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Encon Petroleum is the independent wholesale fuel distributor division under the KA Enterprises umbrella. Encon Petroleum distributes gasoline and diesel to independent gas stations within San Diego County, including KA Enterprises’ own independent gas station, La Jolla Shores Encon. Encon began operations in 2006, distributing an average of 375,000 gallons per month. By 2015, 9 years after inception, Encon’s fuel distribution has exceeded 2,000,000 gallons per month. Encon continues to grow as an independent fuel supplier due to its excellent customer service and competitive pricing. On average, Encon has been able to beat its competitors by a penny or more which allows their independent gas station clients to have larger margins and more competitive street pricing.
Encon Petroleum is able to provide low cost fuel to their customers in a number of ways. The first way is by “locking in fuel” or taking a “long position” when fuel is rising. Most independent fuel suppliers sell fuel at rack or spot pricing which is basically what the market price is. This model is efficient when the market is going down because the next day will be cheaper than today. Gasoline retailers keep the fuel in underground storage tanks lows so they can continually put lower cost product in his or her tank. During this type of market or when there is no trend in the market, Encon Petroleum uses this model. However, when the trend in the market shows it going up, Encon will go long, which basically mean Encon will buy a position of fuel for a week or two. When taking a position, the rest of the competition continue to move up with the market while Encon stays fixed at the price it bought in at. During this time, is where Encon customers and its own station will have above average margins and usually will have the most competitive pricing on the street.
The second way Encon Petroleum provides low cost fuel to their customers is thru an increasing customer base. Encon Petroleum prides itself on being more of a cooperative supplier than a traditional supplier, since its original purpose was to provide low cost fuel to its La Shores Encon site. As Encon increases its customer base our buying power increases with the suppliers/refiners we deal with in which the suppliers/refiners offer gasoline at a lower cost or discount to us which we in return pass through to our customers. We use marketing and referrals to increase our customer base. For certain customers, Encon has the unique ability to offer credit when the customer exceeds an internal credit worthiness threshold.
The last way Encon Petroleum offers low cost fuel to their customers and their own station is by playing the market. During times when Encon is not locked in a certain fuel position, prices vary every day except Sundays. By analyzing intra-day trading and market data, Encon gives out its forecast on where the market is going tomorrow and for the week. This forecast allows Encon’s customers and its own station to buy fuel before the market rises and hold off when the market is falling. This forecast helps its customers and own station keep healthy margins and have competitive street pricing . The forecast allows customers to avoid the swings in the market by loading up when market is rising, to avoid taking in any high cost fuel, and then holding off as long as possible when market falling, so that the customer can take advantage of the lowest cost fuel to put in his or her tank.
Encon also provides excellent customer service to all of customers. Every day at 9:30am, Encon distributes to the public its 24 hour fixed price in which customers can call to place an order on. Orders are accepted 24 hours a day 7 days a week. This flexibility gives the customer assurance that their station will always be supplied with fuel. When Encon receives the order it is logged down and then dispatched to an outside carrier. Once the fuel has been dropped, the carrier faxes over the delivery tickets to Encon’s office. Upon receiving the delivery tickets, Encon invoices the customer based on the net gallon received and the credit terms extended.