Petroleum Wholesale Distribution

The US petroleum wholesale distribution industry includes about 5,700 companies with annual revenue of about $750 billion. Revenue can vary significantly from year to year with the price of crude oil. Major companies include Global Partners, Mansfield Oil, SemGroup, and World Fuel Services. The industry is concentrated: the 50 largest companies generate more than 70 percent of revenue.

COMPETITIVE LANDSCAPE

Demand for petroleum comes mainly from auto and truck use and home heating. Profitability is determined by the efficiency of operations. 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. Large wholesale purchasers generally can negotiate bigger price discounts from suppliers and spread the cost of bulk holding facilities over a larger number of gallons.

An economic recession or dramatic price fluctuations, such as those that occurred in the first half of 2008, reduce demand for gasoline. Concerns about US dependency on foreign fuel and environmental issues also impact demand. Any decline in demand can adversely affect petroleum distributors.

PRODUCTS, OPERATIONS & TECHNOLOGY

Products include gas (more than 50 percent of volume), diesel fuel, propane, heating oil, jet fuel, kerosene, and lubricants. 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 stores, trucking companies, ...