The New Administration's Effect on Service Stations and the Greater Petroleum Industry

February 14, 2018

 

 

In February 2017, Convenience Store News published an article entitled “The Potential Trump Effect” which was a speculative piece on what would happen in the service station industry as a result of President Trump’s proposed policy changes and other public reactions to his presidency.

One year later, we can see some of these speculations coming to fruition.  President Trump has remained true to his promise to change the tax code and to eliminate government red tape.  His goal to simplify the tax code and reduce federal tax rates was met late last year with the introduction of a flat corporate tax rate of 21%.  

 

The aftershocks of the tax change have been felt by men and women working for some of the largest employers in the country in the form of pay raises, bonuses and increased overall benefits.  Locally, we have seen that happen in our own Indiana backyards with Family Express increasing its starting wage.  While the minimum wage in Indiana is $7.25, employees of the local convenience store chain can expect to start at $11 an hour.  This wage increase complements the general store manager’s salary, now set at $50,000 annually.  

 

Because this corporate tax rate is not temporary, these changes for employees include permanent pay raises rather than one-time bonuses.

 

A year under President Trump has also seen a change in attitude toward the energy industry— specifically toward fossil fuels.  This change in perspective was seen almost immediately when the Trump administration decided to remove the federal regulatory obstacles that had stalled the Dakota Access Pipeline and the Keystone XL Pipeline from being completed.  

 

By June of last year, the Dakota Access Pipeline was up and running.  Because of the new pipeline, the number of drilling rigs in service has already increased—as has the overall level of oil production in the entire state of North Dakota.  Further, just last month Interior Secretary, Ryan Zinke, announced that the Trump administration would open up over 90% of the country’s Outer Continental Shelf for energy exploration.  Previously, the Obama administration had disallowed any energy extraction from nearly all of the Outer Continental Shelf.  

 

Although Florida and California, in particular, have indicated that they are opposed to exploration activity off their coasts, states like Alaska and Louisiana are both supportive and on board with the idea.  Not only will this activity boost overall petroleum production, it will also help to curb unemployment which is, in and of itself, a tremendous boost to the United States economy.

 

All in all, it is safe to say that the “Trump Effect” is indeed being felt throughout the petroleum retail industry—in the form of pay raises, better benefits, and more money being kept in the local communities they serve.  Moreover, with strict policy controls being loosened, this will allow for the opportunity for greater energy independence for the United States as a whole.  While we may not all agree on his politics, it certainly looks like the past year under President Trump has been good for business.  


 

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