Diverse Future for Gulf Oil

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Diverse Future for Gulf Oil

By Mehgan Belanger

BOSTON, Mass. -- Under a brisk blue sky yesterday, group CEO of Cumberland Farms and Gulf Oil Ltd., Joe Petrowski, cut the ribbon at Gulf Oil’s first E85 fuel pump in the state, here at Logan Airport. The new pump symbolized more than just a new fuel option for consumers -- it was a celebration of a partnership of private and public sectors, and represents one element in a larger diversification strategy for Gulf Oil.

"It is challenging to bring E85 to market, it took vision, commitment, to bring E85 to Logan," said Laura Scott, vice president of Gulf Oil, emphasizing that while it isn’t perfect, E85 is a good option for alternative fuels today. "Corn-based ethanol is not the end goal. Cellulosic ethanol is the goal. E85 is something we can do today. It isn’t perfect, but let’s not make ‘perfect’ the enemy of ‘good.’"

Gulf Oil’s partners in the project were station operator and Gulf distributor Energy North, and the U.S. Department of Energy with the leadership of Massachusetts Representative Bill Delahunt.

Petrowski explained in an exclusive interview with CSNews Online following the ribbon-cutting event, that Gulf believes partnering with government agencies will overcome the challenges of offering E85 and can help bring E85 to market elsewhere.

"The problem for all of us is ethanol today is cheaper than gas, and compressed natural gas (CNG) is cheaper than oil, but a CNG station costs $100,000 to build," said Petrowski. "I couldn’t go to 500 Cumberland Farms and say ‘I woke up this morning and have a T. Boone Pickens natural gas vision, and I want to spend $50 million of capital on CNG,’ never mind putting the cost of closing our stations down through it, on the bet customers] will come."

In addition, consumers will not buy an alternative fuel vehicle such as CNG or flex-fuel unless that fuel is available, he continued, calling it the "chicken or the egg" predicament.

"This is where a partnership can come in, in one of two ways," said Petrowski, explaining the governmental agency can partially subsidize the capital invested, or can mandate that fleets such as state vehicles fuel up at the station.

"We’ll do it with our own money if we are guaranteed the demand. But I think that’s where you need the public and private partnership to break the logjam of who goes first."

Despite the sometimes challenging environment to bring alternative fuels to consumers, Gulf Oil is making such fuels the center of its strategy going forward. Petrowski called it being "fuel agnostic," and emphasized the company is not an integrated oil company with exploration and production businesses.

"Our personal belief is that petroleum isn’t going away, but the growth of transportation fuels in the U.S. is going to start involving other fuels. Ethanol is one of them. Whether you like it or not, it’s solidly part of our future. Biodiesel is potentially part of that future, as it CNG," Petrowski said. "As a strategic standpoint, we’re not going to back any one fuel. We don’t even define ourselves as a fuel company -- we define ourselves as a wholesale distributor."

He added: "I love option. Diversity works. It crowds out overdependence on one specific fuel."