World Fuel Services (INT)

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Isaac Middendorf

World Fuel Services (INT) is a global fuel logistics company that markets, sells, and distributes aviation, marine, and land fuel products. The company markets its products worldwide to commercial companies and many governments.^[1][2] The companies dependence on oil prices and availabilty make profits difficult to predict.

Business Growth

For 2010, INT reported revenue of $19.1 billion, which was a 69.4% increase from 2009. This was due primarily to an increase in sales volume from new and existing customers, as well as an increase in world oil prices in 2010 as compared to 2009.^[2]

Trends and Forces

External Factors make Profits Difficult to Predict

Oil prices rarely remain stable for long due to the fact that the market maker OPEC, an organization of petroleum-producing nations, primarily controls global oil prices by holding about 40% of the world's crude oil supply.^[3] This volatility can make operating margins difficult to predict. And while oil & gas hold a monopoly over the world's supply of energy, alternative energies such as biofuels and other renewable energies also pose a long-term threat to the industry. Shifts to these forms of energy could have an unpredictable affect on INT.

Environmental Legislation

Fossil fuels, though highly cost-efficient forms of energy, are heavy polluters when burned. Increasing environmental concern over environmental degradation and global climate change is fueling a consumer-driven push away from dirty forms of energy toward cleaner forms like wind energy and solar power. These concerns are also causing political movements, which are leading to increased regulation in the fossil fuels market. Government regulations like emissions caps, renewable energy subsidies, and carbon trading schemes all facilitate transitions away from dirty, nonrenewable fuels. These types of concerns will continue to make the fuel market difficult to navigate for INT.

Competition

INT competes with many companies across the aviation, marine, and land fuel markets. Ranging from major oil producers that can market directly to commercial groups and fuel resellers, to small and specialized firms. Some of these companies are listed below.^[2]

• Aegean Marine Petroleum Network (ANW)
• Exxon Mobil (XOM)
• Suburban Propane Partners, L.P. (SPH)
• Adams Resources & Energy (AE)

References

1. ↑ Jensen, Bret, "3 Undervalued Energy Sector Stocks," SeekingAlpha.com, June 28, 2011
2. ↑ ^{2.0 2.1 2.2} World Fuel Services 2010 10k
3. ↑ Wien International - OPEC – 40 Years in Vienna