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Marketing & Supply By KEITHREID FuelQuest's Grail Conference "Eye on Energy Survey" highlighted what's keeping industry fuel buyers awake at night Insight into Bulk Fuel Buyer Concerns T Houston-based FuelQuest Inc., which provides customers from retail to commercial fleets with a range of fuel management services including an outsourcing option that encompasses fuel procurement, conducted its first annual Eye on Energy Survey among attendees at the company's GRAIL conference. The meeting was comprised of more than 140 market leaders from retail, distribution, supply and transportation companies. To understand what trends and challenges are driving these businesses, FuelQuest conducted its Eye on Energy Survey. The results of this survey, which involved roughly half of the attendees, covered an increased focus on addressing fuel price volatility and margin visibility, strong support for more progress on achieving U.S. energy independence, greater sensitivity towards severe weather preparedness and heightened interest in natural gas liquids. "The people who come to Grail, represent a good cross-section of bulk buyers," said David Zahn, FuelQuest's vice president of marketing. "We had buyers from retail to fleet. You had people like 7-Eleven and their concerns and then attendees from our fuel center business, which is our outsourced fuel managed service that we provide. When we launched the survey, we wanted to take a bulk fuel angle, which is why you see a focus on things such as volatility and margin management. We also wanted to go further out and talk about broader issues and see what some of the concerns are beyond the specific areas that we do for them." Zahn noted that the hot topics during the meeting varied somewhat among the different constituencies. For example, the conference took place close to the anniversary of Hurricane Sandy and featured some discussion around disaster preparedness. From FuelQuest's perspective, the primary focus would be on maintaining adequate supply during such a disruption, but it actually encompasses a far broader range of concerns. "People on the East Coast that were really impacted by Sandy generated some interesting conversations," said Zahn. "Six months out of the year it's hurricane season, and they have to be prepared even if it's a mild season and nothing happens. They have to put programs and processes in place or they will be down and they cannot afford to be down." 12 his year, OCTOBER 2013 Another hot topic was price volatility. Zahn pointed out that while volatility is impossible to overlook, the specific extent of that volatility may not be fully appreciated. "Everybody understands that there is a lot of volatility in the market, but not everybody understands how volatile that really is and how frequent that volatility actually happens," he said. "So when we talk about some of the statistics here, where you have $0.05 or greater swings 25 percent of the time compared to 10 years ago when it was 1.5 percent of the time–that opens people's eyes. And that sparks the question: what am I actually doing to combat that?" Zahn noted that volatility can be an enemy or a friend and if you have some automation in place and a diversified supply portfolio, then you have prepared yourself to take advantage of swings that are in your favor and mitigate risk when they are not in your favor. Where the potentially rapid expansion of natural gas as a transport fuel is concerned, Zahn noted that the attendees seem to be in the same place as much of the industry— feeling their way through the process at such an early stage. "We see a lot of these big fleet companies that are at the vanguard in the process of converting over, so there really is some trend," he said. "The retailers we are talking to are trying to determine what their play is going to be. For some it's good PR and good marketing, but if you're going to do this at scale, that investment requires a greater benefit. So what we are starting to hear as people think about and analyze this is the need to make the decision not on a national or chain level, but at a specific site level to serve the specific mark around a particular site or cluster of sites." Most of these issues, and other important ones such as the dynamic nature of state fuel taxes, were represented in the survey. Zahn noted another important topic of conversation. "Something that is not in the survey and something that we are getting a number of inquiries on is invoice reconciliation with all of the things that have happened at Pilot," he said. "That's going through its own process, and it can land wherever it lands, but it really highlighted a problem in the industry that is not really talked about that much. There are people who get invoices and they pay them without a checks and balances process. That NPN Magazine n www.npnweb.com