Fire at BP’s Cherry Pointautowa.org/pdf/AutoBulletin_March_12.pdf · BP’s refinery on Cherry Point in North Puget Sound is the largest in the state and third largest on the West

The

BULLETIN

The

BULLETINInforming Washington state’s

fuel marketers since 1985

March 2012 VOL. 26 NO. 1

Other stories inside this issue:•MaverickinvadesSpokane,ripsupstreet•Tim’sOUTLOOKonthe“LegislativeFollies”

•KeystonePipeline,politicsatitsworst

•OneofAUTO’sfoundingmemberspasseson

Fire at BP’s Cherry Point refinery lights off a price spike?

It was a georgeous afternoon in Olympia when the Washington State Supreme Court heard the oral argu-ments in AUTO v- Gregoire, the suit challenging the tribal motor fuel compacts. Inside the building, “the temperature was arising” as former Supreme Court Justice Phil Talmadge returned to his old stomping grounds to argue the case for AUTO’s members.

continued on page 6

It was a spectacular sight just outside Bellingham when a leaky flange in the crude processing unit in BP’s Cherry Point refinery caught fire on February 17, 2012. Fortunately, all the workers at the refinery es-caped harm to help or watch fire crews fight the inferno that erupted. continued on page 5

The “cash/credit” or two-tier pricing option has seen a dramatic increase in popularity as shown by this new sign that went up at Frank Desimone’s station in Tukwila when he pulled the ExtraMile off his store and switched from Chevron to 76. While some have been disappointed in two-tier in the past, many dealers like Frank are convinced it’s here to stay.

continued on page 7

Want to advertise? AdvertiserIndex

R & B SyStemS 4

DaviS inDuStRieS 9

Glenn DiStRiButoR inc. 16

HopkinS appRaiSal SeRviceS 10

JackSon oil 7

mccallen & SonS, inc. 13

petRocaRD 19

THE AUTO BULLETIN March 2012PAGE 2

Oh, the things that spread across the internet......

The AUTO Bulletin is produced quarterly by the Automotive United Trades Organization (AUTO), a non-profit trade organization repre-senting Washington’s independent gasoline retailers since 1985. It is distributed to approximately 1,600 vendors, jobbers and retailers via www.autowa.org.

Rates available at the web site.

GENERAL INFORMATION INQUIRIEStim hamilton

executive DiRectoR

Po box 1420mccleaRy, wa 98557

(360) 495-4941(360) 495-4022 (fax)

[email protected]

ADVERTISING INQUIRIEStim mcallisteR

tbm & associates

8883 48th Pl wmukilteo, wa 98275

(425) [email protected]

Somethingsneverseemtochange.ThiseditorialcartoonappearedintheChi-cagoTribune in1934as thenationwasembroiledinthe“GreatDepression”.

In this case, the paper went after“YoungPinkiesfromColumbiaandHar-vard”forsupportingPresidentRoosevelt’sbudget deficits created from public works projects like Grand Coulee Dam in E.WA.Thesignonthebackofthewagonandthethemeprotestedgovernmentwasteoftaxpayersmoney.

Then,upcomesthenationaldefenseargument as communists such as Stalinusethe“Spend!Spend!Spend!”undertheguiseofrecoveryto“Bustthegovernmentand blame the capitalists while junkingtheconstitutiontoestablishadictatorship”(lowerleftcorner).

Whenlookingatthecartoon,thinkofthecollegegradsastoday’s“Occupy”supporters, the capitalists asWall StreetBankers,andthedictatoroftodaybeingPresidentObama.Thematchwithtoday’scampaignrhetoricisclear.

OUTLOOKBy

Tim HamiltonExecutive Director

AUTO

Well, the Legislative Follies are back in town.Within15minutesofthesessionopeningonewasim-mediatelyimpressedwiththewisdomofSamuelClem-ens who wrote the adventures of Tom Sawyer andHuckleberryFinn.KnownasMarkTwain(1835-1910),heissuedthetimelessquote“No man’s life, liberty, or property is safe while the legislature is in session.”

Now, facing a huge deficit, the members of the 2012 Legislature rolled up their sleeves and went towork.TheDemocratscontrolboththeHouseandtheSenate so they were expected to roll out a balancedbudget. Yes, fortunately forallcitizens regardlessofone’sage,sex,nationalorigin,orgender,thestateCon-stitutionrequirestheypassabalancedbudget.

Well, that’s about when the wheels fell off thebus.GovernorGregoirecomesstormingouttheman-sionwaivingaproposedtransportationbudgetthatcallsfor a “barrel tax” on all refined products coming out a Washington refinery. The hundreds of millions it raises will be spent on highway projects which will put allthoseunionconstructionworkersbackonthejobbuild-ingoff-rampsandthesuch.

Whileshetoutsthefactthatthenewtaxeswillbespentonpublicroadsasrequiredbythe18thamend-menttoourstate’sconstitution,sheinsertsaprovisionthatswipes$25millionayearandgivesittocitiesandcountiesinPugetSoundtoenhancefacilitiesprocess-ingstormwaterrunoffintoPugetSound.NotcertainhowonewoulddrivetheircarthroughSeattle’ssewagetreatmentplant,butlet’snotgethungupondetails.

Are you ready for this.....withastraightface,sheclaimsthisgushingnewtaxwillnotcostthepublicadime.Yup,sheandotherproponentsclaimtheoilcom-panies will absorb it out of the hefty profits they are postingfromrisingoilprices.Totopthatoff,sheclaimsbysubstitutingthewordfeefortax,itwasn’tactuallyataxatallsoitdidnotrequirea2/3rdsvotetopass.

It didn’t take long for the industry to respond.Theoilcompanieswerepoliteastheypointedoutthattaxing the instate refineries in this fashion put them at a competitive disadvantage with refineries located out-sidethestate.

Iwasmoreblunt.Iemailedeveryoneonthehillandtheirdogshowingamotorfuelinvoicewheretheoilcompaniesline-itemallthetaxesdowntous.Iex-

plainedfortheGovernortomakesuchaclaimwasab-solutelyridiculous.IusedtheexampleofonetryingtoclaimthatsinceWalmartpaidthesalestaxtothestate,increasingthesalestaxratewouldbeabsorbedbytheretailereven though itprintsoutat thebottomof thecustomer’sreceipt.AtthatpointIsuddenlyrealizedaclerkworkingatWalmartapparentlyunderstoodmoreaboutdoingbusinessinWAthanourGovernor.

Fortunately,thisparticulartrainjumpedthetrackwhenLt.GovernorBradOwenmadeitknownthatinatleasttheSenatewhereheholdsthegavel,ataxbyanyothernameisstillatax.KnowingthattheRepublicanswere holding the ground on no new taxes, the D’scouldn’tmusterthe2/3rdssotheyletitdiewithawhim-per.

It didn’t end at that point. Unabletoget2/3rdsonneworincreased“taxes”,theattentionimmediatelywenttofeescurrentlyonthebooks.Billafterbillwasintroducedtoraiseexistingfeesorinstallnewones.

Upgoesbusinesslicensefees,undergroundstor-agetankfees,vaporrecoveryfees,scaleandpumpac-curacytestingfeesarejustsomeexamples.Itgottothepointwhereonecouldonlywonderwhatwascomingnext.

Here’s one of my favorites. Asmanyknow,theynowmakeusbuyapasstoenteranduseastatepark.Tackonanextrafeeifyoupitchatentandjackthatupifyouparkacamperinaspotwithutilities.Then,ifyoubroughtaboatorwatercraft, tackonalaunchingfee.Ifonegoesintoastateparkwithoutapasstopickup someone, you canonlypark there for a half hourwithoutapass.Calledagraceperiod.

Believeitornot,theydroppedinabilltocutthe1/2hourgraceperiodbackto15minutes.Isthatwring-ingtheolewashclothorwhat?

Gertrude Landis, long time AUTO memberinTacomarecentlybroughtsomegovernmentfactstomyattention. TheDepartmentofAgricultureisafederalagencythatisnowdistributingmorefoodstampsthanatanyothertimeinhistory.Alsoafederalagency,theNational Park Service is busy posting signs in parksaskingthepublictopleasenotfeedtheanimalsastheanimalsmaygrowdependentonthehandoutsandlosetheabilitytotakecareofthemselves.

Perhapsthetwoagenciesshouldcomparenotes.


Attention All Dealers-R & B Systems, Inc. is a COP branded jobber and station operator based in Spokane, Washing-ton with over 30 years experience in the industry. R&B is looking for station owners who are quality operators that would like to be supplied by a wholesaler that respects the rights of the dealer and offers “dealer friendly” contracts that are easy to read and understand.

R & B is currently offering branded supply contracts to select dealers through out WA, OR, and ID that:

• include competitive branding incentives and other type funding that can cover the costs of re-imaging and other forms of station upgrades;

• sets the wholesaler margin to a negotiated level in clear and precise language for the entire length of the contract;

• provides the dealer with the ability to easily verify the wholesale margin;

• provides the dealer the ability to easily verify the actual freight costs to the station;

• does not include provisions such as rights of first refusals or deed restrictions that infringe upon the dealer’s property rights; and

• provides the dealer the flexibility to sell or exit the industry without incurring liquidated damages or financial penalties.

If you are a quality operator that has a supply contract that grants you the ability to chose a new supplier or, it has expired or is due to expire shortly, you owe it to yourself to call Bob Beal, President of R& B Systems, Inc. at (509) 892-5186. Or, E-mail him at <[email protected]>



BP’s refinery on Cherry Point in North Puget Sound is thelargestinthestateandthirdlargestontheWestCoast.The “CPU” or crude processing unit at the refinery is capable offeedingupto225,000barrelsofcrudeeachdayforcon-version into gasoline, diesel, jet fuel, and other refined petro-leumproducts.

Two days after the fire broke out, wholesale prices at theracksinW.WA.jumpedinresponse.Unbrandedtookthebiggesthitandthebrandedwholesalesfollowedbehind.

Then, suddenly, all seemed to level off. Wholesaleswent up and down as the companies fine tuned the differen-tials between the brands and unbranded versus branded.Subsequent increasesmirrored thoseoccurringnotonly inE.WAbutclearacrossthenation.ItwasasifCherryPointhad never experienced its fire.

The price spike that fizzled

When the news that Cherry Point had explodedcameacross,manyexpectedtoseeamajorpricespike.Whenpriceincreasesquicklysettleddown,manyasked“whathappened?”

The quick answer seemed to be the Pacific NW wasnotgoingtobeshortonfueleventhoughithadlostthe entire production of its largest refinery. The longer answerwastolookattheinventoriesofgasanddieselthat were on hand when the fire broke out.

ConocoPhillips, Tesoro, and BP had “plannedmaintenance” at local refineries scheduled for late Feb-ruary throughApril. Asaresult, theyhadapparentlybuiltuplocal inventories tohandletheplanneddowntime.WhenCherryPointwentdownunexpectedly,thesupplies all ready in place helped fill the void.

ConocoPhillips, scheduled for a 38 day “turn-around”inearlyMarchsimplydelayedandcontinued

Cherry Point,continuedfrompage1

The massive smoke flume rising out of BP’s Refinery could be seen throughout the entire region and imme-diately captured the attention of the families who have loved ones or friends that work there.

Fully aware of the dangers associated with working in a refinery, BP’s employees were relieved to “count noses” and find none of their co-workers were injured.

toproduce. Due to the reducedconsumptionof thepublic and the blending of ethanol, the refineries owned byTesoroandShellwerenotrunningatfullcapacity.Theoil intendedforCherryPointwasavailable,soitheaded for the other three refineries which increased production.

Thecombinationofinventoriespreviouslylaidinforexpecteddowntimeandtheabilityoftheotherre-fineries to boost production dramatically reduced the needforpricestospikeupdramaticallyandforcecon-sumerstobackoffondrivingsodemandfelltomatchtheavailablesupplies.

Allofthepricesignsatstationsstillplayedaroleinbalancingdemandwithavailablesupply.Increasesinwholesalepricesforcedpumppricestonearrecordhighsacrossthenation.InW.WAthepricebrokethemuchdreaded$4barrierwithouthelpfromtheunex-pecteddowntimeatCherryPoint.

Similartoothertimesinthepastwherethepriceatthepumpcrossedovertothenextnumber,havingallthose4sshowuphadadramaticpsychologicaleffectonthepublic.Dealersacrossthestateimmediatelyno-ticedtheimpact.

Dealerscommonlyreporttheirvolumesfelloffbyupto10%oncethe4scameout.Inaddition,highoc-tanesalesplummetedasmotoristspunchedtheregularbutton.

While hitting the dealers hard, the reduced con-sumption also helped neutralize the Cherry Point fire.


Supreme Court,continuedfrompage1

OnJanuary12,2012thelongawaitedshowdownbetweenAUTOandtheGovernorofWashingtoncamedownintheTempleofJusticeinOlympia.Thehigh-estcourtinthestateheardoralargumentsoverwheth-erornotAUTOanditsmemberscanlegallychallengeGovernorChristineGregoire’sdecisiontogivenearlyahalfbilliondollarsinstatefueltaxestotribalstationoperatorsoveratenyearspan.

AUTO, a nonprofit organization representing mo-tor fuel marketers, filed a suit questioning whether the Governor exceededher authoritywith respect to thecompacts.AttorneyGeneralRobMcKennaconvinced

Assistant AG Todd Bowers tries to sell the theory de-veloped for Governor Gregoire’s defense by Rob McK-enna’s office that no citizen should be allowed to chal-lenge any deal Gregoire cuts with a tribe even if a bribe was involved. He seemed to struggle when the jus-tices asked if there was “no line that could crossed” by a sovereign tribe and the Governor that would warrant allowing the citizens to protect themselves from mis-conduct such as bribery.

Outside the courtroom, AUTO Exec Tim Hamilton told the media “The Governor and elected officials in Olympia need to stop giving away over $30 million of our gas taxes each year to the tribes as they scream about how the state is broke. It’s no wonder we are out of money and can’t fix our roads.”

Former Supreme Court Justice Phil Talmadge de-fended the 18th Amendment and other constitutional rights of AUTO’s members and the other non-tribal citi-zens of state during oral arguments. He hammered home the point that while tribal sovereignty should be respected, it should not be allowed to suspend the con-stitution and rights of the rest of the citizens.

the trial court to rule thatGovernorGregoirehas thepowertodeedtheCapitolBuildingandtheentirestatetreasurytoatribeandnocitizeninthestatewouldhavetherighttoseekjudicialreviewofthetransferofsuchpublicassets.

IftheSupremeCourtrulesinfavorofthestate,theissueislikelyleftsolelytotheLegislature.IfAUTOprevails,thesuitgoestotrialonthemerits.

So far, the state does not seem overly confident it canwinattrialandseemstoberestingtheentirecaseonarulingsayingnocitizenhastherighttoobjecttoanydealcutbetweenaGovernorandatribe.

Adecisionisexpectedinthefallof2012.


Whileithasn’tseenthepopularityinruralmarketsandE.WAyetasithasinPugetSoundmetro,cash/creditpricingisexpandingatarapidrate.FromBellinghamtoOlympia,stationafterstationontheI-5andI-90corridorsareswitch-ingtothetwo-tiermode.

Brandeddealers getting there a headof thepack aretypicallyreportingincreasedsalesvolumesof10to20per-cent and credit processing fees are decreasing. Once theothersignsgoup,it’sbacktonormalvolumeformanyandthe benefit becomes primarily reduced credit card fees.

While it is difficult to predict and dependent upon the historicalpricinginthearea,brandeddealersswitchingfroma single price mode to a cash/credit offering are finding sales volumesmovedfromabout20percentcashunderthesingleprice mode to the range of 35-45 percent cash after theswitch.

Dealersofferingthetwo-tieroftenreportitisextreme-ly difficult to determine exactly who is spending the cash. In someinstancesitisthecashcustomerthatalwaysboughtatthe lowest price available in the area coming in for the first time. Inother instances, it’s thehistoricalbankcardcus-tomerwhodecidestoleavetheplasticintheirwalletandusetheoptionto“cashin”onthesavings.

Typically,thedifferencebetweencashandcreditistencentsandpatternedafterthedifferentialbetweengrades.

cash/credit,continuedfromPage1

After decades of cash/debit only, BP has reintroduced credit cards at ARCO stations. While currently limited to western WA under a pilot project, the two-tier cash/credit is expected to move to ARCOs throughout the West at some point in the future.


ARCO has been a fixture on Southern California streets for 46 years, but many will begin disappearing in April. BP,whichhasownedARCOsince2000,hasannounceditisnotrenewingitsleaseson257stationsites.Tesoroissueda press release confirming it has reached agreement with the landlord to step into BP’s shoes as it vacates the sites and replace the ARCO brand with Tesoro’s USA flag.

ARCOoriginallyacquiredthesitesin1997whenTedOrdanofThriftyOildecidedtofallbacktotheroleoflandlordandletARCOtakeonthechallengesofdaytodayoperationofthesites.ARCOinitiallycompany-operatedthelocationsandrebrandedmanyARCOandleftothersundertheexistingThriftylabel.OvertimeARCOleasedmanyofthesitestoindependentdealers.Inmanyinstances,thedealersinvestedheavilyintheam/pmfranchise.

BP,whoacquiredARCOin2000,recentlynotified the dealers of both brands that it was pull-ingtheplugandthedealerswillhavetogiveuptheirstationsastheircurrentstationleasesexpireoverthenexttwoyears.About2,000ARCOem-ployees at the company operated sites will alsolosetheirjobs

According to localnewspapers, themoveby BP has set off a fire storm of protest among the dealers who currently operate 106 of the ARCO sites.Manyoperatemultiplestationsandstandtolosetheirentireinvestment.

Dealers told the Orange County RegisterthattheyweretakenbysurprisebyBP’sdecisionnottorenewtheThriftyleasewhichtriggersnon-renewaloftheirdealerleasesissuedbyBP.

“I got my notice in February that I would have to get out April 4, then they extended it a month,” said Issa Demes of Westminster, whoownsthreeThrifty-brandedstationsinLosAnge-les. Demes claims to have made more than$500,000inimprovementsplusinventoryatthe

stations.BP’sdecision,hesaid,willleavehimwithnothing.MikeEngel,whoownstheARCOstationatHarborBoulevardandOrangewoodAvenueinAnaheimsaidhehas

twoyearsleftonhisleasebutstandstoloseamilliondollarsfromhisinitialinvestmentandimprovements,nottomen-tionthesweatequity.“And they are just going to give this to somebody else?”heasked.Dealers get the “ol run around”

BPsaiditdoesn’townthestationsitesandsimplyisallowingthelandleasewithThriftytoexpire.“It is our hope that the independent dealers we used to supply with fuel continue their discussions with the landlord(Thrifty),”BPsaidinitsstatement.Thedealers,however,saidthey’vehadnosuccessatreachingThriftyandhavebeentoldTesoroisbringinginitsownpeople.

BarryBerkett,aThriftyOilexecutivevicepresident,initiallytoldthemediathatthecompanyissimplytheland-lordanddeferredanyquestionsaboutwhathappenstothecurrentdealersbacktoTesoro.Tesoro,viaemailtoreporters,chosenottodirectlyaddressthefateoftheBPdealers.

“Thrifty Oil Co. previously entered into a lease agreement for these stations with BP,”saidThriftyspokes-womanTinaBarbee.“Upon expiration of those agreements, Tesoro will be leasing the stations from Thrifty Oil. Inde-pendent contractors called Multi-Site Operators or MSOs will be operating the stations.”StuckbetweenBPand

Mike Engel, who owns the Arco station at Harbor Boulevard and Orangewood Avenue in Anaheim said he has two years left on his lease but stands to lose a million dollars from his initial investment and improvements, not to mention the sweat equity.

More problems for troubled ARCO franchisees

continued on page 9


Branded Distributor

Call:

MIKE DAVIS @ 425-775-9491

-OR-

NATHAN DAVIS @ 206-755-4230FINANCING AVAILABLE

• Supply• Stations for sale or lease

PugetSoundArea

Tesoro, the dealers fear this statement from Thrifty confirms BP going to move on leaving them sitting on the side-walk.

EditorialNote-Reporters have called the AUTO office asking if the numerous law suits filed by ARCO dealers prompted this lat-

est move by BP. My response is probably not, though dealers in the suits might think so. All one has to do is look to the Gulf mess, Texas refinery explosion that kills workers, pipeline leak in Valdez, etc. and ask if fear of a lawsuit seems to play in the company’s decision making process.

I’ve shared my theory that moves like this are a typical practice when a company seeks to sell a its downstream refining and marketing assets or vacate a region. The first move is often identifying “non-strategic” or “non-core” assets that aren’t a key to profitability and divesting them to leave the remaining assets in the package at a higher value. This happens nearly every time an oil company sells and vacates and as a result, many watch for this type move as an indicator that a company is getting ready to vacate or radically alter its historical marketing and distribution system.

In this case, BP has already announced it has placed its the Carson refinery outside LA, the ARCO brand name itself, all its owned stations throughout the SW, and the ARCO branded supply agreements it has with contract owner-dealers on the auction block. These Thrifty locations are leased rather than owned and apparently are not needed to move the refinery’s production. So, its not surprising to see BP nonrenewing the leases with Thrifty to clean up the lose ends and ready the remaining assets it owns for sale.

One can clearly see the advantages for BP, Tesoro, and Thrifty. Tesoro will not have to look far to find the MSO operators which one assume means commission agents with no PMPA rights as the name comes directly from the Shell/Equilon model that Tesoro assumed when buying the Shell refinery and the block of stations in S. CA earlier several years ago. The addition of 250 former ARCO sites to its USA fleet will give this private label close to 400 high volume locations in the California which is the largest motor fuel market in the world. BP takes a walk and Thrifty has no inter-ruption in its rental income stream.

Big losers will likely be the dealers who leased the sites owned by Thrifty from BP. Especially hard hit will be those who paid large goodwill to buy out a previous dealer or placed significant capital investments into c-store im-provements or equipment. Topping the heap will most likely be am/pm franchisees who paid all those franchise fees and invested heavily into am/pm equipment, supplies, etc. The ARCO dealers and especially am/pm franchisees seem to be taking hit after hit as of late.

Tim Hamilton

ARCO dealers,continuedfromPage8


The Problem

Is Obvious

The Cure?


Indie chain “Maverik” enters E. WA in big wayColoradobasedMaverik,achainretailerwithover

200 locations in 10 western states, has invaded E. WA(http://maverik.com). The first of the new ground-up loca-tionsopened inSpokaneandwerefollowedbyagrandopeninginPasco.

First thing Maverik did was drop the hammer byposting retailprices farbelow theunbrandedwholesaleracksinSpokane. LocalbrandedmarketerswatchedasCenex matched Maverik with its fleet of Zip Trips.

One marketer who did the math and came to theconclusion thatMaverikwasgoingbackwardsapproxi-mately$4,500adayonfuelifitsacquisitioncostwasthelowestwholesalerackpostedforSpokane.

Maverik’s Rocky Mountain roots are evident in its price signs that use a pine pole theme.

The size of the islands show Maverik’s intentions to pump large volumes of gasoline and diesel.

Maverik c-stores like the one just opened in Pasco have a large foot print. Its historical experience in de-veloping over 200 locations makes Maverik a formable competitor.

Once again, branded dealers lose as competitors sell at less than the dealer’s wholesale costs. In this example, the Chevron dealer appeared to be running on near zero margins yet 20 cents over the Cenex Zip Trip across the street that is matching the Maveriks on the nose. Apparently Chevron does not share Cenex’s desire to protect its station volumes and market share.


The AUTO BULLETIN has gone digital! Firstpublishedin1985,theAUTOBULLETINhasbeenmailedtoallmotorfuelretailersandwholesal-erswithinourdatabasesregardlessofwhetherornottheyaremembers.Wehavedonesoasaservicetotheindustry. Duetotheever-escalatingcostsofprintingandpostage,thehardcopymaileraoftheBULLETINhascometoanend.It’ssimplytoomuchpaperandinktodeliverinacosteffectivemanner.Whileexcitingtousinsomeways,inothersitissadtoreportthatlasthardcopyoftheBulletinwasprintedandmailedinMayof2010.TheBulletinhasgonedigitalandratherthanthepostman,itistheinternetthatwillprovidethedeliveryinthefuture.

The good news WehopetocontinuetokeepalltheindustryinformedonissuesofimportancetomarketersinWA.Aquickmovetohttp://www.autowa.orgfollowedbyaclickontheBulletinbuttonanddowncomesthelatestis-sue.You’llbeabletodownload,view,store,andprinttheBULLETINfromyourowncomputer. Onecanalsobrowseourlibraryofpreviousissuesatanytimeaswell.Wanttoreadapastedition?Noproblemandyouwon’thavetolookatallthosecoffeecupstainsortrytoreadfadedprintasinthepast.

The mail carrier is not totally out of the loop WewanttomakesureallintheindustrycontinuetohavetheopportunitytoreadtheBULLETIN.Sincegathering email addresses is an extremely difficult task in our industry, AUTO hopes to continue to mail the lower-costpostagecardsizealertshownabovetoleteveryoneknowthattheirnewissueiswaitingforthemattheAUTOwebsite. Keepaneyeoutinthefutureforyournextcardalerttocomeby“snailmail”.Ifsomeonesortsyourmail for you, make sure they don’t “round file” the alert card without telling you. Then, join us at http://www.autowa.organddownloadyourlatestversionoftheBULLETIN. Whileatthewebsite,usethecontactformtosendusanemailandletusknowwhatyouthinkofthelatestissue.We’dlovetohearfromyou.

The latest edition of the AUTO Bulletin is waiting for you free of charge at http://www.autowa.org

Read all about currrent events that effect motor fuel marketing and c-stores in WA. 24 pages of features you don’t want to miss including:

• AUTO lawsuits over tribal payments and HST taxes moving;

• Shell pulling out of Spokane/N. Idaho;

• Ballot initiatives will impact marketers;

• New ADA “pony rule” presents challenges for c-stores

• Dealer invents device to avoid “busted hose” drive-offs

PSRT STDU.S. POSTAGE

PAIDPERMIT 194

OLYMPIA, WA

P.O. BOX 1420 McCleary, WA 98557Office: (360) 495-4941 Fax: (360) 495-4022

http://www.autowa.org

The latest issue of the BULLETIN is ready for motor fuel marketers to read with a simple click of a mouse

The

BULLETIN

The

BULLETINInforming Washington state’s

fuel marketers since 1985

OCTOBER 2010 VOL. 24 NO. 3

The two lawsuits filed by AUTO contesting the constitutionality of the state’s motor fuel taxation poli-cies are moving through the court system. As expected, the State Attorney General’s Office and legal represen-tives for the Tribes have strongly resisted the suits with a series of legal motions and memorandums.

In the suit challenging the state paying the Tribes 28 cents per gallon out of the motor vehicle fund, AG Rob McKenna has responded to the suit with a motion to dismiss on the grounds that AUTO did not name the Tribes as a defendant in the suit. Since the Tribe is an “indespensible party” to the compacts, he argues the suit should be thrown out entirely.

The AG goes on to argue that in the event AUTO did name the Tribes, the suit must again be dismissed on the grounds the tribes are a soverign identity that can’t be sued. Further, he argues that Governor Gre-goire who negotiated the compacts can’t be held re-sponsible under the rule of executive immunity.

The AG’s defense attempts to set up a classic “catch 22” or “damned if you do and damned if you don’t” delima for the citizens of Washington state. In essence, McKenna’s office takes the position that the Governor could literally quit-claim deed the Capital Campus in Olympia or gift the entire state treasury and

Other stories inside this issue:

• Shell leaving Spokane/N. Idaho;

• Ballot initiatives will impact marketers;

• ADA “pony rule” presents challeges for c-stores

• Dealer invention cuts back on drive-offs

AUTO lawsuits over tribal payments and HST taxes moving in courts

no WA citizen would have the ability to object......pro-vided she gave all our public assets to a Native Ameri-can Treaty Tribe (State Motion Indispensible Parties.pdf available for viewing at http://www.autowa.org).

Former State Supreme Court Justice Phil Talmadge is responding on behalf of AUTO in opposition to the state’s motion to dismiss. The decision before the judge effectively answers the question of whether or not the legisltaure and Governor can suspend the constitutional rights of the state’s citizens to reach agreements that satisfy a soverign identity that claims to be outside the relm of the state authority (Native American Tribes).

Tribes attempt to intervine........kind of........maybe......I quess....

Since the suit filed by AUTO names only the Gov-ernor and the state, the Tribes have no role to in the

continued on page 4

Tribal stations are continuing to price 15-20 cents un-der nearby stations to capitalize on the 28 cent pay-ment from the state. Starting with Shell rack of $2.18 on this day, add 55 cents for taxes, 3.5 cents for freight and jobber margin and this tribal station near Tacoma appears to be pricing on a 2 cent margin before credit card fees or other costs. Adjuster for credit card fees, the Tribe’s price of regular appears to be 6 cents below the nearby Shell dealer’s wholesale acquisition cost.

Simply visit AUTO’s web site and download it. Or, have your computer person do it for you and print you a copy using your printer. Either way, it’s waiting for you at http://www.autowa.org

There’s the BULLETIN Boy was that easy! Motor Fuel Marketer

Corner Of Spruce & GooseEvery City Or Town In WA


WeSellStations.com

Call Now: 425 822-9752

Laura Jones David Kim Dick Wolf Kelly Camoza

New Agent Axel Lindstrom Dan FallonBroker

[email protected]

ARCO ampm South Sound area. Biz only. $295KShell Arlington with real estate. Vacant. $450KShell Downtown Spokane location with real estate. Vacant. $550KTesoro Near I-90. With real estate. 30¢ gas margins. $550K76 Near Moses Lake. Includes real estate. Store over $35K/mo. $589KShell East WA. Includes real estate. Store over $40K/mo. $629K76 Olympia. 40K/mo + gal & $42K/mo store. Hwy location. $699KTesoro I-5 corridor. North of Seattle. $46K in store. $895K76 Olympic Peninsula. Carwash, Deli, over $64K/mo store. $975KClosed Former Shell. 3702 Broadway, Everett. Branding $$ avail. Franchise wants to brand store. Major C-strore. PENDING $895KChev Bellevue. Strong in everyway. Rental income over $10K/yr. $1.29M76 Snohomish. Distress sale. Apartment, plus commercial rental. (Just listed) $1.4MChev 2 stations, over $650K annual gross pro�t. Short sale. Make o�er on 1. Eastern WA. $1.55M76/C-K Over 90K/mo gal + $65K/mo store. Gross pro�t over $500K Freeway location. Comes with addititonal vacant land. $1.8MShell I-90 location. 189K gal/mo. Over $1M annual gross pro�t. Seller �nancing for quali�ed buyers. $2.95MFor more available gas stations, go to our website at wesellstations.com.

Your Photo Here

WeSellStations.com

Chris Choi


Move over expresso stands, here comes “da smoke”

When Stan and Rebecca Peterson started out as Mobil dealers decades ago, the key to success was an oil change or two and pumping some gas. Today, it’s all about using every inch of the lot possible to make a liv-ing at their Tukwila station that now sports a 76 logo.

They’ve had a spot leased out to an expresso stand for some time. So, when a gentleman who loves to bar-becue approached them about leasing a small space on the other side of the lot, it seemed a reasonable way to make a buck to help pay the bills.

The building and the seating area with the ramp was fairly simple to build. Before long, business grew to the point where one of those commercial portable units that look like a huge barrel on wheels was added.

If one doesn’t have the room inside the store for a full service deli, it pays to get creative.

AUTO returns to the Supreme Court on May 1st

A very important case that is often over-shadowed by the more visible tribal compact litigation is the suit filed by AUTO contesting the hazardous substance tax or HST as its commonly known. The Supreme Court has agreed to hear our direct appeal of a lower court dismissal on May 1, 2012. AUTO’s legal team is now two for two on direct appeal which is very unusual.

The HST is collected on all “hazardous substanc-es” which includes chemicals and petroleum products including motor fuels sold for consumption on public roads. The tax is line-itemed at its 7/10th of one per-cent of the wholesale value on fuel delivery invoices.

AUTO’s suit is similar to the tribal compact suit. It seeks to protect the 18th Amendment to the state’s constitution which requires that all excise taxes on mo-tor fuels be placed into the motor vehicle account and used exclusively for building or maintaining public roads. Currently, the tax collected on motor fuels is deposited into the “toxics account” originally set up for clean up of contaminated “orphan” sites that were aban-doned.

Since the tax is a percentage, back when gas sold for 99 cents and diesel for less, it didn’t amount to a significant when considered in cents per gallon. How-ever, when fuel climbed upwards above $3 the amount increased dramatically and the state legislature started “sweeping” the toxics account by pulling hundreds of millions into the general review accounts to cover defi-cits in the budget.

As with the tribal compact suit, Phil Talmadge is

handling this case. California based wholesaler Tower Energy is also a named plaintiff on the suit.


The Washington Department of Ecology proposes changes to the state’s rule for preventing leaks from underground storage tanksEcology is revising the current rule to include some recent changes in state and federal laws, and to improve

compliance with the rule. Leaks from underground storage tanks (USTs) can contaminate groundwater, the source of drinking water for 60 percent of Washington’s residents.

Ecology will accept com-ments from April 4 through May 4, 2012. Comments also will be ac-cepted during public hearings that are tentatively scheduled on April 24 at Ecology’s Spokane office; April 25 at Ecology’s Yakima of-fice; April 26 at Ecology’s Bellev-ue office; and April 27 at Ecology’s Lacey headquarters.

The state’s compliance pro-gram addresses the serious threat posed to human health and the en-vironment by leaking underground storage tank systems containing petroleum and other hazardous substances.

Ecology currently regulates more than 9,500 systems at more than 3,600 facilities throughout the state. A majority of the UST systems are located at gas stations. Each year, about 50 new releases are confirmed at regulated UST facilities. The rule changes will help to reduce the number and severity of such releases.

The changes include:• Authorizing Ecology to stop regulated substances from being delivered to UST systems that don’t

comply with regulatory requirements.• Requiring training program for people who operate and maintain UST systems.• Requiring secondary containment for new or replaced tanks or pipes and containment under eachdispenser whenever new or replacement dispensers are installed.

For more information:• Check online at http://www.ecy.wa.gov/programs/tcp/ust-lust/tanks.html This web page and the information on the UST Rule Proposal will be updated once the hearing dates and locations are confirmed. • Questions? Contact Mike Blum at [email protected] or (360) 407-6913.

To submit comments about the rule changes:• Mail them to Michael Feldcamp, Washington Department of Ecology, Toxics Cleanup Program,

P.O. Box 47600, Olympia, WA 98504-7600• Send email to [email protected].


Cliff was in fine form in 1971 when he attended a dealer appreciation night for Union 76 dealers.

AUTO says goodbye to a good man and founding member

Cliff Houser was born in Oklahoma. He moved to Seattle in the mid 1940’s when his parents were hired by Boeing.

A Korean War veteran, Cliff went to Edison Tech after he got out of the service and studied auto mechan-ics while also working at Boeing. Cliff met his wife Virginia at Boeing where she worked as well.

In the late 60’s, facing a major layoff, Cliff chose to leave Boeing permanently to become a Union Oil dealer at a brand new station in S. Seattle. He and Vir-ginia ran the station in the classic husband/wife service station management mode for over 20 years when Unocal started vacating the state and closed the sta-tion.

Cliff relocated to a repair shop nearby where he continued to turn wrenches for the next 10 years.

Cliff is survived by his wife Virginia and their daughter Victoria and 5 nieces and nephews.

“I’ll get us that oil from Canada,” Mitt Romney said in his victory speech after the Michigan primary. He was referring to Keystone XL, the crude-oil pipeline that has become a top-tier campaign issue for Republicans.

A point that Romney and others have missed is the tar-sands oil in that pipeline wouldn’t be com-ing to “us.” It would go di-rectly from Canada to the Gulf where it would be loaded on ships headed for Latin America and Europe. The U.S. would be used as little more than a transpor-tation corridor.

Normally conserva-tive Nebraskans became greens overnight when they learned the environmental risks of the pipe going through their state.

But the immediate effect of completing the Keystone pipeline (per-haps by 2015) is more sur-prising and counter intui-tive to the public.

Investigative reporters assigned to the Keystone story found that proponent TransCanada told the Canadian Gov-ernment that the purpose of the pipeline was get Canadian oil to the Gulf Coast where it could be loaded on ships and exported with the expectation that oil prices in the US would increase. The documents filed with the Canadian Govern-ment to support approval of the portion of the pipe to be laid on Canadian soil said it this way: “Existing markets for Canadian heavy crude, principally PADD II [U.S. Midwest], are currently oversupplied, resulting in price discounting for Canadian heavy crude oil. Access to the USGC [U.S. Gulf Coast] via the Keystone XL Pipeline is expected to strengthen Canadian crude oil pricing in [the Midwest] by removing this oversupply. This is expected to increase the price of heavy crude to the equivalent cost of imported crude. The resultant increase in the price of heavy crude is esti-mated to provide an increase in annual revenue to the Canadian producing industry in 2013 of US $2 billion to US $3.9 billion.”Spokane racks could be effected by Keystone

PumppricesofgasolineanddieselarecommonlylowerintheRockiesbackthroughtheMidwestthanelsewhereinthecountry.Closetohome,thewholesalerackpricesandthereforepumppricesinSpokanesuppliedbyMontanarefineries over the Yellowstone refined products rack that ends in Moses Lake have tracked 25-50 cents per gallon be-lowSeattleduringthelastyear.

AmajorcontributingfactorinthelowerpricesistheglutofoilintheCalgary-NorthDakota-Wyomingregionsresultingfromdramaticincreasesindrillingandincreasedproductionofshaleoil.CrudeintoMontanaandMidwestrefineries has been selling at $30-$40 per barrel discounts off the “world price” shown on the local news each night.


The Keystone Pipeline...politics in motion

continuedonpage18

Spokane marketer Cenex owns a refinery in Montana. The discounted local crude to Montana refineries is a primary reason the average price of regular was $3.459 in Spokane and 52 cents higher at $3.979 in Seattle on February 29th.


Keystone Pipeline,continued

Brazil grabs Chevron Execs

AfederalcourtinBrazilhasissuedanorderbarring17executivesfromU.S.oilgiantChevronandTransoceanLtd. from leaving the country while it mulls criminalchargesagainstthemforanoilspilllastyear.

Amongthe17whowereorderedSaturdaybyafed-eraljudgeinRiodeJaneirotogiveuptheirpassportsisanAmerican: George Buck, the chief operating officer of Chevron’sBrazildivision.

KurtGlaubitz,aChevronspokesman,saidthecom-pany has not received a formal notification of the order.

“Anylegaldecisionwillbeabidedbythecompanyanditsemployees,”hesaid.“Wewilldefendthecompanyanditsemployees.”

TheoilspilloccurredindeepwateroffthecoastofRiodeJaneiroinNovember.

George Buck heads up Chevron’s division in Brazil. Apparently not trusting the legal system to bring adequate pressure against Chev-ron, Brazilian authorities have detained Buck and 14 others.

The lower crude costs results inlower rack prices and therefore, lowerpumppricesinEasternWAversusWest-ern WA which is supplied by refineries payingthehigherworldpriceforcrude.If the Keystone goes in, this discountwouldlikelydisappearandthepricesinE.WAandtheRockiescouldbeexpect-edtorisetomeetthepricesbackontheCoast.

Political debate often conveniently fails to present all the facts. In this case, the current debate misses the point that the key to eliminating the oversupply, which holds down prices, is getting the glut of oil to “salt water” where the crude itself, or the refined products made from the crude, can be loaded onto ships and exported out of North America. The Ca-nadians “propose building the Keystone line to go around Midwest refineries,” says Philip Verleger, an oil industry consultant and professor at the University of Calgary who served in the US Department of Energy during the Reagan Administration.

It seems the Canadians all realize that taking it to nearby Midwest refineries on the US side of the border would keep it in the US and not achieve the stated goal

The next month, Brazilian federal prosecutors filed asuitagainstChevronandoilrigoperatorTransoceanfor20billionreais,about$11billion.

ThecivilsuitalsoseekstohalttheoperationsinBra-ziloftheoilgiantanditsrigoperator,accordingtofederalprosecutorsinthestateofRiodeJaneiro.

“ChevronandTransoceanwerenotabletocontrolthedamagescausedbythespillingofalmost3,000barrelsofoil,whichshowsalackofenvironmentalplanningandmanagement by the companies,” the prosecutors office saidinastatementatthetime.

Oil started leaking from cracks on the ocean floor at thesiteofaChevronappraisalwelllastNov.7,about230miles(370kilometers)offthenortheasterncoastofRiodeJaneirostate.Abouttwoweekslater,regulatorssaidthattheleakwasundercontrol.

Expertshadwarned,however,thattherewasahighriskofoilseepageresuming.

Chevronsaidatthetimethatthespilloccurredbe-causeitunderestimatedthepressureinanunderwaterres-ervoir.Thepressureapparentlycausedcrudeoiltorushupaboreholeandeventuallyescapeintothesurroundingseabed. The oil leaked through at least seven narrow fis-sures on the ocean floor, all within 160 feet (50 meters) of thewellhead.

Frade field in the Campos Basin where the leaks oc-curredisamongChevron’s“biggestcapitalinvestments,”accordingtothecompany’swebsite.


New advertiser joins Bulletin PetroCard, which has six offices throughout Washington and Oregon and also markets in Oregon, Idaho and Montana, is a new advertiser in the AUTO Bulletin beginning with this issue. Headquartered in Kent, PetroCard is primarily in the business of providing fuel and value-added fueling services via three divisions -- Fleets, Fuels and Lubricants. It has more than 190 employees. The Fuels division has two services, unbranded and branded fuel. The unbranded services consist of bulk deliveries within multiple commercial market areas and branded fuels provides multiple major oil company brands such as Con-oco, 76, Exxon, Mobil, Shell and the independent label Gull. According to Senior Vice President Scott Walters who heads up the Fuels division, “We offer creative incentive pack-ages with our many brand options.” Other key PetroCard personnel include: David Harris, CEO/President; and Senior Vice Presidents Aaron Reding (Fleet), Tim Tonani (Lubes) and Lanny Michael.

PetroCard’s website is located at www.petrocard.com. Primary phone is toll free at 1-800-950-3835.

Page 20 THE AUTO BULLETIN March 2012

AUTO MEMBER Lloyd Williamson has owned and operated Conway Foods 76 in Conway, WAforfouryears.HerecentlyjoinedAUTOoutofconcernovertheimpactoftribalstations’receivingastaterefundof28centspergallon,placinghimatacompetitivedisadvantage.Lloydsupportsthesuitsfiled by AUTO to stop the misuse of motor fuel taxes and discrimination against non-tribal station opera-torsbythestate.RaisedinLouisiana,WilliamsonisanArmyvetandlivedinAlaskamanyyears.HehasfriendsandcustomerswhoareNativeAmericansandoftenexplainshisviewofthesituationtocustomerswiththeAUTOBulletinprominentlydisplayedatthecounter.

Attention: All WA Motor Fuel Marketers

PleasejoinwithLloydandotherfellowfuelmarketersintheefforttostoptheseunconstitutionalanddis-criminatory tax policies initiated by the state of Washington that are inflicting extreme damage to marketersacross the state. For non-members, all it takes is to simply fill out the membership application on the follow-ingpage.

AsanalternativeorforthosethatarealreadyamemberofAUTO,pleaseconsiderhelpingcoverthelegalexpensesweareincurringbymailingacheckpayabletoAUTO,POBox1420,McCleary,WA.Writetheword“litigation”onthefrontofthecheck.

It’stimetoputastoptoWashington’sdiscriminatoryandunfairtaxingpolicies.PleasetakethetimetosupportoureffortstocorrecttheseerroneouspracticesofthestategovernmentbyeitherjoiningAUTOorcontributingtothelitigationeffort.Remember,onecaneitherbepartofthesolutionor,partoftheproblem.


Station #2 Addr Brand

City Zip Phone

Firm Gasoline Brand

Contact Name Phone

Mailing Addr. Fax

City Zip email address

Station #1 Addr Brand

City Zip Phone

AUTO MEMBERSHIP APPLICATIONPO Box 1420

McCleary, WA 98557Voice: (360) 495-4941 Fax: (360) 495-4022 Email: [email protected]

If a problem arises, AUTO members can call ontheir association

Who will you turn to?Fill out your application today!

I understand that dues are payable on the 10th of each Calendar Quarter or all Insurances or other Benefit Pro-grams are automatically terminated.

Member’s signature__________________________________________

$295.00 Motor Fuel Retailers

Station physical locations (if different from above)

$125 Associate (wholesalers & vendors)

Documents

Fire at BP’s Cherry Pointautowa.org/pdf/AutoBulletin_March_12.pdf · BP’s refinery on Cherry Point in North Puget Sound is the largest in the state and third largest on the West