CAMARILLO, Calif. — The average retail regular-grade gasoline price rose 7.82 cents per gallon (CPG) during the past three weeks, according to the most recent Lundberg Survey of approximately 2,500 U.S. gas stations. It sat at $2.3971 on Aug. 11. Higher crude-oil prices contributed, as did the coinciding of refiners shaving their gasoline margins as retailers grew theirs. The U.S. weighted average, wholesale regular-grade gasoline price moved up 3.93 cents, half the amount that the retail price did.

The regular-grade retail margin recovered 3.81 cents since July 21, so its current 17.03 cents is now decent but not festive.

Meanwhile, refiners’ gasoline margin skinnied some, but it is still better fed than it was in full-year 2016.  Notably, despite year-on-year as well as seasonal gasoline demand growth, and capacity idling by the sector due to some glitches, the high and mighty rate of U.S. refining capacity in use is better than 96%. This is world-class capacity utilization; right now, hobbled Venezuelan refineries are reportedly running at about half that rate.

The Aug. 11 average retail price sits a hefty 23 cents above what it was one year ago; however, it is far cheaper than mid-August prices during 2015, 2014 and 2013, and this is likely lessening the negative impact on consumer demand.

In all, U.S. gasoline supply and demand are both humming the summer song rather well, and downstream gasoline margins are, historically, not bad.

Oil prices are not on a steep upward trajectory; instead, they are bookended between about $40 to $50, as they have been most of the time for the past year and a half. They are bobbing at the upper end of that range, but the futures market is not spooked, as modest price premiums a year from now for two key grades, West Texas Intermediate and Brent, attest. Assuming oil prices do not leap up from here, further retail gasoline price increases, if any, should be minor.

Camarillo, Calif.-based Lundberg Survey Inc. is an independent market research company specializing in the U.S. petroleum marketing and related industries. Click here for previous Lundberg Survey reports in CSP Daily News.

SAN ANTONIO – The latest strategic move by the new Andeavor, formerly Tesoro Corp., improves the company’s position for “organic growth programs and strategic acquisitions, including dropdowns,” its CEO said. Andeavor is merging Andeavor Logistics and Western Refining Logistics, its master limited partnerships (MLPs), and repositioning Andeavor Logistics through a buy-in of Andeavor Logistics’ incentive distribution rights (IDRs).

Tesoro closed on its acquisition in mid-November 2016 of Western Refining Inc. in a stock transaction valued at $4.1 billion. Western Refining’s retail operations included nearly 550 gas stations and c-stores under the Giant, Howdy’s and SuperAmerica brands.

Tesoro Corp. and Tesoro Logistics LP officially changed their names Aug. 1 to Andeavor and Andeavor Logistics LP.

Also in August, Andeavor acquired 39 convenience stores in California from Flyers Energy, Auburn, Calif.

El Paso, Texas-based Western Refining Logistics (WNRL) owns, operates, develops and acquires terminals, storage tanks, pipelines and other logistics assets related to the terminaling, transportation and storage of crude oil and refined products. Its assets include approximately 705 miles of pipelines, approximately 12.4 million barrels of active storage capacity, distribution of wholesale petroleum products and crude oil and asphalt trucking.

“Andeavor Logistics is well positioned for sustainable growth through the execution of our organic growth programs and strategic acquisitions, including dropdowns from Andeavor,” said Greg Goff, chairman and CEO of San Antonio-based Andeavor, and CEO of Andeavor Logistics’ and WNRL’s general partners. “The transactions announced today significantly improve the financial strength of Andeavor Logistics, reduce our cost of capital and clearly highlight the value of this growth business.”

Andeavor Logistics plans to spend at least $500 million to $600 million per year on organic growth and acquisitions with a current two-year backlog of $800 million to $900 million of identified organic growth projects.

Andeavor Logistics targets investing $400 million to $500 million per year on dropdowns; Andeavor has a dropdown portfolio of at least $750 million of estimated annual earnings. This portfolio includes earnings from refinery infrastructure of at least $150 million, logistics assets of at least $200 million, assets under development of at least $150 million and Andeavor’s wholesale fuels business of at least $250 million.

The transactions strengthen the credit profile and position Andeavor Logistics for an investment-grade credit rating. The IDR buy-in also lowers the marginal cost of capital and reduces the need to access public equity markets while expanding the universe of economic growth opportunities.

Together, these transactions simplify the corporate structure, the company said, resulting in Andeavor owning approximately 59% of Andeavor Logistics, valued at $6.1 billion.

The transactions represent an enterprise value of $1.8 billion, including the assumption of approximately $310 million of Western Refining Logistics’ net debt. The estimated 2018 EBITDA multiple is approximately 8.6x, excluding estimated 2018 general partner (GP)/IDR distributions for Western Refining Logistics of $22 million.

These transactions have been approved by the boards of all three companies as well as the conflicts committees of both MLPs. Andeavor said it expects the IDR buy-in to take place immediately after the merger. The companies said they expect the merger transaction and IDR buy-in to close in fourth-quarter 2017, subject to customary closing conditions, including regulatory and approval from holders of a majority of the Western Refining Logistics units.

Upon closing of the transaction, Goff will continue as chairman and CEO and Steven Sterin as president and CFO of the general partner of Andeavor Logistics.

Andeavor is an integrated marketing, logistics and refining company. Its retail-marketing system includes more than 3,100 gas stations and convenience stores marketing fuel under brands including Arco, SuperAmerica, Shell, Exxon, Mobil, Tesoro, USA Gasoline and Giant. It also has ownership in two logistics businesses, which include Andeavor Logistics LP and Western Refining Logistics LP and ownership of their general partners. Andeavor operates 10 refineries with a combined capacity of approximately 1.2 million barrels per day in the mid-continent and western United States.

Andeavor Logistics, also based in San Antonio, operates primarily in the mid-continent and western United States. It owns and operates a network of crude oil, refined products and natural gas pipelines. The company also owns and operates crude oil and refined products truck terminals, marine terminals and dedicated storage facilities. In addition, Andeavor Logistics owns and operates natural gas processing and fractionation complexes.

Brought to you by GasBuddy.

In today’s hyperconnected world, retailers don’t own their brand—their customers do.

Retailers own the overall customer experience—every interaction with the customer from start to finish. They control how the store appears from the road, the interactions with customers on social media and whether or not the restrooms are clean, the fuel pumps are well-lit and the store layouts easy to understand. By providing a quality experience, they can influence what is said and shared about their brand.

Strategic customer experience can further enhance the experience. A recent survey of GasBuddy users found that in addition to gas prices and location, customer service was considered the most important factor driving their visits. This includes responding to online reviews, offering genuine thanks at the point-of-sale and being attentive to their needs.

But it can be tempting to assume that “more is more.” Many of us have walked into a retail store only to be greeted in a way that seemed forced or inauthentic, or encountered employees who were overzealous in offers of assistance.

Most customers don’t require that level of interaction. Many of them, especially millennials, seek to direct their own retail experience. Rather than looking for assistance and guidance, they want choices, options and the freedom to navigate as they please.

Retailers can facilitate this in a number of ways. Ensure the store is designed from start to finish in a clear, intuitive manner. Encourage customization on foodservice menus and provide self-serve coffee options. Use point-of-purchase displays to inform customers of new products and existing offers and address frequently asked questions.

And when opportunities for customer service interactions do arise, be ready with the right strategies.

Interact with customers in a way that makes them feel valued and welcomed. Provide a clear way to report issues with restroom cleanliness. Train employees to take charge of difficult situations and handle them in a way that enhances the brand’s reputation.

When negative reviews are posted online, see them for what they are: an opportunity.

A recent survey found that 72% of GasBuddy users would consider returning to a store if their complaint were resolved. Through GasBuddy Business Pages, retailers have the opportunity to manage their reputation by responding directly to these reviews.

If someone leaves a review that a card reader didn’t work, a store might reply, “Thank you for alerting us to the problem with our credit-card readers. We fixed the problem, and all pumps are working fine!” Not only does this show the individual that his or her complaint was taken seriously, but it signals to everyone else visiting the station’s page that there are no issues with the gas pumps. 

Positive reviews also present an opportunity for GasBuddy Business Pages partners. When customers rave about a store’s foodservice and clean restrooms, consider thanking them for their business. Invite them to return.

It’s one more way to improve a brand’s reputation by controlling the experience. 

CHARLOTTE, N.C. — Snack maker Snyder’s-Lance will drop hundreds of SKUs as part of a plan aimed at improving operating profit between now and 2020.

Brian J. Driscoll, president and CEO, said in an Aug. 8 earnings call that the company believes the move will help boost profit by about $175 million. It is part of a six-pronged initiative that includes reducing direct spending and streamlining manufacturing and distribution networks.

The company has identified nearly 750 of its roughly 2,000 branded SKUs that can be eliminated with a “minimal impact to revenue and a positive effect on operation income,” Driscoll said.

“As we remove low profitability, low velocity SKUs from the shelf, we can redeploy the trade dollars that are going against those SKUs into the higher velocity, higher-margin SKUs,” said Alexander Pease, executive vice president and CFO, “which basically improve the economic picture both for the retailer as well as for us.”

It will also create more space for the company’s core brands at retail, Driscoll said.

“So it’s not necessarily in every instance adding new SKUs on core, but expanding core into the space vacated by some of the SKUs that we’re eliminating,” he said.

Driscoll said the company’s goal is to “outpace the categories we compete in.”

“However, considering the impact from our SKU rationalization and trade effectiveness initiatives, we do anticipate growing modestly below category levels in the early stages of these initiatives,” he said.

Snyder’s-Lance’s net revenue for second-quarter 2017 was $579.6 million, an increase of 3.3% compared to second-quarter 2016. The company’s core brands accounted for the bulk of that, bringing in $401.7 million in net revenue, a 4.7% increase compared to second-quarter 2016. The increase was led by brands Late July, Snack Factory, Pretzel Crisps, Lance, Snyder’s of Hanover, Cape Cod, Pop Secret and Kettle Brand, offset by a decline in Kettle Chips.

The latest news continues the Charlotte, N.C.-based company’s transformation that began July 25 when it announced plans to close a chips plant in Perry, Fla., by the end of September. The company will also cut 250 redundant positions from its global workforce as it seeks efficiencies in manufacturing, supply chain and direct spending.

EL DORADO, Ark. — With the Food and Drug Administration (FDA) pushing for a new, low-nicotine direction for tobacco products in the United States, executives with retailer Murphy USA Inc. recently chimed in, saying they expect the process will be a long-term one and play out in a “thoughtful way.”

Speaking during an Aug. 3 investor call, Donnie Smith, vice president and controller for El Dorado, Ark.-based Murphy USA, expressed confidence that the FDA would follow through on its promised review of “real science and understanding the unintended consequences of any regulation.”

Smith also said the FDA’s newfound recognition of a “risk continuum” is helpful, in that the agency now seems more amenable to the idea of moving people from combustible cigarettes to less harmful devices such as electronic cigarettes and other vaping products. Such a perspective is a positive step, “as you think about new products and the innovation that has been developed either here in the U.S. around the vapor products, or if you think about the heat-not-burn products and non-U.S. markets that are coming in,” Smith said.

Working with manufacturers, retailers like Murphy are “well positioned to participate in the new products, their introduction and work in the context of the regulations as they get developed and modified over time,” Smith said.

Nothing in the FDA’s July 28 announcement gave Murphy executives pause, Smith said.

Here are a few insights Murphy gave on the recent performance of its tobacco category:

• Murphy’s newer, larger stores start with a bigger mix of merchandise and higher nontobacco sales than that of established kiosk locations, and then ramp up over time. For its newer stores, tobacco, a category that has essentially the same offer across all the chain’s formats, starts off lower than well-established kiosks but catches up in 12 to 18 months.
• Tobacco margins were up 2.6% on a same-store-sales basis but down 0.3% on an average per-store, per-month basis.
• On the merchandise side, Murphy continues to see competitive pressure on cigarettes and the traffic associated with fuel, which has seen pressure from competitors in key regions building new stores or renovating old ones.

El Dorado, Ark.-based Murphy USA is a retailer of gasoline and convenience-store merchandise with more than 1,400 locations in 26 states, primarily in the Southwest, Southeast and Midwest. Murphy USA was ranked No. 5 in CSP‘s 2017 Top 202 list of the largest c-store chains in the United States.

CHICAGO — Fuel theft in the United States is becoming big business, with criminal gangs using skimmed credit-card information to steal fuel from gas stations and specially equipped trucks and vans to carry it away.

Criminals can earn $1,000 or more per day reselling the fuel to unscrupulous truckers, construction sites and other gas stations that are looking to cut costs, according to an Associated Press report.

“It’s pretty rampant,” said Owen DeWitt, president of Know Control, Lampasas, Texas, which provides products to prevent fuel theft. Interstate 10 from Jacksonville, Fla., to Los Angeles, is a hot spot for the activity; California, Florida and Texas have the highest rates of the crime, DeWitt said.

The black market for fuel took off in 2006 when skimmers grew in availability, according to DeWitt. After installing the devices at gas pumps, criminals capture customers’ credit-card data, and later copy it on to a counterfeit card. Because the fuel thefts typically top out at a few hundred dollars, many prosecutors have tended to not prioritize pursuing the cases, which has helped the black market grow.

Adam Putnam, Florida’s commissioner of Agriculture and Consumer Services, said fuel thefts were viewed as a “slap-on-the-wrist-type crime, and yet [thieves] were making more money doing this than a lot of other criminal activities that had a lot higher sentences.” However, state and federal officials are paying more attention to fuel theft as organized crime rings have entered the business.

Steve Scarince, assistant to the special agent in charge of the U.S. Secret Service and the head of the agency’s fraud taskforce in Los Angeles, said fuel theft is high in Las Vegas, Los Angeles and Miami, which combined see about 20 million gallons in diesel theft each year.

Scarince said the “least-profitable group” that the Secret Service has investigated was making $5 million annually on reselling stolen fuel, while some groups earn upwards of $20 million. “The gangbangers in Los Angeles have been migrating to financial crimes instead of street crimes because it’s much more profitable, and if you get caught, you get probation,” he told AP.

In one Secret Service case from 2014, a group of criminals stole $16,000 worth of fuel each day for more than 10 months, using pickup trucks and SUVs outfitted with hidden fuel tanks that could hold up to 300 gallons each. In the process, they used stolen credit-card information from around 900 people. They would then move the fuel into a 4,500-gallon tanker and resell it each day to gas stations.

Another gang used fraudulent credit cards to steal $100,000 worth of diesel from two gas stations in central Florida over the course of a month.

As authorities pursue these criminals, there are safety concerns. In Los Angeles, one fuel thief on the run from police crashed his truck with 1,650 gallons of stolen diesel. A van driven by another suspect in Miami-Dade County exploded as he was filling its secret tank.

“God forbid that hits a school bus with a bunch of kids on it,” Ned Bowman, executive director of the Florida Petroleum Marketers and Convenience Store Association, Tallahassee, Fla., told AP. “A car full of that much fuel is like a bomb going down the street.”

LAKE ZURICH, Ill. — FETCO, a coffee-brewing-equipment manufacturer serving the foodservice industry, has named George Campise as its new director of sales. Campise joins the FETCO team with more than 25 years of comprehensive sales experience in the commercial foodservice equipment industry.

Campise most recently spent 14 years with commercial foodservice equipment manufacturer Unified Brands Inc., Conyers, Ga., with the last four years as the company’s national sales director, managing a direct regional sales team and a network of independent foodservice representatives that focused on the institutional commercial foodservice segment.

Campise was vice president of operations for Avtec, a division of Unified Brands, earlier in his career.

Established in 1987, Lake Zurich, Ill.-based FETCO has developed beverage solutions for the foodservice industry using vertically integrated manufacturing processes.

SALEM, Ore., and AUGUSTA, Maine — Two more states recently raised the legal age at which consumers can buy tobacco products from the federal standard of 18 to 21 years old, bringing the total to five states. A sixth state, Massachusetts, may be the next to enact such legislation, according to an anti-tobacco advocacy group.

On Aug. 8, Oregon Gov. Kate Brown signed legislation that will increase the minimum age to 21 starting Jan. 1, 2018. And on Aug. 2, lawmakers in Maine voted to override Gov. Paul LePage’s veto of a similar measure, allowing an age increase to take effect July 2018.

Laws raising the legal age to purchase tobacco products to 21 have also been enacted in California, Hawaii and New Jersey, as well as at least 255 cities and counties, including New York, Chicago, Boston, Cleveland, St. Louis and both Kansas Cities.

Massachusetts lawmakers are considering similar legislation for the state, according to the Campaign for Tobacco-Free Kids, Washington, D.C. A vote could come before the end of this year.

More than 150 cities and counties in Massachusetts have already adopted a legal age of 21 for purchasing tobacco, covering more than 60% of the state’s population.

HOUSTON — Phillips 66 has selected GasBuddy Business Pages, the smartphone app company’s B2B retailer software-as-a-service (SaaS), to be deployed in more than 6,000 fuel and convenience stores under the company’s Phillips 66, Conoco and 76 branded locations across the United States.

GasBuddy Business Pages enables marketers and operations personnel to manage customer-facing store information such as hours, prices and amenities; to manage and maintain store performance with respect to customer service and experience; and to directly market to GasBuddy consumers products such as loyalty programs and other incentives. GasBuddy Business Pages ties directly to its consumer-facing smartphone app, which has been downloaded more than 65 million times and attracts millions of gas station ratings and reviews each month.

Business Pages has an analytical dashboard that combines insights from millions of ratings and reviews with market, competitive benchmark and foot-traffic data, giving retailers the opportunity to create new strategies to grow market share.

“Consumers have many choices when they fuel up or visit a convenience store. Not only are we competing on the value we provide to the consumer, but on the experience of shopping with us,” said Phillips 66 Branded Marketing Manager Greg Hart. “GasBuddy Business Pages gives us the unique opportunity to tap into millions of consumer interactions each month to understand how we can compete more effectively.”

“With expectations created by the Amazons, Apples and Ubers of the world, today’s consumer truly expects a perfect pit stop every time,” said Greg Fox, chief revenue officer for GasBuddy. “GasBuddy Business Pages finally gives this massive market the tools to understand and influence these tens of millions of U.S. drivers each month.”

Boston-based GasBuddy is a smartphone app that allows drivers to rate their convenience-store and gas-station experiences. With nearly 70 million downloads, GasBuddy is the leader in crowdsourced information to help drivers find the best gas prices, closest stations, friendliest service, cleanest restrooms, tastiest coffee and more in the United States, Canada and Australia. The company’s B2B retailer SaaS, known as GasBuddy Business Pages, provides fuel marketers and retailers with an opportunity to maintain their station information, manage their brand, and promote to their target consumer audience.

Phillips 66 is a diversified energy manufacturing and logistics company. Using a network of branded marketers and dealers operating approximately 7,500 retail outlets, its U.S. marketing business supplies Top Tier-branded Detergent Gasolines under the Phillips 66, 76 and Conoco brands.

WESTLAKE, Ohio — While the past few years saw a flurry of convenience-store acquisition activity from TravelCenters of America LLC, that momentum slowed in the first half of 2017, with the company integrating purchases and encountering competitive “challenges,” officials said in its latest quarterly investor call.

During the Aug. 8 call, Thomas O’Brien, managing director, president and CEO of the Westlake, Ohio-based chain of Minit Mart and TravelCenters c-stores and travel centers, said that while same-store results grew 8.5%, “high-quality operators” are constructing new or upgrading existing stores, increasing competition.

As a result, “certain acquired convenience-store sites have not yet returned to the pace of growth seen prior to the first quarter of 2017,” O’Brien said. “I still believe we will generate contributions from these stores in the expected magnitude.”

For its c-store segment, both fuel and nonfuel revenues increased, resulting in an increase in total revenues of $5.3 million, or 2.8%, in the 2017 second quarter compared to the 2016 second quarter. The increase in total revenues was primarily due to the impact of the five locations acquired since the beginning of the 2016 second quarter and increases in market prices for fuel, the company said.

During second-quarter 2017, TA invested $38.3 million in capital expenditures, as compared to $86.9 million in the second quarter of 2016.

O’Brien described the c-store market as “hot” in terms of mergers and acquisitions. When asked if TA would consider selling its roughly 200-unit chain of c-stores, CFO Andrew Rebholz said, “If it were the case that I could get someone to pay for the growth that is yet to come, we’d consider that. But at this time, I think there is a case to be made for continuing the ramp-up and then seeing what market we’re in when that’s completed.”

Overall, Rebholz said TA performed well. Though net income declined to a net loss of $3 million in the second quarter on a year-over-year basis, earnings before interest, taxes, depreciation and amortization (EBITDA) rose 8.4% vs. the second quarter of 2016. O’Brien said the increase was due to strong performances in both fuel and nonfuel gross margin, and in controlling site-level operating and administrative expenses.

More important, O’Brien said, declines in fuel volumes slowed from a more dramatic fall in the first quarter of 2017. In the second quarter, fuel volume showed a 1.6% decline, much improved against the 5% decline during the first quarter. More specifically, he said same-site diesel-fuel volume declined only 1.7%, vs. a 7.5% decline for first-quarter 2017. Compared to 2016, O’Brien said competitive forces he called “uncharacteristically difficult factors” pulled down volumes in the early part of this year.

Also weighing on the company’s second quarter were expenses from a legal dispute with Norcross, Ga.-based Fleetcor and its Comdata subsidiary. Those expenses hit $5.3 million in the second quarter of 2017, with the total being $13.5 million for the first half of the year. O’Brien said the court case was completed in June, and the company, while confident it will prevail, is still waiting for a ruling.

TA’s nationwide business includes travel centers located in 43 U.S. states and in Canada, stand-alone convenience stores in 11 states and stand-alone restaurants in 14 states. The company ranked No. 19 in CSP’s 2017 Top 202 list of the largest chains in the United States.