Petroleum Product Wholesalers

Industry Profile Report

Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters

Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

Call Preparation Call Prep Questions, Industry Terms, and Weblinks.

Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.

Industry Profile Excerpts

Industry Overview

The 1,800 petroleum product wholesalers in the US act as middlemen between refiners/storage terminals and retailers or end users. Major revenue categories include motor gasoline; distillate fuel oil; lubricating oil and greases; jet fuel, naphtha, or kerosene; and residual fuel oil. Wholesalers may have downstream operations and own groups of gas stations. Petroleum product wholesalers service a wide range of customer industries, including gas stations, convenience stores with gas stations, airports, farms, and government fleet operators.

Sensitivity To Economic Conditions

Demand for fuel is sensitive to economic conditions, and can drop during periods of uncertainty.

Reducing Dependency On Fossil Fuels

Consumer and governmental efforts to reduce US dependency on fossil fuels affect demand for petroleum products.

Industry size & Structure

The average petroleum product wholesaler operates out of a single location, employs 18 workers, and generates about $282 million annually.

    • The petroleum product wholesaling industry consists of about 1,800 firms that employ about 33,300 workers and generate $520 billion annually.
    • The industry is concentrated; the top 50 firms account for 87% of industry revenue.
    • Large companies, such as Mansfield Energy, Murphy Oil, and US Venture, may have additional midstream and downstream operations, in addition to wholesale operations.
    • Petroleum products wholesalers ("jobbers") supply the majority of fuel sold to gasoline stations. Jobbers also own or act as franchisors for the majority of gas retail outlets in the US.
    • Most firms operate within a limited geographical market, and may be constrained by proximity to supply (terminals).
                                Industry Forecast
                                Petroleum Product Wholesalers Industry Growth
                                Source: Vertical IQ and Inforum

                                Recent Developments

                                Mar 15, 2023 - Renewable Diesel Production Surpasses Biodiesel
                                • US renewable diesel production surpassed biodiesel production in November 2022 and is forecast to continue to grow, according to the US Energy Information Administration (EIA). Renewable diesel is chemically equivalent to petroleum diesel but is produced using fats, oils, or greases rather than petroleum. In the EIA’s January 2023 Petroleum Supply Monthly, which included US biofuel production data through November 2022, renewable diesel production surpassed biodiesel production for the first time since the agency began reporting renewable diesel production data in 2011. Renewable diesel production in November 2022 averaged 113,000 barrels per day (b/d), a 38,000 b/d (51%) increase from November 2021 and a 74,000 b/d (191%) increase from November 2020. The EIA forecasts renewable diesel production to continue to grow and remain higher than biodiesel production, which is expected to decrease.
                                • Tax rates for retail gasoline and diesel fuel increased in 13 US states this year, according to the EIA. As of January 2023, state taxes and fees on gasoline and diesel fuel averaged $0.3163 per gallon (gal) of gasoline and $0.3388/gal of diesel fuel, according to the agency's. Gas and diesel taxes have increased in 13 states since July 2022. Notably, Illinois surpassed California as the state with the highest taxes ($0.674/gal), while Connecticut temporarily surpassed Alaska as the state with the lowest gasoline taxes ($0.05/gal), although that low tax rate will gradually increase through May 2023. Other states with rising taxes on retail fuel sales include New York, Utah, Nebraska, Pennsylvania, Georgia, North Carolina, Florida, West Virginia, Massachusetts and the District of Columbia. Federal excise tax rates remain at $0.183/gal for gasoline and $0.243/gal for diesel fuel.
                                • Global oil demand is expected to increase by 2 million barrels per day (bpd) this year, fueled by resurgent oil demand from China’s reopening, the International Energy Agency (IEA) reported in mid-February. The agency raised its 2023 demand growth estimate by 100,000 bpd from last month’s forecast. This year, world oil demand is set to average a record 101.9 million bpd, up by 2 million bpd from 2022, the IEA said in its Oil Market Report. The increase is 100,000 bpd higher than the 1.9 million bpd rise the agency expected at the time of the publishing of its January report. China’s resurgent oil demand – with growth seen at 900,000 bpd this year – and the rest of the Asia-Pacific region will dominate global growth, according to the IEA. Demand for jet fuel is expected to rebound to 90% of 2019 levels, the IEA said, as demand for air travel rises.
                                • US gasoline and diesel retail prices are expected to decline in 2023 and 2024, according to a recent Short-Term Energy Outlook from the US Energy Information Administration (EIA). After reaching multi-year highs in the first half of 2022, the EIA forecasts that retail prices for regular-grade gasoline will average $3.32 per gallon in 2023 and continue to decrease to average $3.09 per gallon in 2024, down from $3.96/gallon in 2022. The agency expects on-highway diesel prices to decrease to average $4.23 per gallon in 2023 before decreasing further to $3.70/gallon next year. The price forecasts are based on the expectation of lower demand growth for diesel and gasoline with continued high production of both products. In 2023, the agency expects that limited growth in global demand for gasoline combined with increased gasoline production will cause US gasoline inventories to rise.
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