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Under Buffett’s wing, U.S. fuel retailer Pilot leaps into oil trading, eyes refining

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November 1, 2021

By Gary McWilliams and Marianna Parraga

(Reuters) – One of the largest U.S. diesel retailers is assembling a fuels trading, processing and distribution powerhouse that could turn a truck stop operator part-owned by billionaire Warren Buffett into the Walmart of petroleum.

Known best for its Pilot Flying J service stations, Pilot Company has hired veteran energy traders and expanded into Latin America’s fuels markets. Under Buffett’s wing, the company is quickly broadening into buying, processing, distributing and marketing fuels.

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Shameek Konar, a former Castleton Commodities executive who this year became Pilot’s chief executive, said in an interview the moves into oil trading, international markets and processing complement its North American retail operations.

“What is happening in crude oil markets, ags (agricultural) markets is very important,” said Konar. “The best way to understand the spreads is by being in those markets,” he said referring to trading bets on feedstocks and fuels.

Pilot’s strategy reflects a shrinking business for conventional motor fuels in North America that has led retailers to look for growth in related markets, said strategy consultants.

The expansion began after Buffett’s Berkshire Hathaway took an about 39% stake in the business and agreed to increase its ownership in Pilot to 80% in 2023. Following the Pilot deal, Berkshire separately invested in Japanese commodities trading houses.

Greg Abel, the head of Berkshire Energy, declined to comment on how energy trading fits into Berkshire’s investments.

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A MOVE INTO MEXICO

Pilot’s trading has gone international with deals in Mexico and other Latin American countries. It aims to begin diesel and gasoline distribution in Mexico, said a person familiar with the matter.

Its trading arm represents the largest U.S. energy commodities startup since Freepoint Commodities opened in 2011, said a consultant, who declined to be identified due to work with related energy firms.

The Tennessee-based company’s oil and petroleum trading is small, with about 100 employees, a fraction of the staff at better-known Freepoint Commodities, Mercuria and Vitol.

This year, it has expanded the business by adding financial trading and Mexican diesel supply experts from Noble Group, Vitol and Exxon Mobil, said people familiar with the company.

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Pilot is buying 750,000 barrels of diesel and gasoline per day for its U.S. operations and the expansion into Latin America “gives us a good outlet for our product,” said Konar.

The push into Latin America also comes as other traders are mired in scandals there.

BIODIESEL PUSH

Pilot is evaluating stakes in biodiesel processing operations after becoming one of the largest U.S. biodiesel sellers, Konar said.

He did not rule out a purchase of an oil refinery, but that is “not top of mind at the moment,” he said.

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Fuel retailers have ventured into fuel production as oil refiners bulk up retail arms, said Tony Portera, a managing director at business consulting firm BCG. Parkland Fuel Corp acquired a Chevron refinery while oil processors Irving Corp and Royal Dutch Shell have purchased retail outlets.

“The pie will get small, but the players that are left in this industry will take larger pieces of that pie,” said Brian Gray, head of Accenture’s global fuel and convenience retail consulting.

(Reporting by Gary McWilliams and Marriana Parraga in Houston; Editing by Marguerita Choy)

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‘Flash mob’ thieves target U.S. retail stores on Black Friday

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November 28, 2021

By Steve Gorman

LOS ANGELES (Reuters) – Black Friday shoppers weren’t the only ones out hunting for bargains on the day after Thanksgiving. Thieves were busy as well.

Police in Los Angeles and cities elsewhere across the country spent much of their holiday weekend patrols looking for suspects in a spate of “flash mob” robberies on Friday, part of a surging U.S. crime trend in which groups of thieves swarm a store, ransack the shelves and flee.

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Authorities also have used the term “smash-and-grab” to describe the trend.

At least two such robberies were reported on Saturday by the Los Angeles Police Department (LAPD) and the Los Angeles County Sheriff’s Department. A local television station, KCAL-TV, counted a total of six smash-and-grab heists on the city’s west side alone on Friday.

In one incident, a group of eight men entered a Home Depot outlet at a shopping mall in Lakewood, south of downtown Los Angeles, walked directly to the tool aisle and snatched a bunch of hammers, sledgehammers and crowbars valued at about $400 before making their getaway, the sheriff’s office said.

According to L.A. television station KTTV, the Home Depot robbery on Friday night involved up to 20 suspects who pulled up to the store in as many as 10 cars and donned ski masks before raiding the tool aisle.

“We tried to stop them,” store employee Luis Romo told KTTV. “We closed the front entrance, and they put their sledgehammers up and whoever got in the way, they were going to hurt them.”

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The Los Angeles City News Service said four suspects in that robbery were arrested on Saturday by Beverly Hills police.

In a similar incident Friday afternoon, a group of 10 men or more invaded a store in the city’s Fairfax district and started grabbing merchandise without paying for it, pushing employees out of the way before fleeing the scene, according to LAPD.

Police are investigating possible ties between that incident and a flurry of other robberies and retail thefts on Friday and earlier in the week, including two smash-and-grabs reported on Wednesday, an LAPD spokesperson said.

The rash of retail crime prompted the LAPD to place its officers on a citywide tactical alert on Friday afternoon.

Mass robberies also were reported on Friday at two Best Buy electronics stores in the Minneapolis-St. Paul area, one of them involving as many as 30 suspects, while a spree of pre-dawn retail burglaries were under investigation in Chicago.

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In one of the biggest flash-mob robberies reported on the West Coast in recent days, police in the San Francisco suburb of Walnut Creek were seeking about 80 suspects who swarmed and ransacked a department store last Saturday.

(Reporting by Steve Gorman in Los Angeles; Editing by Paul Simao)

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U.S. Black Friday shoppers tapered online splurge, as some returned to stores

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November 27, 2021

By Arriana McLymore and Richa Naidu

RALEIGH, North Carolina (Reuters) – U.S. shoppers spent slightly less online during Black Friday this year, with many venturing back to physical stores despite coronavirus fears, tight supplies, and retailers’ efforts to encourage earlier holiday purchases.

For the first time ever, spending online during Black Friday – traditionally one of the biggest shopping days of the year – fell, reversing the growth of recent years, according to data from Adobe Analytics, a wing of Adobe’s business that specializes in data insights and tracks transactions at 80 of the top 100 U.S. retailers.

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Retailers lured shoppers to make holiday purchases online as early as September this year, because the supply-chain logjam has prevented them from quickly replenishing year-end merchandise. Shoppers’ total outlay online during Black Friday was roughly $8.9 billion, less than the $9 billion in 2020, Adobe said. Spending online during Thanksgiving Day was flat at $5.1 billion, Adobe said.

Many retailers closed physical stores on Thanksgiving this year, as they did in 2020, amid a labor shortage and the coronavirus pandemic. Stores reopened the day after Thanksgiving, and shopper visits increased by 47.5% compared to 2020, but fell by 28.3% when compared to 2019, the last pre-pandemic year, according to data from Sensormatic Solutions.

Supply-chain challenges and shipping delays may have prompted shoppers to visit stores in order to increase the chances of securing gifts in time for Christmas. More are making purchases online that they can pick up in-store, which keeps shipping costs down.

Macy’s, Walmart, Target and Kohl’s, for example, gave shoppers the flexibility to shop online, in stores or through hybrid methods, walked away as winners on Black Friday, said Louis Navellier, chairman of investor Navellier & Associates.

Of those purchasing online, slightly more used their smartphones. Canadian e-commerce company Shopify said the number of shoppers on its platform who used smartphones to make purchases increased this year to 72% from 67% last year.

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Retailers’ moves to encourage buying holiday gifts earlier could also lessen the importance of Cyber Monday, the first Monday after Thanksgiving.

(Reporting by Arriana McLymore and Richa Naidu, Aakriti Bhalla and Sabahatjahan Contractor in Bengaluru; Editing by Nick Zieminski)

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Canada’s Shopify records Black Friday sales up 21%

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November 27, 2021

(Reuters) – Canadian e-commerce company Shopify Inc recorded worldwide sales of nearly $2.9 billion on Black Friday, an increase of about 21% in comparison to last year, the company said Saturday.

New York, London and Los Angeles were among the top-selling cities, the company said, while apparel and accessories was the top-selling product category.

Shopify also said it funded 23,000+ tonnes of carbon removal to counteract emissions from the delivery of every order placed on its platform on Black Friday.

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(Reporting by Aakriti Bhalla in Bengaluru; Editing by Nick Zieminski)

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