by John Keller | Dec 29, 2014 | Fuel Price Management, Fuel Pricing Strategy, Industry News, Retail Fuel Margins
The OPIS report showed for the week ending December 26 retail fuel margins across the US averaged at the highest levels of the year. The US average this week was $0.376, down only $0.005 per gallon from the previous week.
The year to date retail fuel margin average stands at $0.218, while the Q4 average is $0.303 and the six week average is $0.310.
The average margin at this point is a whopping $0.236 above the equivalent week last year. We’re finishing up 2014 with an overall retail fuel margin of the year that is $0.028 per gallon higher than the overall retail fuel margin of 2013.
From a financial earnings standpoint, the fourth quarter this year finished $0.103 above Q4 of 2013. Couple those improved margins with the increased fuels demand reported lately, and we can expect to see strong quarterly results by publicly traded fuel marketers in the coming months.
by John Keller | Dec 23, 2014 | Fuel Price Management, Fuel Price Optimization, Industry News, Retail Fuel Margins
According to Brian Milne, Energy Editor of Schneider Electric, the months of November and December this year have yielded some of the highest weekly fuel demand numbers of the year.
According to Mr. Milne, two of the three highest weekly demand rates in 2014 happened in November and December. The retail fuels price drop we’re seeing began in mid-October, and since then only two weeks have had gasoline demand below the five-year average. The second week of December had some of the highest retail fuels demand of the year, quite an oddity since typically the highest demand weeks are in the summer months during high travel season.
What does this mean from a fuel price management perspective? Take these high volumes and multiply them times the high margins at the time, and we can expect exceptionally strong financial results from the publicly held retail fuel companies when they report their calendar year Q4 earnings.
by John Keller | Dec 19, 2014 | Fuel Price Management, Industry News, Retail Fuel Margins
The OPIS report today revealed that the average US retail fuel margin jumped $0.045 per gallon to hit the highest level of the year. The average retail fuel margin now stands at $0.381 per gallon. The year to date average is $0.214 per gallon, while the Q4 average is $0.297 and the six week average is $0.289 per gallon.
In 2013, on this equivalent day the retail fuel margin was $0.221 per gallon.
Most analysts believe that retail gas prices will continue to lower over the coming weeks as the drop in crude prices makes its way through the supply chain. Assuming that’s true, we can expect to see margins at similar or dare we say even better levels than we see today.
It certainly is turning out to be a happy time for both consumers and fuel marketers alike.
by John Keller | Dec 18, 2014 | Customer News, Fuel Price Management, Industry News
CST Brands continues its buying spree this month with the acquisition of Landmark Industries, growing their store count by 22. These newly acquired locations are in the San Antonio and Austin area, so they’re right in the CST Brands headquarters back yard.
CEO Kim Lubel is a self-proclaimed “deal junkie” who sees consolidation in the industry as a great opportunity. The CST acquisition of Lehigh Gas GP LLC allows CST to work around a post-spinoff agreement they had with Valero, where they would have been forced to delay acquisitions until summer of 2015. The Lehigh Gas acquisition also allows CST to build the number of stores they wanted, where previously they were limited by the prior year’s EBITDA.
In the past two years, CST opened 60 new stores. In 2015 they may build as many as 45-55 new stores.
The PriceAdvantage team is proud to be a partner in the success of CST Brands. CST has been using PriceAdvantage at all their stores since 2012, and they have a position on the PriceAdvantage Customer Advisory Board. CST is also a customer of Skyline signs, so they can take full advantage of the closed loop fuel price management process from competitor surveys, to price determination, to price execution, and finally to price confirmation.
by John Keller | Dec 18, 2014 | Fuel Price Management Solutions, Fuel Pricing Strategy, Industry News
At the close of the NYMEX today, Oil traded at $54.70 bbl, down $1.77 from yesterday. Gas prices continue to plummet across the US, and experts predict that gas prices are not yet at their lowest.
That’s a pretty safe prediction, given that it takes time for decreased NYMEX oil prices to make their way through refining, to wholesale, to the retail channel. And since a $5 drop in crude can equate to a $0.12 drop in gas prices, it’s not unreasonable to expect retail fuel prices to drop that much in the coming days. Many fuel retailers are experiencing a time when their replacement margins are routinely below their actual margins, since the cost of buying a new load today is less than what they paid yesterday (or last week, depending on how quickly they turn over the inventory in their tanks).
What does this mean from a fuel price management perspective? First, it means we can expect to see increased retail fuel margins to finish off the year. That should make Q4 of this year one of the strongest in recent history.
Second, it’s important to consider that the retail fuel pricing game is not as simple as the basic price elasticity principles you learned in Microeconomics 101. Consumer psychology is always at play. As a wise fuel manager once taught me, sometimes lower gas prices lead to the customer reaction of waiting to see if the prices drop even further. And now that the US culture has started to get used to falling gas prices, just because you drop retail fuel prices at your locations doesn’t mean you’ll automatically see an uptick in fuel volumes.
The retail fuel pricing business requires no less finesse in these times than in times of low fuel margins. Fuel pricing software like PriceAdvantage continues to be critical for analyzing your business so you can always have the right price at every store all the time.
