Oil Spot Blog

Retail fuel marketing, normally a less important part of the value chain and a small contributor to overall profits for energy companies, has become more important during the economic downturn, according to a Fitch Ratings report released Feb. 16.

Retail is an independent profit center and has the ability to provide liquidity by monetizing company-owned sites, the report states. It also has potential strategic value in allowing a competitor to box out other entrants or capacity.

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Referred to as the blend wall, ethanol is nearing the 10 percent saturation point in the gasoline blending market, with 10 percent the current maximum ratio that ethanol can be mixed into gasoline for non flex-fuel vehicles in the United States.

Flex-fuel vehicles can use up to an 85 percent ethanol to 15 percent gasoline ratio, or run on all gasoline or various ethanol blend ratios up to 85 percent.

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U.S. distillate deliveries, a measure of demand, fell by double digits in January from year prior levels, highlighting an uneven economic recovery, according to the American Petroleum Institute’s Monthly Statistical Report. Distillate demand, particularly low sulfur distillate demand, tracks economic growth closely.

“A sharp drop in low sulfur distillate demand is a concern,” said API Chief Economist John Felmy, noting that deliveries of 15 parts per million LSD, which is used by trucks shipping goods on highways, plunged 11.5 percent from January 2009 to 2.7 million bpd last month.

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