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Small Fuel Retailers Call for Even Playing Field

SHERMAN, Texas — Douglass Distributing Co. CEO Bill Douglass has founded the Small Retailers Coalition, whose goal is to “even the playing field” regarding renewable identification numbers (RINs).

Douglass, whose company owns 30 Lone Star Food Store locations (22 of which its operates) told CSNews Online that alternative fuel blenders, including several large convenience store chains, receive RINs in essence as a reward for blending renewable fuels, such as ethanol and diesel, as required under the Renewable Fuel Standard (RFS). The RFS seeks to address global warming, reduce dependence on foreign oil and bolster the rural economy by requiring a steady increase in the overall amount of ethanol and other renewable fuels blended into gasoline over time.

The RINs generated from fuel blending can be sold on the open market and currently generate a return of 10 cents to 15 cents per gallon, according to Douglass. The price of RINs are determined based upon supply and demand, similar to any other commodity.

Some of this return is applied at the pump, providing fuel blenders with an unfair advantage that is extremely difficult to compete with, stated Douglass.

“The advantage used to be one to 3 cents per gallon, which is something we didn’t complain about,” he said. “Ten to 15 cents is a huge number, though. [One convenience store retailer] sold more than $100 million in RINs last year. I don’t have any problem with them having RINs for sale. The problem is I compete with this [retailer].”

Douglass provided an example that a competitor in his home area of Sherman is selling gasoline at $1.79 per gallon. Meanwhile, Lone Star has to be pay major oil companies $1.80 per gallon just to purchase gasoline, making it impossible to in turn sell it to consumers for $1.79 — unless it takes a loss.

“[This retailer] has an advantage on us because it sells RINs,” Douglass said. “That puts us at a clear disadvantage because we are marketing in the same market. A government-administered program shouldn’t tilt the field. Not everyone gets this benefit. It should be level.”

The Small Retailers Coalition, which saw 50 members join in just two weeks, recently drafted a letter to U.S. Environmental Protection Agency Administrator Janet McCabe asking her to move the RIN so-called point of obligation to the "rack," a term used to describe the terminals that hold bulk fuels before they move to retail outlets.

“Right now, the EPA’s transfer point of the RIN is at the refinery,” said Douglass. “If they would transfer it to the rack — the point-of-sale — everyone is on the same page.”

Douglass revealed to CSNews Online that McCabe has responded to the group, in part noting that any unfair advantage was not the intent of Congress and that she understands the predicament currently faced by members of the Small Retailers Coalition. However, she did not discuss if any action would be taken and what that might be. 

Conversations between the Small Retailers Coalition and the EPA are ongoing, Douglass relayed.

The former president of NACS, the Association for Convenience & Fuel Retailing, and 2008 Convenience Store News Hall of Fame retailer inductee concluded he will not be actively recruiting any members to join his group. He simply wants to make sure no advantage is provided to any party involved when it comes to fuel blending.

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