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When Protec Fuel Management was initially founded in 1999, wholesalers, regional trucking companies, industrial manufacturers and large agricultural co-ops were the typical customers the business set out to serve.
Fast forward 15 years. Today, convenience stores, distributors, municipalities and state and federal governments have joined that core customer base, Todd Garner, CEO and managing partner of Protec, said.
“Protec Fuel Management was created on the belief that most small- to mid-size companies do not have the opportunity, knowledge, or staff size to manage their risk and/or purchase supply competitively like most of their larger competitors,” Garner said. “Our unique business model is designed to allow our customers to grow and diversify in an ever-changing and competitive market. If our customers are successful and grow, then we will grow with them. That was true when we founded the company and it continues to hold true today.”
That philosophy led Protec to become an early proponent of alternative fuels. The company entered the ethanol industry in 2005 following the signing of the Renewable Fuel Standard (RFS). Soon, one of its larger retail gasoline customers approached the company about blending ethanol to sell E10 and E85 at their sites.
“In 2005, the blending of ethanol, logistics and dispensing equipment was fairly new to most in the distribution business,” Garner recalled.
But that didn’t stop Protec from moving forward. The company developed the first blending sites outside of the Midwest, and constructed and supplied more than 35 new retail sites that first year.
“Today, Protec is one of the largest distributors of E85, serving more than 250 sites and stations across 12 states,” Garner said. “The growth of the E85 has been tremendous and with the introduction of E15, we expect to develop over 100 new sites in 2015.”
Turnkey Model Simplifies the Process
Protec has established itself as a leader in building or converting retail stations for biofuel blends. The company’s turnkey model is key to its success.
“Our model allows retailers to offer customers a choice at the pump and separate themselves from the competition. It offers our customers the ability to diversify and grow without the fear of trying something new and failing,” Steve Walk, VP of Protec, explained.
Evaluating a proposed station location to determine likely fuel sales volume and overall station success with the general public and with fleets is the first step in the Protec process. A site survey of existing equipment, fuel island layout, point-of-sale systems, tank and piping configurations, current dispensers, and price signage follows. Existing equipment can be used to reduce the project’s cost if it meets regulatory requirements, Walk noted.
“For example, if just E85 fuel is being added to the station, we may be able to convert the existing tank and dispenser to add the additional fuel option,” he said. “We look into changing the configuration of tanks at the station to products that are more conducive to the demographics and immediate marketplace — replacing a mid-grade tank to E85 or diesel tank to E15, for example. In other instances, we may need to replace the dispenser, which is common when adding E15 fuel, and possibly install a new underground tank.”
Protec doesn’t stop with ordering or converting equipment. The company oversees the installation crew and PEI company, negotiates fuel rates, and helps station owners with sales meetings, fuel risk management services, price sign displays and station island re-imaging. In addition, Protec provides handouts and marketing brochures about alternative fuels, as well as ongoing sales support so station owners can provide a better experience for their customers.
“We are doing a variety of things to help make the buying decision easier and more convenient,” Steve Walk, VP, said. “It is crucial that the station clerk and other team members are interacting with customers. Our E85 stations with employees who help educate consumers about E15 and E85 fuel and what a flex fuel vehicle really means experience great sales volumes.”
Tracking Fuel Trends
Protec’s increased market share and sales volume especially over the past two years underscore the growing acceptance of alternative fuels.
Garner and Walk credit this sales boost to an increase in the number of stations, the placement of flex-fuel dispensers on the island, a hike in the number of flex fuel vehicles on the road, and Protec’s pricing consistency model as a discount to gasoline. Estimates show, for example, that 75 percent of vehicles on the road today can use E15, with those numbers expected to increase since E15 is approved for 2001 and newer model vehicles, Walk said.
“Consumers know that E15 fuel does not have any significant miles per gallon loss compared to gasoline, hasn’t caused vehicle problems, and is five to ten cents less per gallon [than regular gasoline],” he reported. “Our retail station customers are benefiting from increased fuel sales and consistent fuel margins, while enjoying the increased foot traffic at the retail station. When E15 and E85 fuel are added to an existing retail station, the regular gasoline sales at that station also increase on average by 3 percent, in addition to the added E85 and E15 fuel sales volume amounts.”
Meeting the Challenges
Higher ethanol fuels like E15 and E85 offer retailers and wholesalers alike a “fantastic opportunity” to maintain and capture market share, differentiate themselves, and attract a multitude of customers.
Roadblocks, however, remain.
Offering consistent prices, having a reliable and consistent fuel supply, and maintaining infrastructure and equipment are challenges retailers face when adding new biofuel to their existing fuel supply, he says.
Protec can help retailers meet those challenges.
“We are able to structure a pricing formula in respective marketplaces as a delivered, discounted price to gasoline, at branded or unbranded station locations,” Walk explained. “We will peg the price of E15/E85 fuel off of the respective brand to maintain the consistent pricing discount for the consumer. This consistency in price flows through and helps the retailer while also helping the customer.”
To ensure a reliable fuel supply is delivered — a critical step in a retailer’s success with alternative fuels — Protec also handles logistics, deliveries, and invoicing for retailers and wholesaler.
“Orders are placed and deliveries are made within 24 hours so that the station is never out of E15 and/or E85 fuel,” Walk said. “Protec has a great of team assembled that manages the fuel and ensures that the proper blend ratio and mix are being delivered according to ASTM specifications.”
Walk and Garner also noted that associations like Growth Energy are vital in helping progress the ethanol applications and positive exposure. In working with Growth Energy, Protec is able to leverage their marketing, educational outreach, products and services to help customers make an educated buying decision.
The arrow is pointing up for Protec, and for the future of alternative fuels.
Currently, Protec is working on a project that will enable retailers to add E15 and E85 beside the three standard grades of gasoline and diesel fuel they currently offer. “The consumer benefits from having options at the station when fueling with products that are less expensive, and the retailer will benefit from the inevitable increased fuel sales, as well as the increased customer foot traffic inside the store,” Walk said.
“By having E85/E15 on the same dispenser as regular gasoline, E85/E15 fuel has become more mainstream and less of a ‘what kind of fuel is that?’ response from customers,” Walk added.
Working more closely with the agricultural community, ethanol producers and large and/or innovative retailers and wholesalers nationwide is another way Protec is progressing.
“We’re looking into ways to provide more value to all partners along the chain, whether that is fuel logistics or mobile phone payment capabilities,” Walk said.
The company is also designing retail stations in ways that will accommodate higher ethanol blends, as well as any new fuels that may arrive on the scene. “We are capturing technologic advances today so additional large investments are not required tomorrow,” Walk said.
An uptick in the number of higher ethanol stations is on the horizon, as consumers’ buying habits "eventually drag major oil companies into accepting higher ethanol blends,” both Walk and Garner predict. Already, stations are adding those blends in spite of more stringent regulatory issues and associated costs "because the consumer demand is present,” they added.
Whatever the future holds, alternative fuels are likely to play an important role for any business involved in fuel retailing. Protec will continue to provide support and services to help those companies compete and grow.
“The future of life on our planet and the fate of generations to come will be greatly affected by the choices we make today," Walk concluded. "I am thankful and excited to be part of such an important time within the fuel industry and to help make a positive impact.”