Headlines
March 17, 2010
DOE Report: Import Slide Has Helped U.S. Refiners
News item: U.S. companies imported 2.163 million b/d of petroleum products
last week.
If that strikes you as an unusually low number, you may have recognized a trend. Imports of all products have been trending lower through all of the winter. In fact, last week's rate is the lowest weekly number for all products since Dec. 12, 2003.
What's not yet clear is whether the weather has played a major role in reducing the offshore contribution to U.S. supply. Storms last week may have delayed a couple of cargos, particularly with regard to gasoline headed toward the U.S. East Coast.
East Coast imports of gasoline were measured by EIA at just 505,000 b/d last week. If not for one rogue quirky week where only 435,000 b/d of foreign gasoline arrived in mid-November, the 505,000 b/d number would represent the lowest weekly figure since 2005. More typically, U.S. marketers in recent years could depend on March gasoline import levels about twice the rate of last week.
The import numbers stand out in an otherwise neutral report. U.S. refiners ran 15,000 b/d additional crude last week, but they trimmed processing some feedstocks so that utilization slipped to 80.6% of capacity. There was little regional color. East Coast refiners processed 107,000 b/d less crude and feedstock last week while Midwestern operators added 61,000 b/d.
Gasoline output advanced by 203,000 b/d nationally, but it's important to note that the surge doesn't match the more significant drop in the foreign contribution. East Coast production moved up 142,000 b/d, but the gasoline- saturated West Coast saw a 74,000-b/d decline.
Demand numbers are quirky. Viewed from a four-week average perspective, total products demand is up 3.5%, roughly matching GDP growth estimates. But the increases lie in the "other oils" category (up 21.8%) and in propane
(+7.3%) and resid (+7.9%). Four-week demand levels for gasoline are up 1.3% versus 2009 with a 3.1% decline in distillate and a 6.6% drop in jet fuel.
The one-week totals offer a differing and perhaps misleading snapshot.
Total petroleum demand dropped 821,000 b/d last week, but the propane, resid and other oils categories account for the precipitous fall.
Distillate actually saw a small increase demand-wise, up 117,000 b/d nationally. There is anecdotal evidence that suggests a small turn higher for diesel demand, with some regional marketers even talking of the occasional state that finds a year-on-year sales increase.
But heating oil stocks still appear unwieldy. East Coast stocks of 32.7 million bbl are considerably lower than February levels, but compare to 27.3 million bbl as March ended in 2009. Heating oil states saw consistently colder- than-normal weather in the second quarter of 2009, and that mitigated some of the downward price pressure. But a glance at typical end-March levels this decade finds many years with heating oil stocks of less than 18 million bbl.
It may take some aggressive selling to get rid of the overhang.
March 15, 2010
Jobbers Hope BP Card Test Leads to Larger Loyalty Deal
BP and upscale grocer Publix are about to launch a one-week market test which gasoline marketers hope is a prelude to a more ambitious loyalty marriage between the two retailers.
The promotion, which runs from March 18-24, will cover all the Southeast markets where Publix has a presence -- Florida, Georgia, South Carolina, Alabama and Tennessee. Consumers in those states will be able to get $10 off a specially-issued $50 BP gift card if they buy $25 worth of Publix groceries.
Publix will support the effort with sidebars in newspaper circulars that will include a $10 off coupon printed in the newspaper, as well as offered in Publix stores. The BP gift cards will be issued at Publix and will sport a third-party design. They can be redeemed at any BP store, and retailers will be charged the same 5cts transaction fee that BP levies on its standard gift card.
Neither Publix nor BP have mentioned further plans beyond the one-week promotion, but jobbers in the region believe the offer will be closely monitored in both camps. Publix has few fuel outlets -- its station count is under 12 -- but has more than 1,000 supermarkets in the Southeast, including 730 in Florida and 179 in Georgia.
Marketers say Publix would be a perfect loyalty partner for BP's "fuelperks!" program, which is hosted by third-party processing firm Excentus in Abilene, Tex. Publix has a more upscale grocery offer than BP's current loyalty partners, Winn-Dixie, Bi-Lo and Roundy's, jobbers tell Oil Express.
March 3, 2010
Shell Extends Sign-Up Time for Kroger Loyalty Deal
Shell has told jobbers in its key Houston market that they can have more time to sign up for its Kroger loyalty program. The enrollment date had been Feb. 15, but Shell says it will give them another 30 days to get the paperwork done. It is not clear whether Shell will offer a similar breather to wholesalers in other markets.
Shell officials say the delay does not mean that it is having a hard time selling the program to its wholesalers. "It's in recognition of the fact that there is a huge squeeze on the site system suppliers and installers due to the PCI crush, and we simply want to allow everyone more time," said one exec.
More than 85% of Shell wholesalers have already signed up for the program, he said.
Gilbarco distributors recently cited Shell and BP's push to install price rollback equipment at sites as one reason Gilbarco may have trouble meeting the July 1 PCI deadline (Oil Express 03/01/10).
Shell execs say the Kroger offer presents "an enormous opportunity" for jobbers in Houston because 85% of rewards currently issued by the grocery chain in that market are never redeemed.
"Many of Kroger's customers in the Houston market do not have a Kroger fuel facility where they can redeem the points they've earned. Soon, all those millions of points can be redeemed at Shell sites. This is exactly what we've seen in the first five markets we've launched," said the Shell marketing official.
Houston jobbers confirm the low availability of gas at Kroger sites in their market. There are 101 Kroger stores but only 48 sell fuel, says one jobber. "There are a lot of Krogers around town where you'd have to drive 20 to 30 minutes in order to fill up," says the jobber.
Shell says the lower the current Kroger redemption rate is, the better the opportunity for jobbers. For example, in San Diego, where Kroger markets under the Ralph's logo, few of the supermarkets offer gasoline. "So, there is an almost 100% opportunity there," Shell said.
In Cincinnati, Kroger's HQ with a lot of grocery/gas outlets, the redemption opportunity is only about 40%. While that may seem low, the sheer number of points available is huge, he says.
March 2, 2010
Supermarket Chain Abandons ConocoPhillips for Own Brand
After a five-year supply deal, the ConocoPhillips flag is coming down from some supermarkets in Texas.
Supermarket chain United Supermarkets has decided to launch its own brand at its outlets in Lubbock and Amarillo, where it operates under the names United Supermarkets, Market Street and Amigos United. Its private banner, United Express Fuels, will fly at 19 stations. Conversion work should be completed by April 1. Three stations in the Dallas-Fort Worth area will remain under the company's Market
Street brand.
"Our guests expected United Supermarkets to offer the highest-quality products. With United Express Fuels, we'll continue to honor that commitment with fuel products that are...100% guaranteed," said Chris Bridgford, fuel operations director for United Supermarkets LLC. The company, which also intends to offer its own fleet card, is a family-owned firm with 50 stores in 30 markets across north and west Texas.
ConocoPhillips officials declined to comment, except to note that United had been supplied by one of its jobbers. According to a United spokesman, the company had been buying 46 million gals/yr from Amarillo-based wholesaler Davidson Oil. United moves approximately 52 million gals/yr, he said.
March 2, 2010
BP Says Its New Visa Will Reward Big Spender Consumers at
the Pump
BP is busily promoting its soon-to-be-released co-branded Visa card, teasing jobbers with promises of the increased volumes they'll see as a result of its new price rollback offer to consumers.
BP is mum on many of the details, but company officials confirm that the amount of discount the consumer will see will be tied to how much he previously charged on
his Visa.
"The BP Visa offer will not be a static cents-off offer," says one BP executive. "It will depend on the cardholder's prior spend. So, a cardholder that is a heavy spender
(at BP or outside of BP) will be able to rollback the pump by larger amounts."
BP's current co-branded Visa offers cardholders rebates of 5% at BP sites, plus 2% on travel and dining purchases and a 1% rebate on everything else.
However, that offer is more than a little cumbersome -- the consumer has to wait until he accumulates $25 worth of rebates before he can get his rebate money, and then must call BP or go onto the Internet to ask for a check to be sent to him. There used to be no limit on the rebates but last March, Chase decided to cap them at $25 because it was costing Chase too much to honor the 5% fuel rewards as fuel prices rose, as exclusively reported (Oil Express 03/16/09).
All that will be replaced by an instant cents-off discount at the pump with the new co-branded Visa. Chase Bank will continue to handle the processing for BP and the 13cts per transaction fee will remain the same for marketers. "The
13 cents simply covers the processing costs as it does today," said the BP official.
How much BP is willing to give away as a discount isn't known, but at one point the refiner was talking about an offer of up to 10cts/gal. The total discount amount will be capped, sources say.
However, the consumer may still have problems in getting his money under the new instant cash-back offer. In order to redeem the rewards, he must go to a participating BP station. If that site has not joined BP's price rollback program, he will not be able to get his discount at the pump.
"The cardholder will need to find a participating BP to redeem," says the BP exec. "It will be similar to McDonald's advertising on national television, 'Get a cheeseburger and fries for $1.99, at participating locations. We recognize this will not be optimal when it occurs, and it will put pressure on the site to participate," he added. "Cardholders will become accustomed to seeing a redemption message like "$0.45/gal off Y/N?"
BP has not said how it will communicate to consumers which of its 10,000 or so stations will allow them to redeem their cash rebate, but the company is likely to require marketers to put up special signage indicating their participation.
BP confirms that marketers who do not sign up for its price rollback program will not be able to offer the instant discount, but rejects any suggestion that it is strong-arming its jobbers to join the program.
"Remember, BP is funding the deployment of this functionality for the vast majority
of our sites," the company says. Actually it's funding the equipment at outlets with
three dispensers -- those with only two pumps must pay for the rollback
technology themselves.
According to BP, 93% of its sites have enrolled in the price rollback program. So far, only approximately 200 BP sites actually offer instant discounts at the pump through various grocery store loyalty programs. The company claims that it will have all its stations equipped with rollback technology by year's end..