February 06, 2015

Dear NJGCA Member:

Thank you for reading this week's NJGCA Road Warrior!

Here is what you will find in this edition:

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EXECUTIVE DIRECTOR'S MESSAGE: GREETINGS & SAL-UTATIONS! 

GREETINGS FROM WASHINGTON DC
THE MARKETPLACE, VOLATILE PRICES, AND THE GAS TAX
CASHING CHECKS AT YOUR LOCATION
CLOSING REWARDS PROGRAM LOOPHOLES
OUR FRIENDS AT FMANJ HELD DOWN THE FORT

Hello Everyone! You are getting this Road Warrior a little bit later than usual because, as you may recall, myself, Jacy and Eric have just spent the past couple days in Washington DC at the SSDA Federal Lobby Day on Capitol Hill. You also may remember that I sent out a general invitation to all members who may have been interested in joining us to see what goes on in our nation’s capitol. I will have more on that story and our experiences in Washington DC next week.
 
This week, I'll start with the marketplace. I am sure you all have noticed that your deliveries got more expensive and then two days later they were less expensive. The price of product was up about 20 cents a gallon earlier this week, and though I expected prices to begin rising in March, I certainly didn't expect them to rise that much, this soon. But then prices dropped again yesterday almost 12 cents. Crude oil had also climbed back over $50 a barrel, but is back down to $47. This is a little bit outside of what I predicted, and I need to touch on what is causing this volatility.
 
With crude oil prices steadily declining over the past few months, and eventually getting down to $40 a barrel, producers were starting to feel the squeeze. I have always said that the profitability point for producing a barrel of crude oil domestically is in the $60-$65 range.  We've been below that $60 range for a few months, and there didn't appear to be any increase in sight, so we have started to see domestic producers opting to close their wells and shut down production until prices rise again.  Consumption has not increased, and continues to remain flat, so, according to the law of supply and demand, the only way to cause prices to increase is to reduce supply, which will be the result of wells closing.  Right now the financial markets are trying to correctly speculate on the near future supply and demand ratio. Their thirst for profits gives upward pressure on prices, but realization that a higher supply and lower demand ratio scares them in to lowering the futures price. We may see a lot of this but honestly it is getting beyond my crystal ball.

How does all of this affect the gas tax issue?  Many have wondered why I have appeared to be so willing to give legislators and the Governor a "pass" if they choose to increase the gas tax. Well, nobody knows me better than me, and I too still can't believe that I am willing to go easy on Trenton for considering an increase in ANY tax.  But here's what I'm thinking:
 
1. I firmly believe that an increase in the gas tax or another revenue increasing mechanism (such as including sales tax on your fuel sales) is INEVITABLE.
 
2. Since applying sales tax to gasoline will create a huge burden on YOU, I much prefer a simple increase in the gas tax, whenever Trenton decides to do something. The message that I have been repeating is, "what is most important is not that we do some-thing but that we do the right thing."
 
Here's the biggest reason that I'm willing to be somewhat forgiving if Trenton increases the gas tax NOW. Presently, a truckload of gasoline costs about $17,000 when it rolls in your driveway. One week ago, that same truck cost you $15,000. BUT last June, that same truckload cost $30,000 when it arrived at your fill ports. Although experts may not agree on specifics, it can be assumed that a truckload of inventory could get back to levels as high as $30,000 again. The longer Trenton waits to solve what has turned into a desperate situation, the more of an increase we can expect in the gas tax, and I DO NOT want taxes to add another $2,000 or MORE to your gas loads, when you are paying $30,000 for the load. I'd rather see that tax applied NOW, while the load is still around $15,000. For those of you who struggle with the capital costs to fill your USTs, you will understand what I'm talking about.
 
Eric and I continue to make the rounds, visiting legislators, to help them see exactly how devastating sales tax would be to you if it were applied to gasoline -- I am beginning to detect that since the motoring public overwhelmingly disapproves of any hike in the gas tax, that legislators who are up for election this coming November do not have the stomach to increase the tax now. If this is true, then the situation that I just described above (where legislators continue to delay any decision) will become even MORE desperate, and when they do take action, it will occur when retailers are facing a much higher cost for a truckload of gas. This desperation in Trenton will create a perfect storm of burden, on you. So, although I prefer never to see an increase in the gas tax, I much prefer to see it happen sooner, rather than later, while you are more capable and better prepared to handle the added burden and additional cost of inventory.
 
Moving on, I know that many of you have asked about cashing checks at your locations, and we have kept our eye on some legislation that would permit you to do so. We got a nice surprise this week when we learned that the Assembly Financial Institutions and Insurance Committee would hear this proposal in Trenton on Thursday. Since we were in Washington DC yesterday, I submitted written testimony in my absence.  Click here to read the testimony I provided. For those of you that have expressed interest in this opportunity, being permitted to cash checks at your locations will be another profit center, and, similar to lottery, will be another reason for customers to drive into your locations to purchase gas or other higher profit items like coffee, chips, and sandwiches. Since I'm writing this while still in Washington DC I do not know what action if any was taken on this bill as the automatic alerts that I receive on my smart phone are void of any info. I’ll investigate when I return and report to you next week.
 
Finally, other action that occurred in Trenton yesterday was a vote on the rewards bill that we have been discussing recently, the bill that would close the loophole which allows oil companies to hold retailers responsible for certain costs associated with rewards programs at their locations.
 
Fortunately, I did receive the alert on the action taken on this bill.  We sent out an alert to you on Monday, asking you to contact your Senator through our user-friendly VoterVoice system.  With just two or three clicks you could have communicated your message to your Representative, and strengthened our case.  We will know who took action on this, as we requested.  The result of the vote in the Senate was 36-0, and with the bill already out of Committee in the Assembly, we are hoping that it will be voted on there soon too.
 
I have to give accolades to our friends at Fuel Merchants of NJ.  Since we had scheduled business in Washington, Eric and I could not be in Trenton to lobby for a “yes” vote from Senators yesterday. We were relatively confident that the bill would pass in the Senate prior to our departure. However as we arrived on Capitol Hill we learned that our opponents in Trenton were out in force and lobbying hard asking Senators to vote “No”.  From The Capitol I began calling Senators on their cell phones explaining that I was away in Washington DC and asked them to continue supporting our effort. Our friends from FMANJ were in the State House to thwart their attempts and as I just reported the vote was unanimous. There were 36 out 40 Senators that voted for the bill. Only the 4 Senators who were absent were unable to cast a “yes” vote. Several Senators sent me text messages to ease my worries when the vote was concluded. Look for another Action Alert that will easily enable you to send a “Thank You” message to your senator for his or her vote in our favor.
 
Finally, again, the NJ Generator Grant Program is now accepting applications for the second round of their program. If your station has 18,000+ gallons of gasoline storage capacity AND sells diesel, you are eligible for up to $15,000 to install a quick connect, power transfer switch. All information about the program, including the application, can be found HERE.  Please contact Jacy at 973-376-0066 or jacy@njgca.org with any questions or concerns.

Ok that’s it for now.  I want to get to bed and be ready for the drive home to NJ. I have lots to discuss next week regarding the mine fields we will now have to begin avoiding down here in Washington. I came here for a reason and I am now very glad that I did.  Trenton is not our only worry!

That's all for now!  Thanks for reading -- See you next week!

Regards,
Sal Risalvato
Executive Director

TRAINING CLASSES!!
-ALL CLASSES WILL BE HELD AT NJGCA HEADQUARTERS-
66 Morris Avenue - Springfield, NJ 07081 (Union County)

FUTURE CLASSES WILL BE ADDED UPON REQUEST AND ACCORDING TO DEMAND. CONTACT DEBBIE at 973-376-0066 or DEBBIE@NJGCA.ORG TO LET HER KNOW YOU ARE INTERESTED IN TAKING A SPECIFIC CLASS.  THIS WILL ALLOW US TO GAUGE YOUR NEEDS AND KEEP TRACK OF THOSE WISHING TO PARTICIPATE!!

CLASSIFIEDS! -- FOR SALE & HELP WANTED ADS 

Do you have a business for sale?  Are you looking for a new location or opportunity?

• NJGCA regularly assists members looking to sell their business by getting the word out. Since everyone reading this message is involved in the small business gasoline retail, convenience store, and automotive repair trades, it is an ideal medium to connect with interested buyers and prospects!

NJGCA also helps members sell equipment by placing ads in the Road Warrior!

• If you'd like to list equipment for sale, or have an open position you'd like to make other industry professionals aware of, please contact NJGCA at 973-376-0066 and let us help you get the word out! 

NEWS AROUND THE STATE: THE NEWS YOU SHOULD KNOW

02/03/2015:
Obama Puts Federal Tobacco Tax Hike On the Table Again
The federal tobacco tax is once again under the executive microscope. In his proposed $4-trillion budget for fiscal year 2016, President Barack Obama has called for the federal levy to nearly double to help fund health insurance for low-income children. Under his plan, the federal cigarette tax would rise from just under $1.01 per pack to about $1.95 per pack. Taxes on other tobacco products also would increase. The revenue would provide financing to pay for the Children's Health Insurance Program through 2019. The federal-state program serves about 8 million children, and funding technically expires Sept. 30. The tobacco tax hike would take effect in 2016. A similar measure was included in Obama's proposed budget for fiscal year 2014. That proposal called for a 94-cent levy increase on cigarettes, with a comparable raise in the levy on all tobacco products, to help fund pre-kindergarten programs for 4-year-old children. The move ultimately fell flat.
 
02/03/2015:
Gas Prices Begin to Tick Upward
After dropping to the lowest levels since 2009, average gas prices in the US have increased 7 days in a row. Prices had dropped a record 123 consecutive days to an average of $2.03 per gallon before rising for the first time since Sept. 25, 2014.  It is typical to see gas prices increase this time of year due to refinery issues, yet hopefully the consumer impact will be less problematic given how low prices are today.  The new national average is $2.06 per gallon as of Feb. 2, approximately $1.22 less than one year ago. US drivers are spending around $365 million less per day on gasoline compared to this time last year. On Jan. 26, 2015 the national average gas price reached a 2015 low of $2.03 per gallon, which was the lowest average since March 27, 2009. Since the national average reached $3.70 per gallon on April 28, 2014, gas prices have dropped about $1.64 per gallon. For the month of January, the average price of gas was $2.11 per gallon, marking the cheapest monthly average since 2009. This was a steep drop from the previous month, as the average gas price in December was $2.51 per gallon. A combination of refinery issues and more stable crude oil costs are contributing to the increase in prices. Refinery maintenance season is beginning and there have been several refinery upsets, which can limit production.
 
02/02/2015:
California Making Lots of Headlines Around Tobacco
The State of California has placed an emphasis on tobacco legislation in the past week, focusing on the legal smoking age, as well as electronic cigarettes. Legislation was introduced to raise the legal smoking age from 18 to 21.  It is supported by the American Cancer Society, the American Lung Association and the California Medical Association, but will likely face strong opposition from the tobacco industry. Regarding e-cigarettes, in separate legislation filed in the past week, California proposed the products be banned in public places. The proposed legislation perhaps comes on the heels of a new report issued by the California Department of Health stating that e-cigs emit cancer-causing chemicals and can get users hooked on nicotine, although the agency acknowledged more research must be conducted.

MEMBER BENEFIT PARTNER MESSAGE BOARD:

TMP Energy Solutions
Another Way to Save on Your Energy Bills

We have had a number of NJGCA members successfully reduce their rate per kWh signing up through our energy saving program. We know it's difficult to collect 12 months worth of previous electric bills to get an "accurate" analysis when comparing a variable rate to a fixed rate, but we now have another option available. 

This new solution is a power purchase option; the other program is still in full force and has saved members thousands of dollars. If you sign up for the power purchase option, you will be grouped with other NJGCA members until the minimum KW demand is acquired. By pooling the member's usage together, you will be able to take advantage, as large energy users do, and receive a lower kWh rate.

Each member will receive their own contract. Each member is responsible to sign and return the agreement the day it is received in order to secure the price for their group.

Please do your due diligence, so when you receive the proposal and the agreement you will be able to make an intelligent decision.

If by chance, you still want us to assess you bills, to give you a price to compare, we will require12 months of your most recent utility bills.

There are no bills required, but we would still like to have one bill per meter on file to check account #'s, meter #'s  service addresses and other pertinent information incase there is a problem.

The term of the agreement is for 12 months. During this term period, you will have price protection against any energy price increases along with a low fixed kWh rate.

If you are interested in becoming part of this power purchase option, please contact Greg Cannon at the NJGCA.

Remember when you sign up your energy through the NJGCA Energy Program, TMP makes a considerable donation to the NJGCA Scholarship Fund through their proceeds. This has no affect on your rate, and costs you nothing out of pocket.

We hope to help hundreds of NJGCA members reduce their utility costs by participating in this and our other cost reduction programs.  Our purpose, in the endeavor, is to help NJGCA members lower their energy costs while supporting the NJGCA Scholarship Fund. 

Contact GREG CANNON at 973-376-0066 or email Greg at greg@njgca.org. Mention that you are interested in saving money on your energy bills. NJGCA & TMP Energy Solutions will handle all the rest.