Petroleum & Petroleum Products Wholesalers Industry Trends

Transportation Outsourcing

Many distributors outsource gas hauling from the rack to customers, in part because of the liability associated with hauling gasoline. Many distributors desire to focus on the core business of buying and selling gas, as well as other related products.

Supplier, Distributor Consolidation

Major oil companies that supply distributors are consolidating to streamline their own distribution channels. The result is fewer distributors in each geographic territory. Contracts with suppliers, which typically last three to ten years, often require minimum purchase levels, causing some distributors to merge to secure higher volume.

Direct Distribution from Rack to Customer

Traditionally, distributors maintained petroleum inventory in bulk plants at their facilities. Onsite storage isn't as common, as distributors typically pick up gas from the rack (terminal) and haul it directly to the customer.

Wholesalers Participating Less in Convenience Store Operations

Fewer distributors own and operate convenience stores. Many distributors enter lease arrangements wherein they pay store operators a percentage of profits in exchange for handling sales at the pump.

Product Line, Brand Diversification

Distributors today often operate in various segments due to unpredictable prices and markets. Operators can reduce overall risk by distributing fuel, heating oil, lubricants, and having retail operations. Distributors also are expanding with different brand names.