Petroleum & Petroleum Products Wholesalers Industry Profile

Companies in this industry store, transport, and distribute wholesale petroleum and petroleum products; some wholesalers also operate bulk storage facilities. Major US companies include Global Partners, Mansfield Oil, Statoil Marketing & Trading, Sunoco (owned by Energy Transfer Partners), and World Fuel Services.

The US petroleum wholesale distribution industry includes about 5,400 companies with annual revenue of about $800 billion. Revenue can vary significantly from year to year with the price of crude oil. The industry is expected to grow at a low rate over the next two years. Key growth obstacles include flat gasoline consumption, volatile crude oil prices, and consolidation and increasing purchasing power of gasoline retailers.

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. The industry is concentrated: the 50 largest companies generate more than 70 percent of revenue.

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 ...