R Sheet On Fuel Delivery

Authors

C. Jarrett Dieterle
Resident Senior Fellow, Competition Policy
Nick Zaiac
Former Associate Fellow

Key Points

The automotive fuel market is decentralizing. Legacy gas station regulations make this transition more difficult for new entrants.

State environmental protection departments are good at regulating stationary environmental hazards, but struggle to regulate mobile hazards.

State departments of transportation have experience regulating decentralized delivery markets, including wholesale tanker-based fuel delivery. They are better positioned to regulate this market as it expands.

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BACKGROUND

The American automotive fuel market underpins one of the world’s largest road transportation systems. Born in the early years of the last century, automotive fuel retailing grew from a niche service for the rich to an everyday infrastructure component that facilitates about eighty percent of all travel in the country.

For decades, this market was mostly stagnant. Fuel retailers built underground storage tanks, filled them with gasoline and diesel, and went about filling the tanks of drive-up customers. Some attached them to convenience stores, others focused only on fuel sales for passenger cars, while still others focused on selling fuel to truckers and other freight transportation companies. What tied these enterprises together was their reliance on fixed fuel tanks, or “depots” as they are often called.

Like other transportation products, things changed with the rise of new technologies. Today, the fuel market has started to decentralize, making space for specialized firms to serve consumers who demand new styles of fueling service, including fuel delivery for both consumers and fleet vehicles. But changing physical infrastructure markets is never easy, and regulations designed for traditional gas stations stand to hinder innovation and render new fueling services unpredictable or impossible.

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