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Petroleum Wholesale Distribution Industry Profile Excerpt
| SIC Codes: 5171, 5172 NAICS Codes: 4247 Page Length: 10-12 Last Quarterly Update: 11/3/2008 View Sample Industry Profile |
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The wholesale distribution of petroleum products in the US includes about 5,300 companies with annual revenue of around $300 billion. Revenue can vary significantly from year to year because the price of crude oil can vary by 50 percent within a year. The industry is highly concentrated: the 50 largest companies hold more than 70 percent of the market. A typical wholesaler has annual revenue between $1 and $25 million.
COMPETITIVE LANDSCAPE
Demand for petroleum comes mainly from auto and truck use and home heating. Profitability is determined by the spread between purchase price and selling price and on the volume of product. Most companies are local and operate a single "bulk station" (tank farm), although the large companies may operate a dozen facilities and serve several states. There are economies of scale because large wholesale purchasers generally can negotiate bigger price discounts from suppliers, and because the fixed cost of bulk holding facilities can be spread over a larger number of gallons.
PRODUCTS, OPERATIONS & TECHNOLOGY
Products include gas, diesel fuel, propane, heating oil, jet fuel, kerosene, and lubricants. Gas accounts for 60 percent of volume, diesel fuel for 20 percent, propane for 7 percent, and heating oil for 5 percent. Diesel fuel and heating oil are collectively called "no. 2 distillates." Petroleum distributors, also called jobbers or marketers, buy petroleum products from oil refiners and resell them to residential, industrial, or commercial consumers like gas stations, convenience ...
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