaten to disrupt fossil fuels


The disruptive potential of electric vehicles (EVs), which had seemed like a long-term concern, suddenly came into sharper focus in 2017 as some countries announced plans to ban the internal combustion engine and shift their vehicle fleets toward electrification. These included India, Great Britain and France. For most, the need to address air pollution caused by diesel- and gasoline-powered vehicles is acting as a major motivating force.

Meanwhile, automakers including GM, Ford, Volvo and Volkswagen announced their shifts toward electrification, in part to meet the growing demand for EVs in the world’s largest automotive market, China.

Several gasoline retailers also got in the EV-charging business in 2017, as buzz continued to grow about the disruptive prospects of this new transportation fuel. Kum & Go began to put charging to the test, while chains such as Sheetz, Royal Farms and QuickChek partnered with Tesla, hosting the EV manufacturer’s SuperCharger stations at their c-store sites.