Consolidation, Future of Fuels Dominate First Day of SIGMA Conference

BOSTON — Consolidation and future fuels consumption were both on the docket for discussion during the opening general session of the 2015 SIGMA Annual Conference, which kicked off here Monday.

Considering who the panelists were for the “Thought Leaders Forum” that opened the trade show at the Westin Copley Place, it’s no surprise merger and acquisition activity was a leading topic. The panelists included: Jack Pester, chairman of Pester Marketing Co., who sold his company to World Fuel Services Inc. on Oct. 30; Eric Slifka, president and CEO of Global Partners LP, which has acquired several c-store assets in the past couple of years; and Bob Espey, president and CEO of prominent Canadian retailer Parkland Fuel.

All the panelists agreed c-store industry consolidation will continue for the foreseeable future.

“The trend will continue,” said Espey. “There is a mature product with potential declining demand.”

Slifka agreed, but stressed there is value in oil companies holding onto retail assets. Moderator Tom Kloza, co-founder of OPIS, noted that this is something Marathon Petroleum Corp. has chosen to do with its Speedway LLC c-store division.

“Big Oil companies used to be integrated. That has been blown up. [But] I believe there is value in integrating. Value can be driven through the chain, but you have to make sure not to be too disparate,” Slifka remarked.

Pester spoke about how there is always some regret when selling your business. However, he said he’s glad he made the decision he did. “I’m very happy with the sale. I’m a happy boy.”

FUELS OUTLOOK

Additionally during the opening general session, Paul Tanaka, energy and technology advisor, corporate strategic planning for Exxon Mobil Corp., presented “The Outlook for Energy: A View to 2040.”

ExxonMobil expects worldwide population to increase from 7 billion people currently to 9 billion people in 2040, and more people worldwide are expected to enter the middle class, Tanaka said.

As for the fuels landscape, ExxonMobil expects light-duty fuel demand to be flat for the next 25 years. Heavy-duty fuel will show the most growth, especially in the Asia Pacific region.

In the United States, Tanaka revealed that diesel fuel will show the most growth. Higher ethanol blends are also expected to show growth. Electric vehicles will have growth on a percentage basis, but Tanaka stressed the increase is coming from a very small base and electric charging will still be only a small part of the U.S. fuels landscape in 2040.

The retailer panelists for the most part agreed with the results, specifically when it comes to electric vehicle chargers. None said they are considering offering this option at their stores.

“It’s not on our radar,” said Espey. “There are still technology challenges.”

Pester said he simply would not want to give up spaces in the c-store parking lot and devote them to electric charging.

But Espey did note that if electric vehicles do become quite popular at some point in the future, it could change the convenience landscape forever. “People probably won’t come to convenience stores to recharge their vehicles when they can just do it at home,” he said.

IN MEMORIAM

SIGMA sadly announced that Carl Boyett, CEO of Modesto, Calif.-based Boyett Petroleum, passed away Nov. 8 at the age of 70. He served as SIGMA’s president from 2008-2010.

Boyett Petroleum is a fuel supplier, distributor and retailer operating under the Boyett Petroleum, Cruisers and Kwik Serve brands. According to SIGMA CEO Ryan McNutt, a celebration in honor of Boyett’s life will take place Nov. 19 in California.

The 2015 SIGMA Annual Conference continues at Boston’s Westin Copley Place through Nov. 11.

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