The Society of Dependent Gasoline Marketers of America just doesn’t roll off the tongue that easily. Something is not right about it. It is pretty much impossible to pronounce the acronym, SDGMA. But other than sheer semantics, it’s clear why SDGMA isn’t our name. It is highly unlikely that any gasoline marketer can survive without the freedom to respond optimally to rapidly changing market conditions. Consumers benefit the most and the business of gasoline marketing is heartier when there is a Society of Independent Gasoline Marketers of America, or SIGMA.

Two trends over the past two decades threaten the independence of gasoline marketers. The first trend is the consolidation of suppliers. With fewer motor-fuel suppliers come fewer choices for marketers and less opportunity for innovation from suppliers. There are definitely fewer gasoline refining companies today than there were in the 1980s. However, an argument could be made that today’s gasoline suppliers are more efficient than ever and that as long as several alternative suppliers remain the conditions for competitive supply exist. So while the trend toward fewer gasoline suppliers is of some potential concern, the fact is that supplier concentration has not (at this time) eroded the independence of gasoline marketers.

The second trend that threatens the independence of gasoline marketers is the rise in government regulation of gasoline and, most specifically, clean-fuel mandates. Mandated clean fuels are certainly not all bad. As marketers, we benefit from selling a product that is 99-percent better for the air than the old, unregulated leaded gasoline. It is how clean fuels are mandated and what clean fuels are required where that impedes the independence of fuel marketers. Recognizing that we have come a long way and acknowledging that today’s motor fuels are the product of many years of environmental regulation, the question is: how much more are we willing to do to achieve the final 1 percent?

The answer is that, as much as we appreciate the quality regulation and fuel mandates that our governments have provided for us, the cost/benefit of additional fuel mandates is not compelling. We have enough fuels, thank you. And we have enough region-specific and state-specific fuels. The patchwork quilt of existing geographically permissible fuels does plenty to restrict the independence of motor-fuel marketers. Mandates limit choices. And when the choices are down to one, as in some isolated boutique- fuel markets, the freedom to find a better way is gone.

SIGMA supports a “ratchet approach to reducing the number of boutique motor fuels. This means that when a state or region finds a way to achieve clean-air objectives without a special fuel, then the number of total fuels will be reduced by one when that fuel is eliminated. Just as we do not need any more new fuel mandates, we also do not need the marketplace disruption of rapid fuel elimination mandates. Simply put: there is no need for government intervention in the fuel slate at this time.

The good news is that there are no pending fuel regulations that will require refinery investment on the order of magnitude of the 2006 ultra-low-sulfur diesel rollout. That means that refiners will be able to concentrate investment on making more fuel to meet demand in the years ahead. More fuel, and more fungible fuel, means more choices for marketers and relatively lower prices for consumers. This very good prospect can only happen if our legislators and governors can resist the temptation to “do something” for the gasoline market. Doing nothing is the perfect thing to do.

All those against the name SDGMA, say “I!”

Bill Shipley III
SIGMA President