Dash Fuel CEO on modernizing paper-based fuel logistics and Middle East conflict price spikes

end of the year. By the end of the year. Okay. Yeah, it feels correctly priced at the moment, but who knows? Well, we have Miles from Dash Fuel in the studio. Welcome to the show, Miles. Good to meet you. Welcome. Nice to meet you. How you doing? Good. How are you? Uh, good.

Would you mind kicking us off on uh with a little bit of introduction on yourself and the company and then obviously have a bunch of questions to ask downstream of that uh related to the current uh kind of global situation. Yeah, happy to. Um, so I'm the CEO of Dash Fuel.

We are a vertical SAS company focused on downstream oil and gas logistics. So that is you know you have Exxon and the big producers producing fuel but how do you get that fuel to gas stations, airports, marinas for actually the consumption of that fuel and our customers are focused on that.

So are your customers like like you know the the 76 or like the Chevron station, the gas station? Some of our customers are um you know the big hazmat trucks you see driving down the slow interle trucks those are our key customers. Okay. And that might be a different company that is contracted by 76.

Hey I need gas deliver it for me but then I might go to a different competitor if I'm if you're out of gas today and I need to react. Got it. Okay. Um and yes if fascinating industry. How how did you get how did you discover this opportunity?

I feel like this is something that most people don't necessarily interface with on a daily basis. Yeah. Yeah. Absolutely. So I I actually got recruited by a venture studio called Fractal. So they incubate vertical SAS problems and this is one of the ones they were incubating. Okay.

Um and you know it's a huge market uh lots of legacy players, old technology. Yeah. And just an interesting space like it's dynamic, it's complex, it's 24/7 and it's a critical part of how kind of the US keeps running. And so I I kind of jumped at it. Yeah.

What what is the key unlock in actually building the vertical SAS product? Is it just like having an an mobile app or getting from paper to spreadsheets to a database table and some visualization or is it handling payment processing more efficiently?

Like where are you actually plugging in and creating value for these companies? Uh I think honestly all of those. Um so key things that we look at are moving off paper. So that's a big one. Uh duplicate data entry. So logistics or spreadsheets into the accounting system is a big one.

And then the third big one is just driving increases in profit margins. So um fuel is a very complex dynamic optimization problem.

So you might for a single load have 400 different sourcing options from all the terminals around and it's dynamically priced and so how do you figure out what is my optimal sourcing for those? And so we're going to try and drive those margins higher. Um and so those are kind of I'd say the three key pieces for us.

So uh what are your customers seeing? you're seeing news that oil prices are are starting to gyate on the basis of uh the the conflict in the Middle East. Um what are you hearing from uh your customers and folks in the industry? Yeah, so I I think we're definitely seeing that.

So Thursday night into Friday morning from last week, the typical price volatility in our space is roughly 3 to 4 cents uh overnight. And we saw price jumps from 15 to 20 cents. So you're talking, you know, 5 to 10x greater volatility. Um, so that's definitely playing out and that obviously cascades through.

Um, ultimately if prices stay high to gas stations and the end retail customer, although we haven't seen much of a jump there, it's very competitive and so prices are still only slightly higher.

I would say the big thing I think people are watching for is does this conflict extend into the straightfor that would cause prices to go up pretty significantly. Yeah. Explain to me the different uh beneficiaries of various oil price levels like uh who likes higher prices, who likes lower prices.

Obviously, the American consumer government loves high gas prices. It feels like that. But I've also heard that uh that gas station owners actually like higher gas prices because they slap a margin on top of the the oil price.

And so, uh, when when prices are high, they might be making more money, but at the same time, if consumers are pulling back from high prices, they might not go into the store and buy, you know, a case of beer and some snacks.

I I think it's it's more the Goldilocks, the happy middle is kind of where people like to be with a little bit of volatility so that you can take advantage of price swings. But ultimately, as you're saying, too high prices, no one's going to be driving. No one's going in to buy snacks for gas stations.

So, no one wants really high prices. and really low prices, you start to have producers cut back because no one wants to sell at the, you know, 30 or $40 a barrel volume. And so really that happy medium is where people like to have it sit. We've got enough supply and demand matching.

Um, and so I would say that's kind of the the sweet spot. Yeah. We're uh how closely do you track these markets? Do you do you can you tell me the story of that that time that like oil was negatively priced or something like that or whatever? Yeah. Yeah. What what happens there? Can you break that down?

I honestly I don't remember. It was like a very temporary thing, but um I do remember so I was actually this that was before I started this.

I was at Bridgewater um and I remember the markets were going crazy and we were you know I was in trading at the time and so people are scrambling to figure out well how do you deal with this temporary dislocation where as you're saying prices were literally negative people trying to roll contracts and uh it was mostly just chaos.

Yeah, it seemed like something where like you could make money, but there was always a risk that you would have to receive the oil and then they'd be like, "Okay, like you're getting a thousand barrels of oil delivered. Do you have a warehouse for that? " Exactly.

Good luck finding out like 100,000 if you went in with size. Um, yeah. So, uh, uh, what else are people tracking in the news if you're trying to understand where oil markets go?

Obviously that straight of her mu herm's story is important, but is there is there a narrative around uh oh, we have a strategic reserve that we might unlock. There's other sources that might come online. How do these things work out?

I feel like there's always this um this back and forth between the various major players uh kind of jostling to keep the price at a reasonable place for everyone. Yeah, I mean I think that's right.

And I think the other thing is with producers obviously the higher the price the more they want to they're incentivized to to kind of um export or drill or what have you. So so they're also definitely keeping an eye on that.

I think um you know from from the US perspective there's no real super fast supply unlocks is the problem right cuz to spin up a new well or something you're going to take you know 6 months or so. And so people are keeping a close eye.

They're probably starting to get ready for that but they want to see how this plays out. like if this conflict is mostly goes away in the next couple of weeks then you know it's going to be much to do about nothing really.

Um if this extends or again if more drastic actions taken that's where you know we could see something different change.

Um and so I think I think it's mostly in a wait and see now from from the people that I've talked to and again I'm more in the downstream space but from their perspective on the upstream um it it's mostly a waiting game right now. Yeah. how uh um what pieces of the entire oil supply chain are still on paper the most?

Can you actually walk me through? I'd love I'd love just like oil 101. Like I know it's it's not dinosaur bones, but it's something close to that. It's in the ground. It gets dug up and then it goes on a journey. Walk me through that whole journey and kind of like what the different players are. Yeah, absolutely.

So you're like you're saying you're you're extracting that raw crude out. Um and then that is again your Exxon Mobile or you you have smaller players in the Perium Basin or things like that that that is then going to refineries and those refineries are processing the raw crude into its various components.

So that's not only just like gas and diesel but that could be you know end up in plastic and other things like that. So you're separating out the pieces from there. It's either, you know, via pipeline or via barge moved around. I'm again talking US specifically um to there's about 1,200 terminals around the US. Oh wow.

That's then sitting in those terminals until a wholesaler or a carrier comes and picks a f a load of fuel up and then goes and delivers it ultimately to again gas stations, airports, homes for home eating, whatever you have. Um and there's a lot of paper, right?

So, so in a single load for one of those deliveries from the terminal to an end store, you might end up with, you know, a bill of lighting, a delivery ticket, maybe you've got two bills of lighting. You end up with a supplier invoice a day later, maybe a freight invoice.

You could have four or five different pieces of paper. They're all coming in differently. A couple of them are going to be pictures from a driver's phone that are emailed in. Um, so you can imagine it's it's a little bit hard to process all of that and keep track of everything.

How does the overall uh industry and various players in gas process uh what will be maybe not ever a a total phase out of of gas cars, but you know what what is you know California had like a this ban in place for banning the sale of new gas cars past 2035. Sounds like cold dead hands. Yeah.

No, I mean there was a massive amount of push back. um uh from from the president uh as well as Congress. So I don't think that necessarily is happening as of now. But is there does the industry try to you know oil isn't going away has a bunch of different uses.

Gas isn't going away again has a bunch of different uses just other than just getting a car from point A. Just look at the Nurburg Ring Times.

It's obvious it's not um but I'm but I'm curious like if there's any sort of like highlevel discussion around you know because many of these companies have been in business for so long you know if you've been in business for 100 years you should be thinking about the next hundred years right it's reasonable yeah absolutely sorry sorry I accidentally tossed the iPad off no it's appropriate the idea of having of not having a naturally aspirated V12 at my disposal is booy booy but break down the evolution of the industry Yeah.

So I think um you know you have at the upstream space you have them exploring alternative energy a little bit right.

So you had you know BP was exploring carbon neutral fuels and a lot of these thing they've been exploring them and I think you know you you've talked to people um you know like Valor Atomics who are exploring that as well and so I think there's definitely interest there and so um that's one piece.

There's also another piece which is like on the kind of gas station side, you have these EV chargers which in some ways are helpful because it, you know, takes 10 or 15 minutes. Someone's more likely to go into the gas station and the vast majority of gas station revenue is actually from inside the store.

It's not the gas. It's, you know, that's break even if they're lucky type thing. Um, and so you have some of that as well.

And then um honestly you look at the projections out to 2050 from from the US government you don't see that much of a decline because just as as people are wealthier they want to travel more they want to own a car and so so it's honestly more of an unlock than anything else and so as long as the US keeps growing I expect to see demand to keep growing you know you have a little bit of a slump but in the order of 1 to 2% as opposed to this giant you know cliff that you're going to fall off of anytime Yeah, that makes a ton of sense.

Uh, anyway, thank you so much for stopping by. This was fantastic. Thank you for being our gasoline correspondent. Yes. Our oil and gas consultant. Straight from the oil fields of America. Yeah. Yeah. Can we call you a rough neck? Exactly. Yeah. Show me. Vertical SAS rough neck. Vertical SAS rough neck in the trenches.

Thank you so much for stopping by. We'll talk to you soon. Thanks for joining, Miles. Cheers. Up next, we have Alex from Meridian coming into the studio. Uh, former size lord. Former size lord. Break it down. I think he was in PE, Toma Bravo, maybe Black Rockck. I've met him before a