Amortization – When an oil company offers up front cash to induce an independent dealer to brand with that oil company. Normally, as long as the dealer continues to purchase product from that company, the money does not have to be paid back. It is amortized over the term of the contract, which is typically a ten-year agreement.
AUTO – Automotive United Trades Publication
Backroom – Term used for the service bays where cars are repaired.
Branded Fuel – Retail fuel sold under a major brand name (i.e. BP, Chevron, Shell)
C-store – Convenience Store – According to the National Association of Convenience Stores (NACS), the definition of a convenience store is as follows: 1)While building size may vary significantly, typically the size will be less than 5,000 ft; 2)Have off-street parking and/or convenient pedestrian access; 3)Extended hours of operation with many open 24 hours, seven days a week; 4)Stock at least 500 stock keeping units (SKU s); and 5)Product mix includes grocery type items, and also includes items from the following groups: beverages, snacks (including confectionery) and tobacco.
Canopy – The structure covering the pump islands
Company-Controlled – see Lessee/Lease Dealer
Company-Operated – see Salary Operation
Contractor-Operated – see Lessee/Lease Dealer
CRIND – Card Readers in Dispenser. Originally a Gilbaco (manufacturer) term, now used generically.
DTW – Dealer Tank Wagon-Wholesale price of gasoline delivered to a retail outlet (transportation costs are included)
Direct Operating Retail – See Salary Operation
Direct Serve Dealer – see Lessee/Lease Dealer
Distributor – see Jobber/Wholesaler
Downstream Operations – Operations concerned with oil refining, transportation and gasoline marketing.
EPOS – Electronic Point Of Sale
Hypermart – A large retail or wholesale outlet selling durable goods (e.g. appliances, hardware and electronics), soft goods (i.e. clothing) and groceries. Retail examples include Fred Meyer and Wal-Mart Supercenters, while Costco is an example of a wholesale hypermart.
Independent Marketer – A petroleum retailer not affiliated with a major brand.
Independent Refiner – A petroleum refining company that is not a major brand.
Islands – pump islands typically have one or two MPD s.
Jobber/Wholesaler – A local company that owns or supplies properties with petroleum products obtained from local supply points (wholesaler); or by a third party, non oil company(i.e. convenience store chain such as Southland or Quik Trip) that sells gasoline, does not produce product, and usually buys at the branded or unbranded rack or or is supplied indirectly. May or may not own and operate retail outlets. Also known as a distributor or marketer.
Lessee/Lease Dealer – The dealer owns the business. A major or regional oil company or a distributor owns the land and building (i.e. gas station) and leases it to a dealer. The dealer operates the location and pays rent to the owner (as opposed to an open dealer that owns the property). This arrangement gives the oil company or distributor a guaranteed supply outlet for their petroleum products, pursuant to a supply contract. A typical lessee dealer operates 1-2 stores and does not wholesale gasoline. Also known as company controlled, contractor-operated, and direct serve dealer.
Marketer – Any company or person that retails (sells) motor fuels. May or may not sell branded gasoline.
Majors – Large multinational oil companies involved in all aspects of oil production, including both upstream and downstream activities.
MPDs Multiple Product Dispenser – many people believe these to be pumps. Most MPD s have six hoses and dispense all three grades of fuel.
OPEC – Organization of Petroleum Exporting Countries, oil producing and exporting countries that have organized for the purpose of negotiating with oil companies on matters of oil production, prices, and future concession rights. Current members are Algeria, Gabon, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, United Arab Emirates, and Venezuela.
Open Dealer – An individual (who may own several properties that retail gasoline products) owns and operates the building/facility/property (as opposed to a lessee dealer who does not own the property). The typical open dealer operates between 1 and 10 locations. A major or regional oil company, or a large local wholesaler supplies the facility directly. Open dealers can evolve into a distributor if they achieve a large enough volume.
POS system – Point of sale computer systems, which typically include bar code scanners, automated price look-up, and inventory tracking components
Phase I Environmental Review – Typically involves the review of previous uses of the subject property and of other properties in the immediate vicinity, a site inspection and report on findings by a qualified engineering/environmental firm. This report includes recommendations for further testing, if deemed necessary.
Phase II Environmental Review – Required if the Phase I review uncovers potential environmental problems. Among others, procedures typically included at this stage are subsurface soil and water sample tests.
PMPA – Petroleum Marketing Practices Act – Federal law offers certain protections, somewhat similar to franchise protection laws. Keep in mind that some oil companies are technically franchisers, for example, Arco AM/PM, Texaco Star mart and Jackpot Convenience Stores. Franchisers must comply with state and federal franchise laws as well.
Pooled Margin – Weighted average cents per gallon from all fuel grades, usually with the exception of diesel.
Rack Price – Price at which the majors and independent refineries sell branded or unbranded gasoline to jobber/wholesalers. It is related to the commodity spot price, but adjusted for transportation, overhead, and profit.
Retail Price – Petroleum price set by a marketer selling to the general public.
Salary Operation – A major or regional oil company owns the building/facility and business. The company pays a salary to the managers/proprietors and usually produces and supplies petroleum products to the location. Also known as company-operated and direct operating retail.
Service Bays – Where auto repair is done at a service station.
Shrink – Inventory/merchandise loss resulting from theft, spoilage, short deliveries, etc.
Spot Price – Petroleum price on the commodity market. Rack price is based on the spot price.
Starting Gate – A modern design of positioning pump islands so that cars are facing the c-store while refueling.
Stock Keeping Unit (SKU) – A number given to each item (by category and brand) stocked in a retail outlet for inventory and tracking purposes.
Store Margin – Profit margin in convenience stores, typically ranging from 30% – 35%.
Supply Contract -The agreement a dealer makes with a supplier to secure fuel.
TBA – Tires, batteries and accessories.
Terminal – A physical storage facility for petroleum products, typically supplied through a pipeline from a refinery, where jobbers/wholesalers purchase and obtain gasoline at the rack price.
Throughput – Refers to the sale of gasoline or other petroleum products, and is usually measure in gallons.
Traditional Operator – A convenience store operator whose roots are in convenience retailing rather than petroleum products. Gasoline operations were either de-emphasized or non-existent when the company was founded.
Unbranded Fuel – Retail fuel not sold under a major brand name. Typically sold by an independent marketer under the marketers private label or with no name attached.
Underlying Ground Lease – While the 3 year oil company is typically treated as a long term lease, because of the provisions in the PMPA, if the oil company does not own the land, a buyer must look to who owns the land and what the terms of the underlying ground lease are. The oil company may have only 5 years left on their land and therefore, have no obligation to the dealer beyond that 5 years.
Upstream Operations – Operations concerned with oil exploration and production
UST – Underground Storage Tanks. Term is frequently used in environmental protection.
Wholesale Sales – Sales of refined products to purchasers who are other than ultimate consumers, i.e. sales for resale. The Energy Information Administration blends rack, bulk, and DTW price to create wholesale price.