Petroleum Marketing Management, November/December 1994

New Study Reveals Reluctance of Fleet Fuelers to Comply

Managers at over 50,000 commercial refueling facilities across the country have no current plans to comply with strict EPA regulations for underground storage tank systems, according to a research study entitled: The United States EPA Regulated Retail, Commercial, and Industrial Gasoline Service Station Markets, 1992-1998, conducted by Havill & Company, Inc.

According to Joseph Slagle of Havill & Company, the implications for the petroleum industry are significant. "These 50,000 facilities purchase over five billion gallons of fuel annually. Changes in commercial fuels distribution will be required to enable these fleet administrators to achieve compliance. For the suppliers of fuels, fuel handling equipment, and vehicles to cash-in on this new opportunity, they need a clear understanding of the structural changes that will be occurring in the fleet refueling market." This is the focus of a major new study conducted by Havill & Company to be released in early 1995.

"Our past studies have shown that underground storage tank systems have been closing at an annual rate of about six percent," Slagle says. Some fleet operators are installing aboveground tanks rather than another underground system. If a decision is made to discontinue on-site fueling, a fleet card program offered by petroleum marketers is a popular option. By the end of 1998, fleet operators must bring their UST systems into compliance. "This new study will identify the structural changes that are likely to occur in the fleet refueling market. More importantly, the new study will pinpoint actions that suppliers should take to achieve a strong position in the growth segments of the fleet refueling market," says Slagle.

Alternative fuels are being considered, as fleet operators evaluate their refueling options. The managers are trying to understand how they will be affected by the Clean Air Act Amendments of 1990, the Energy Policy Act of 1992, and state alternative fuel mandates. Excluding off-road vehicles and truck stops, Havill Consultants estimate that 23 billion gallons of gasoline and diesel fuel are consumed annually by commercial vehicles. Mandates will force minimum annual consumption of about 600 million gallons of alternative fuels by 1998.

While many fleets will upgrade their on-site fueling facilities, a growing number will take advantage of off-site refueling. During the first quarter of 1994, Havill & Company completed a proprietary study of major oil company trends in marketing to fleets. "Major oil companies have been investing heavily in POS hardware to implement their fleet management systems," says Slagle. "Our research found that two out of every three new dispensers that were shipped to major oil companies had internal card readers installed. This is almost twice the number of internal card readers shipped two years ago."

The upcoming study will be based on interviews with 1,000 fleet administrators. Havill & Company will ask fleet administrators detailed questions about their future vehicle, fuel, and refueling equipment plans. After gaining a clear understanding of the tradeoffs that fleet administrators make, the decision making process for each major segment of the current private refueling market will be modeled. A forecast will then be compiled by aggregating the major market segments.

Havill & Company is a marketing research and consulting firm that specializes in the petroleum and construction industries. Further information about this benchmark study is available by calling Joseph Slagle or Justin Zohn of Havill & Company in Toledo, Ohio at (419) 841-2244