Some might say Loring Perez has had a hall-of-fame career. The Petroleum Convenience Alliance for Technology Standards certainly believes so, electing him to its Technology Hall of Fame in late April.
Using his financial skills, Perez, 62, has been running Chattahoochee Oil Co., based in nearby Auburn, Ala., since purchasing it with partner, Mashud Reza, in 2006.
The company is a supplier of gas to convenience stores in Alabama, Georgia and Tennessee, with about a dozen in the Columbus market. Its supply line includes 45 locations the company consigns, or leases, to dealers and another 150 other dealers. It also has commercial, industrial and farming customers.
It's a $200 million-a-year business, with Chattahoochee Oil -- which owns subsidiary Wilson Oil Co. as well -- distributing fuel to stations branded BP, Shell, Chevron and Marathon, as well as Big Cat, Quik Stop and Lobucks.
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Prior to owning Chattahoochee Oil, Perez had a two-decade run with West Point, Ga.-based Spectrum Stores, where he helped build the regional chain to more than 100 convenience stores before they were eventually sold.
For Perez, it's been a heck of a ride, with the businessman expecting to continue three or four more years before setting off into the sunset.
The Ledger-Enquirer talked with Perez -- who splits time between homes in Upatoi (Harris County) and Valley, Ala. -- about his job, his life, and general thoughts and experiences on the gas industry. This interview is edited a bit for length and clarity, with a longer version online at www.ledger-enquirer.com.
What's it like to run an oil company that is a gas jobber, or supplier?
It's extremely busy and complex. The biggest problem right now is the current administration is trying to kill us. We're in the South and there's an imbalance in costs of crude between the Gulf Coast and New York Harbor, all because Obama held up approving the Keystone pipeline forever and a day. The pipeline would bring Canadian crude to the Gulf Coast to the Gulf refineries.
What that would have done was stabilize the price nationwide between the Northeast and the Southeast. Right now if you own a lot of gas in the Southeast at the refinery, you would make more money by shipping it up the pipe, or trucking it, or barging it or whatever, into the Northeast and Midwest because there's a 25-cent-per gallon price advantage between the two prices.
What that causes is in the Southeast, everybody's short of product. All of the brands are on allocation. The price of unbranded fuel is above the price of branded fuel at the rack (gas terminals), and that's why you see these ridiculous prices that you have down here, and the differences between the branded and unbranded.
And, of course, the Southeast is dominated by four big players. That's Racetrac QuikTrip, Circle K and Pantry. They buy off the pipe, or they buy supply down the line, so they can get it cheaper. The rest of us, the other jobbers, are all rack driven. You have to buy it at the terminal at the price set at the terminal. What happens is we are all squeezed. Of course, the Obama administration doesn't give a damn because we're the red states ... It's a problem right now and it's tough to be a jobber in the Southeast.
Do you take some heat from people about the price of gas?
Oh yeah. Everybody thinks when the price is high, we make more money. But actually jobbers don't make more money when the price is high. We would rather see the price lower because we make the same amount of money per gallon, whether it's $1 or $4. We're contracted to our dealers at a price above the rack.
That's the way this business is done. If you're contracted to a branded location at a penny above the rack, your only profit is a penny and the freight, if you make a little money on the freight ... and then the discount or whatever deal you've got going with the brand. That's really where you get your money, and then you've got your costs. So the truth is this is a very low margin industry, the jobber business.
The refineries, the Chevrons and the BPs of the world, make the most money?
Yeah. The exploration and production people are the ones that make the most money. The people that make the most money in the gas business are the guys that get it out of the ground. Now they make varying amounts, depending upon how difficult it is to get it out of the ground ... When crude went up to $100, that's what caused all of these revolutionary changes in the drilling industry.
We are probably energy independent today, even though we can't drill on any public land, or we're restricted from drilling on almost 90 percent of the country because of the government. It's all political; it has nothing to do with reality. We have more oil than the Saudis have. we just can't get to it because of our politics.
Who else makes money in the gas business?
The people that make the second-most money in the oil business is the government. They tax it to death. The third-most profitable entity in the gas business is the banks, because of the credit cards. They are ripping off the American economy to the tune of 1 percent of the entire consumer goods in the country. They make more money than the convenience store industry. And then the fourth highest is the retailer. The fifth highest is the jobber. That's me.
Do you make more money with higher volume?
No, not really. Not if you're like us, where you're rack based. You're at the mercy of the refiner and the terminal and they take most of that profit. Of course, the refiners are ripping off the people because of ethanol.
In the Southeast, ethanol is a bad economic decision. It's also a bad environmental decision because by the time they get the ethanol down here -- because it's corn based -- you've destroyed the BTU advantage completely. Mileage goes down more than the carbon savings go up. So you really don't save anything with ethanol in the Southeast.
We should be making ethanol out of sugar here, but because the sugar lobby's so strong -- another political problem -- we can't import sugar. ... What we ought to be doing is letting all of these folks from Latin America, that are immigration issues for us, go back home and cut cane and sell us the sugar.
What is your heritage?
I was born in Miami. My father came here in 1923 through Ellis Island from Cuba. He went back to Cuba and found his second wife in 1940. So she immigrated here (to be with him) in 1940 before the second world war. They were in Miami when they gave birth to my brother and I.
You're full-blood Cuban?
I'm full blood, yeah. But I was born in the United States. So was my brother. We had been here since 1923, 40 years before Fidel Castro came along. So we were an older Cuban family.
What's your typical day like?
I'm generally in Columbus two days a week. I'm 62 years old, so I've got some doctors; I have diabetes. I try to make them all happen on Mondays and Fridays. I live in Upatoi, just across the Harris County line. I won't live in Columbus because of the tax freeze. I think that's so unfair. I won't live in a house next door to somebody that's paying a different tax on the same house. That's crazy. ... We have another house in Valley, Ala. My wife has a business in Cusseta, Ala.
But your specific tasks and duties?
I run around and see dealers some. My job is generally administrative and financial and doing deals and legal. I have a lot of legal work, which is my expertise. My partner does mostly the operations side. Where he does the real-estate dealer deals, I do the legal part of the real estate. But he's very well-schooled in the street smarts.
We're forever dealing with the dealers in terms of contract renewals. There are issues from day to day because we have a transportation department that's booking all the transports. We also have short trucks here, and we're in the lube business, so we have multiple customer interaction.
What's the most challenging aspect of your job?
Right now it's supply, getting enough product through our various sources to be able to supply all of our dealers timely. Supply is short in the Southeast. It's been that way since October, and it doesn't look like it will be getting any better until this administration is over with. It's just tough for jobbers in the Southeast right now, in that respect. That's really the most complex problem.
How do you go about dealing with that?
I keep my relationships going with every supplier I can, and try to access product wherever I can. Of course, we pull from multiple terminals. We pull from Macon, Columbus, Atlanta. We're getting product from multiple vendors and terminals, but it's still tough. We're pretty much shot everyday by noon or 2 o'clock; we've gotten everything that we can get for a day.
The transportation people start early. They actually book things the day before. ... We use Florida Rock as a common carrier (fuel trucks) because we're in multiple cities. So we have to plan and stratagize how we're going to get logistical things done and product to all of the locations, etc.
So it's not as easy as it used to be. It used to be you just tell Joe to go outside and crank up the truck and go to the terminal and go deliver the product. That's because you had extra equipment. But one of those trucks now costs a quarter of a million bucks. You don't do that anymore, no matter who you are.
Have you ridden with a driver before?
I have done that once, but it's a complete waste of my time. Those people know what they're doing. We are very mindful of safety and those issues with our short-truck drivers. We got rid of our big trucks and went exclusively to Florida Rock last year. So we don't have that headache anymore, the DOT headaches.
What's the most rewarding thing about your job?
The people. This is a very family business, once you get the dealers, and everybody's part of the family. Of course, I care about my people very much, just like every other small businessman. The myth that we don't care about our people is pure bull. We do care about our people very, very much. And when you have to make decisions about cutting staffing or something, it's not just numbers. It's somebody and their kids and their family. So you try not to have to do that.
I think the most rewarding thing is to see people develop, people who come in and they don't know much and they learn and they start to be good business people.