Thought Fuel Information, the Newsletter of Bill Terpening, Medford Fuel, an Independant Franchisee of Pacific Pride, The Commercial Fueling System.  936 South Central Ave., Medford, Oregon 97501. Phone (541) 773-7311 in Medford, (541) 476-1961 in Grants Pass.
October/November 1999

In this Issue...
76 logo

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Get the Spirit!Tosco brands logo

Along with the arrival of the new millennium comes a fresh new look and spirit here in the Pacific Northwest and at Bill Terpening's Medford Fuel! By Spring of 2000, our BP branded stations will be dispensing "76" branded fuel!

As you may remember, just 10 years ago, Medford Fuel was changing from Mobil to the BP brand. At the time, BP, unknown to the Northwest, had negotiated a retail marketing territory trade with Mobil for the west coast. During the last 5 years, the BP company engaged in a multiyear license with Tosco Corporation to market under the BP name in 20 states. Today, Tosco has marketed the BP brand to become one of the strongest brands in the Pacific Northwest. Just 2 years ago, Tosco Corporation purchased the "76" trademark for retail fuel marketing worldwide and has rights to the Exxon brand in Arizona through 2001.You may have noticed that the BP-branded retail stations in California have all switched to the "76" brand very smoothly in the last year! As the license with BP is up for renewal, Tosco has chosen to stop "renting" and become the "76" brand owner on the West Coast... better to own, than to rent!

So who is this Tosco? (not "Cosco")!
Tosco Corporation is one of the largest independent oil refiners and marketers of petroleum products in the United States, with current annualized revenues of over $12 billion. Their refining system has a capacity to produce approximately 950,000 barrels per day of petroleum products, which they market through retail and wholesale systems across the United States. Their retail division is one of the nation's largest operators of company-controlled convenience stores. They sell annually over 4 billion gallons of retail transportation fuels, primarily the Company owned "76" brand, and over $2 billion in merchandise at their "Circle K" convenience stores. Tosco is based in Stamford, Connecticut, with Tosco Refining Company in Linden, New Jersey, and Tosco Marketing Company in Tempe, Arizona.

Spirit of 76

Is there a difference in brands?
76 is the brand name at more than 2,100 retail fuel sites in the United States. 76, with its distinctive orange ball, has been providing high performance petroleum products and excellent customer service for more than 100 years.

76 is synonymous with great NASCAR® racing. For over 40 years NASCAR® has chosen 76 as its Official Fuel. It is this long standing heritage of trust and quality that has made 76 a true leader on and off the track!

Nascar and 76

76 Gasoline contains PROpower, a unique additive designed to clean up deposits on intake valves and help prevent new build-up from occurring. The results are peak engine performance in the form of smoother accelerations, better pick-up, and less hesitation. PROpower is the same additive used in every NASCAR® Winston Cup Race and is available at Union 76 retail sites. PROpower lets you power your car as well as the pros power theirs! PROpower is in all grades of 76 brand fuel!

When can we fuel 76?
The fresh new painting and signage will begin this October and continue as weather permits throughout Oregon and Washington, to be finished by April 30, 2000. As Tosco is only switching its BP fuel distributors and stations, the existing Union lubricating oil distributors remain the same. Bill Terpening's Medford Fuel will continue to be your fuel and lubes supplier, meeting your petroleum needs with the fine products of 76, Mobil Oil, Pacific Pride, VP Racing, Monitor , and Deville . During the rebranding of our stations, be sure to sign up for your new 76 credit card at your local BP dealer, get your free 76 antenna ball, and Get the Spirit of...76!

76 and Circle K

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Fuel Pricing in Oregon
A Newsletter of the Jerry Brown Company,Junction City,Or.

1. It is true that the number of gas stations in Oregon has dwindled in the last few years. However, the newer upgraded facilities pump faster and more efficiently. Simply put, they can handle more traffic and business.

2. It seems that fewer stations means less competition. However, the competition remains fierce as operators try to sell the volume that they need in order to overcome lower margins.

3. Oregon has the 6th highest gas tax in the nation at 24 cents per gallon. Comparing street prices with other states is not always a good means of comparison. Note, effective November 1, 1999 Oregon State Gas tax increases from 24 cents to 26 cents. And again on Jan 1 2000 from 26 to 29 cents! Federal tax is 18.4 cents. Altogether, gas tax is $.474 cents per gallon!!

4. In Oregon, 89% of fuel comes from four refineries in the Anacortes area of Washington State. Therefore, anything affecting refinery activity will severely hamper supply here. A supply problem in California will affect us as well since refined fuel from Washington will be barged to California to help meet their needs.

5. The fuel travels south from the refineries through a 14 inch pipeline. This pipeline ends at the Eugene terminal on Prairie Road. A problem at any point along this pipeline immediately affects prices because oil companies anticipate supply being hampered.

6. Nationwide, US refineries are supplying 92% of all fuel. This means that there is little wiggle room if there is a break in the supply stream from refinery to consumer.

7. Fuel is a global commodity. The oil companies are global companies. Viewing fuel prices on a national or regional basis would be naive. The price of fuel is affected by influences faraway as well as close to home. It is a global market.

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The Changing Motor Fuels Business
Dave Reeves, General Manager Retail Marketing/Marketing Dept. Chevron Products Co.

Oil Price Outlook
I think most of you are aware of the precipitous drop in oil prices last year, and their subsequent recovery in the second quarter of this year. Although forecasting is a tricky business, we're expecting a slow but steady increase in the average price and demand over the next 20 years. The cost of raw materials to refiners will certainly go up and down, as the price of crude fluctuates, but long term crude oil prices should help keep motor fuel prices both competitive and attractive to motorists. You aren't especially interested in the absolute price of crude oil, you're just interested in price stability. Unfortunately, the price over the last year or so has been anything but stable.

Oil Demand Outlook
Most of the new demand driving growth is expected to come from Asia, even though Asia's recent economic slowdown was the primary reason for the oil surplus that drove down crude oil prices. Reports of 25 years ago predicted that we would be in a severe supply crunch by the end of the century. A prediction that obviously didn't pan out. Between new discoveries and advancements in production tech, we are confident that we will meet the world's supply needs for decades to come.

Oil Imports Outlook
We bring in over half our crude oil supply today, and even more tomorrow. By 2010, we'll be importing about two-thirds of our supply. The good news is that the imports will come from a wide variety of countries, including our neighbors, we get over half our total imports from Canada, Mexico and Venezuela. So while it is true that the U.S. refining industry will be more import dependent, America will be buying its oil from a lot of different and willing sellers who need the oil income as badly as we need the oil supplies. Put all these facts together and what you get is diversified sources that help off-set the risk of short supplies. That helps to ensure competitive prices at the same time, not total energy security, but not bad either!

Refining Review
Everybody knows the number of US Refineries is lower today because competition and government requirements has driven out the poor performers. The remaining refineries have invested in new capacity, plus improved their ability to make more gasoline, and running at record efficiency levels. The API reported August last year that the average US refinery utilization rate was 99.2%. This is extraordinary performance but the efficiency boom couldn't last forever. Today, to put it simply, things are tight in the US refining sector. In Oil & Gas Journal said that US refined product demand is outrunning capacity.

Putting a Premium on Reliability
Because refining capacity is tight, it puts a premium on running refineries reliably. West Coast gasoline inventories for most of 1998 stayed above 28 million barrels. However, earlier this year, Tosco and Chevron both had refinery problems, which resulted in a run on inventories that quickly sent prices soaring. Inventories are so low in the West Coast right now, that Chevron recently asked for an exemption to import and sell conventional gasoline in California as opposed to the state required Reformulated gasoline. California demanded a 15 cent a gallon penalty if normal conventional gas was imported. The low inventories and import restrictions have caused spot prices for gasoline to rise dramatically, a fact I'm sure you are aware of. In spite of tight supplies, we appear to have avoided industry-wide run-outs this summer.

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Oxygenated Fuel Begins November 1, 1999

Jackson County and Grants Pass are again under the clean air act to require oxygenated gasoline with ethanol. If you would like to fill up your storage tanks with clear gasoline please call. Clear gas works best in older car engines, small engines such as generators, chainsaws, etc. Now is the time to fill up before the oxygenated fuel starts flowing about October 15 (to meet the November 1 deadline) as we need to move this clear fuel out of our tanks!! The oxy Zone is November 1,1999 through February 28, 2000.

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Check out our perfect NEW Deville Atrium 2000 on Sale!! May be just the heat you're looking for, for quick heat... low price!

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Y2K OK UPDATE!

Tom Hagerty, an economic professor at Virginia Polytechnic who studied the question of Y2K in the petroleum industry states that most US petroleum firms and foreign suppliers are ahead of schedule of Y2K. The size, diversity and scope of US petro distribution systems reduce the threat of problems, and no need to stockpile fuel for year 2000. Additionally, the Eugene pipeline which supplies 99% of our fuel, assures us that their preparation is complete.

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