Eye on the Future

March 2, 2021

Written By Adam Buckallew

MFA Oil is exploring non-traditional business opportunities that could benefit its members in the future.

The Earth is indisputably round. But standing on its surface, the curvature is imperceptible. Just as it’s difficult to recognize the planet’s rounded nature, it can be easy to miss gradual changes that lead to an eventual tipping point.

That’s why MFA Oil Company has a business trends committee that studies how markets, technology and consumer behavior are shifting over time. While some developments, such as the coronavirus pandemic, have accelerated adoption of new technologies and changed consumer expectations, other trends can be more subtle. Sifting through and identifying the trends that are meaningful to the cooperative is critical to MFA Oil’s efforts of serving its members and customers.

“The only certainty we have of the future is that it will look different than the present day,” says Jon Ihler, MFA Oil president and CEO. “We would be fooling ourselves if we thought things would continue to look the same.”

The MFA Oil business trends committee is made up of two members of the company’s Board of Directors and two members of the executive management team. The committee reviews emerging technology, innovative business models and changes in consumer preferences that could prove disruptive to MFA Oil and its subsidiaries. This had led the company to explore non-traditional business opportunities that could benefit its member-owners.

“The current pace of change is accelerating faster than it has at any other time in our co-op’s history,” Ihler says. “We are planning and investing in anticipation of short- and long-term disruptions so that we are better positioned to be proactive and responsive to future developments.”

Trends the committee is currently monitoring include solar energy, electric vehicles, biofuels, mobile purchasing technology and advancements in automation.

“We are monitoring how these trends are progressing, how they could impact our businesses and what value they may hold for our member-owners,” Ihler says. “We’re looking at all the angles, and we’re keeping an open mind.”

Electric Vehicle Opportunities

The rise of electric vehicles (EVs) is a trend that has been hard to miss. Market forces and climate-based government policies have sped up the shift to EVs in the United States and around the world. Combined annual sales of battery electric vehicles and plug-in hybrid electric vehicles surpassed 2 million in 2019. Industry experts say EVs are close to a tipping point of mass adoption thanks to the plummeting cost of batteries.

Insufficient charging infrastructure, cost of ownership and limited model availability are hurdles that must be cleared before more drivers make the switch to EVs. But headway is being made in addressing each of these concerns.

Every major auto manufacturer now has at least one EV in production and some major players —Daimler (parent company of Mercedes-Benz), Volkswagen and General Motors—have committed to phasing out production of vehicles with internal combustion engines. Meanwhile, lithium-ion battery pack prices have fallen 89 percent over the last decade. Researchers expect the prices for those batteries to hit a threshold in 2023 that enables automakers to produce and sell mass market electric vehicles at a price comparable to petroleum-powered vehicles. That leaves charging infrastructure as the top issue to address, and that is where MFA Oil is investigating opportunities.

In 2016, the U.S. Environmental Protection Agency filed a complaint alleging that between 2009 and 2016, Volkswagen violated the Clean Air Act with the sale of motor vehicles equipped with emissions “defeat devices.” These devices allowed the vehicles to perform differently during normal vehicle operation than during emissions tests. This meant the vehicles exceeded EPA’s compliance levels of nitrogen oxide (NOX) during normal use. Volkswagen agreed to settle some of the allegations by creating an Environmental Mitigation Trust to fund strategies that will reduce NOX emissions.

Missouri received approximately $41 million in trust funds for mitigation projects, to be distributed over several years. Approximately $6 million (15 percent) of Missouri’s allocation was dedicated to creating a network of electric vehicle charging stations. In January 2021, MFA Oil was one of nine recipients of funding through the Volkswagen Settlement Environmental Mitigation Trust to construct electric vehicle charging stations throughout the state of Missouri.

The funding MFA Oil received will be used to construct an EV charging station at the company’s Break Time convenience store in Sikeston, Mo. This location was selected based on its proximity to Interstates 55 and 57 and for its ample space to install charging units. The Sikeston charging station will help MFA Oil and Break Time evaluate demand and considerations for other charging sites.

“It’s unclear how many EV drivers are in the greater Sikeston area, but this will be a good test site, and it will be interesting to see how much highway traffic the charging station will receive,” says Curtis Chaney, senior vice president of retail for MFA Oil.

Studying Solar

While breakthroughs in battery production have made EVs commercially viable, there is even greater potential that may yet be unlocked for the solar and wind industries. Advancements in battery technology have opened the door for utility-scale storage—one of the keys to transitioning to renewable energy sources. Wind and solar solutions are great when the sun is shining and the wind is blowing, but they must currently be supplemented with fossil-fuels until effective energy storage systems are developed. Despite their current limitations, renewable energy sources are already on track to bypass coal as the largest source of electricity in the world by 2025, according a November 2020 report from the International Energy Agency.

MFA Oil has installed an array of ground-mounted solar panels at its Business Support Campus in Moberly, Mo., in an effort to evaluate solar power and its potential benefits to the company. The solar cells are expected to generate about 140,000 kilowatt hours of energy per year or the equivalent electric usage of 13 U.S. homes for one year.

“We’re exploring a number of non-traditional avenues like solar and electric vehicle charging because we see opportunity,” Ihler says. “We’ve provided energy solutions to our members for more than 90 years, and these types of projects are crucial to us staying ahead of the curve. We’re working hard to ensure the cooperative is built for whatever the future holds.”