How do fuel deliveries work to the stations?

[dadto2]

Gasoline is a fungible commodity. Several different refineries pump base gasoline into a pipeline. They pump in hundreds of thousands of gallons of 87, then 92, then various fuel oils, etc. Along the pipeline are terminals with tank farms. The terminals pull out the 87, the 92, etc. and pump into the tanks. Everything at the tank farms is potentially produced by several refiners. (the 87 tank is all 87, but could have Sunoco, Hess, Valero, and United Refining mixed in it, depending upon who is connected to that pipeline.

When a delivery truck pulls up to be filled, his orders stipulate X gallons of Sunoco in one compartment, Y gallons of Mobil in the next compartment, Z gallons of unbranded in another compartment, etc. The terminal operator blends the additives unique to each compartment as he fills them.

Then the trucker delivers to the Sunoco station, the Mobil station, the 7-11, and so on.

Unbranded is not less expensive because it's old, or watered down, or whatever. It's all market driven. Mobil and Shell are more expensive because their marketing campaigns have convinced a segment of the market that their gas is better. BJs, 7-11 and the local "generic" brands sell to customers who buy on price. BJs doesn't pay a royalty to Mobil on each gallon they sell, so they don't have that cost.

 

[y_p_w]

Originally Posted by dadto2
Gasoline is a fungible commodity. Several different refineries pump base gasoline into a pipeline. They pump in hundreds of thousands of gallons of 87, then 92, then various fuel oils, etc. Along the pipeline are terminals with tank farms. The terminals pull out the 87, the 92, etc. and pump into the tanks. Everything at the tank farms is potentially produced by several refiners. (the 87 tank is all 87, but could have Sunoco, Hess, Valero, and United Refining mixed in it, depending upon who is connected to that pipeline.

When a delivery truck pulls up to be filled, his orders stipulate X gallons of Sunoco in one compartment, Y gallons of Mobil in the next compartment, Z gallons of unbranded in another compartment, etc. The terminal operator blends the additives unique to each compartment as he fills them.

Then the trucker delivers to the Sunoco station, the Mobil station, the 7-11, and so on.

Unbranded is not less expensive because it's old, or watered down, or whatever. It's all market driven. Mobil and Shell are more expensive because their marketing campaigns have convinced a segment of the market that their gas is better. BJs, 7-11 and the local "generic" brands sell to customers who buy on price. BJs doesn't pay a royalty to Mobil on each gallon they sell, so they don't have that cost.

Even "branded" fuel may only use a generic additive. I remember reading about Valero before they got the Top Tier certification. Apparently they would specify whatever generic additive pack was available at the terminal for its deliveries. However, Valero itself is the largest fuel refiner in the US, so they actually put fuel into the system and don't solely buy it on the spot market.

The pipeline operators (that also operate fuel terminals) can deliver fuel that's segregated and where the product in is the exact product delivered, with the exception of what's blended in between. However, this costs more, and most treat the pipeline operators like a bank, where they can deposit at one point and their customers (gas station operators) can withdraw the fuel (which you correctly refer to as fungible) at a convenient point.

Quote
http://www.colpipe.com/home/about-colonial/frequently-asked-questions

What is the difference between fungible and segregated products?
Fungible products shipped on the Colonial system are generic products. These products meet published Colonial specifications. Shippers will receive equivalent product but may not get back the actual product shipped. Segregated products are branded products or blendstock materials. On segregated shipments shippers receive the same product they injected into the system.


There is another detail which is that most fuel today is specifically formulated to meet the octane requirement with ethanol. If you check the most common commodity fuel sold in the US, it's called RBOB, for "reformulated blendstock for oxygenate blending". It's specifically designed to reach 87 ((R+M)/2) octane when blended with 10% ethanol. The ethanol generally can't be transported by traditional pipelines, but gets blended into the delivered fuel at the terminal.

I live fairly close to Richmond, California, which has the Chevron Richmond Refinery and is pretty close to the Phillips 66 Refinery about 8 miles away. The city itself has a large dock for tanker ships and has 4 different fuel terminals (Chevron, Phillips 66, Plains All American, Kinder Morgan). There's really no telling which end customers get fuel from which refinery. There are three other refineries in the area (Shell Martinez, Tesoro Martinez, Valero Benecia) and I believe there's pipelines crossing bridges. The pipelines do more than just transport finished fuel. They ship crude oil. I've heard that the primary source for the Chevron Richmond is crude piped in from Kern County.

 

[y_p_w]

Originally Posted by y_p_w
Even "branded" fuel may only use a generic additive. I remember reading about Valero before they got the Top Tier certification. Apparently they would specify whatever generic additive pack was available at the terminal for its deliveries. However, Valero itself is the largest fuel refiner in the US, so they actually put fuel into the system and don't solely buy it on the spot market.

I found an article from 2010, before the Valero brand went Top Tier and ostensibly uses a specific additive package.

Quote
https://blogs.platts.com/2010/08/23/unbranded_vs_br/
Unbranded gasoline that heads to stations like US Gas also receives the detergent or additive package, albeit a generic one that is regulated by the government. But with price at the forefront, more retailer store owners are making the move to unbranded stations as consumer's eye price over performance.

"The brand right now is price," said Lenard. "The brand may come back if the brand can offer consumers something other than price."

Valero's Day said their gas stations do not offer a patented "value-added" detergent package to their gasoline.

"We have distribution agreements and add proper packages at the rack but we don't have specifically branded additives," said Day. "All of those packages add to price and Valero competes on price, not marketing."


It's also a bit complicated because companies have been known to split off their retail divisions. Valero Energy is still the largest refiner in the US, but they've legally unrelated to the Valero retail brand since 2013.

 

[MNgopher]

Originally Posted by bullwinkle
Originally Posted by Mainia
Super America here in Minnesota was bought out by SpeedWay. No 4 cent discount now unless you buy $4 inside the store. A lot of people I know don't go there anymore. Then I see 10 cent discount signs on the pump end cap. Then now I looked, they are not Top Tier. What a BS company STAY AWAY!! SAD how crap companies buy good companies and WRECK THEM FOREVER.
Super America has been owned by Speedway since the Marathon Ashland station buyout of approx. 15 years ago, they were forced to continue using the Super America name in MN due to some kind of copyright issue. Speedway is actually owned by Marathon Oil, but they're definitely not TT. They were a major customer of my employer until 3 years ago, but all the company vehicle fuel issues I've had have been with Speedway fuel, not to mention the stories I've heard about excessive amounts of ethanol in their E10 in the past. We don't call them GREEDWAY for nothing!


Superamerica had not been a part of Speedway dating back to 2010. The stores and refinery were owned by Ashland Petroleum up to 1997, then Ashland Marathon from 1997 to 2010, when they sold the operations here to Northern Tier Refining. Northern Tier was Eventually acquired by Western Refining, who then sold the refinery and Superamerica stores to Tesoro, who folded them into the new Andeavor operation. These assests were then reacquired by Marathon in 2018, leading to the rebranding of the Superamerica stores here to Speedway in the last few months.

There are still Speedway stores here with pumps with Top Tier stickers. Asking Speedway will get you no answers, but they are not licensed for top tier.

Historically, I bought a lot of gas at Superamerica, though their stores were dumps. Between the 3-10 cents per gallon off at the pump with their rewards card, and the fact my truck showed their gas to have good bang for the buck in terms of Octane Adjustment Ratio in my ecoboost, it was easy to buy gas. (And yes, with the refineries here with dedicated terminals, there is a noticeable difference in gas from the two major refiners here - your local market will vary)

Fast forward to now, the rewards program is nowhere near as lucrative, and no more top tier despite Kwik Trip and Holiday being Top tier, and its easy to move on.

 

[y_p_w]

Originally Posted by MNgopher
Superamerica had not been a part of Speedway dating back to 2010. The stores and refinery were owned by Ashland Petroleum up to 1997, then Ashland Marathon from 1997 to 2010, when they sold the operations here to Northern Tier Refining. Northern Tier was Eventually acquired by Western Refining, who then sold the refinery and Superamerica stores to Tesoro, who folded them into the new Andeavor operation. These assests were then reacquired by Marathon in 2018, leading to the rebranding of the Superamerica stores here to Speedway in the last few months.

There are still Speedway stores here with pumps with Top Tier stickers. Asking Speedway will get you no answers, but they are not licensed for top tier.

There is a long convoluted history of different retail brands being split off from the refiner brands. Then selling those brands off to other companies. Unocal sold off the 76 retail brand to Tosco, which then was bought out by Phillips, which then merged to become ConocoPhillips. Which then spun off to become Phillps 66 again. I think.

As for stickers, I remember some Valero station where I guess the owner pasted a Top Tier sticker next to the register which I knew wasn't reflected in the gas sold. This was years before the brand got Top Tier certification. Also - Arco must have some sort of convoluted Top Tier licensing arrangement since it's marketed by BP in some areas and Tesoro (or whatever weird name they use now) in Southern California. It's my understanding that they could be using different additive packs, but of course whatever they use needs to meet Top Tier requirements.