by John Keller | Jul 11, 2014 | Fuel Price Management, Fuel Pricing Strategy, Industry News, Retail Fuel Margins
According to the OPIS report today, the average retail fuel margin is up $0.033 per gallon this week to $0.228. The Q3 average now stands at $0.212 while the six week average is $0.185 per gallon.
Today’s margin is the highest since May 16 of this year.
Last year at this time the average retail fuel margin stood at $0.171 per gallon. That means this week marks the first time we’re above last year’s margin since June 13, nearly a month ago.
From a fuel price management perspective, we can see the market using the downward trend of crude and wholesale fuel costs to seize the opportunity to “come down like a feather” and make up for lost margins in Q1 and Q2 of this year.
by John Keller | Jul 11, 2014 | Fuel Price Management, Fuel Price Optimization, Fuel Pricing Technology, Industry News
Here’s something many people may not know: fuel efficiency improves during the summer months. NACS provides an excellent explanation here, with four key reasons displayed below:
A number of factors, all weather related, can increase fuel efficiency by as much as 10% during the summer months, regardless of the type of fuel purchased:
- Engines are more efficient: In the colder months, it can take longer to start a car and multiple cranks of the engine waste fuel. In addition, many drivers give their cars a chance warm up, whether to defrost windows or heat the interior. This idling detracts from fuel efficiency. But even without this idling, car engines are less efficient when cold. It may take a while for a cold engine to achieve peak efficiency and on extremely cold days it may never achieve peak efficiency. Overall, engines perform much better when outside temperatures are 90 degrees, not 20 degrees.
- Ice and snow detract from mileage: Ice and snow can hurt mileage, whether on the roads or on a vehicle. Cars are likely to spin their wheels under icy conditions, reducing mileage. Also, drivers tend to travel at less fuel-efficient speeds under poor road conditions brought on by extreme winter weather. In addition, any snow or ice on a vehicle adds weight and makes the vehicle less aerodynamic — as does any weather-related grime on the vehicle. One more thing: Hot air is less dense than cold air. All things being equal, a vehicle is more aerodynamic travelling through hot air.
- Better tire pressure: Tires lose air pressure in colder temperatures. If a tire’s air pressure isn’t adjusted in the colder months, it will be flatter and increase resistance and friction, leading to reduced fuel efficiency. The opposite occurs in the warmer months, and fuel efficiency can increase.
- Lubricants perform better: A car’s oil is more viscous (thinner) when it is warm and engines perform more efficiently when oil is thinner. The same holds true for all other lubricants. In addition, people take better care of their vehicles when it is warmer outside. They are more likely to change the oil and conduct other routine maintenance that can improve fuel efficiency.
by John Keller | Jul 8, 2014 | Fuel Price Management Solutions, Fuel Pricing Strategy, Industry News, Retail Fuel Margins
It has been a tough first half of the year as far as retail fuel margins go. According to the weekly OPIS margin reports, the year to date average currently stands at $0.165 per gallon compared to $0.180 this time last year. Alimentation Couche-Tard, whose outlets include Mac’s and Circle K, just reported in their financial earnings their gross fuel margin in the United States fell more than 23% this quarter to $0.1485 per gallon from $0.193 per gallon same quarter last year. While same-store fuel volumes increased 2.8% at Couche-Tard, that wasn’t enough to prevent the company from missing analysts’ expectations.
But according to Brian Milne of Schneider Electric, now that ISIS (the extremist militants, not the mobile wallet company) has been contained in Iraq, and Libya is expected to increase their output from roughly 200,000 bpd to 500,000 bpd in the near term, supply disruptions are perceived as being much less likely. That explains why global oil prices are down from early June and should continue on that trend. The Brent crude contract is already down $5 bbl from its June high.
That means now is the opportunity to gain margins the fuel retailing industry lost while the cost of oil was climbing. Keep careful watch on the competition, but don’t be too quick to drop your retail fuel prices – use retail fuel pricing software like PriceAdvantage to protect your margins.
by John Keller | Jul 4, 2014 | Fuel Price Management, Fuel Pricing Strategy, Industry News, Retail Fuel Margins
The OPIS report today revealed a restoration of retail fuel margins back to levels last seen June 13. The average retail fuel margin rose $0.038 per gallon this week to $0.195 per gallon. That’s still a far cry from this same time last year where the average retail fuel margin was over ten cents higher at $0.302 per gallon.
The year to date and last six week retail fuel margin averages were both up $0.001 per gallon, at $0.165 and $0.174 per gallon respectively.
This week last year the retail fuel margin average took a $0.13 nose dive to $0.171 per gallon. If we can hold our retail fuel margin average steady this week, we’ll be back over the number last year, which would be the first time since June 13.
by John Keller | Jul 3, 2014 | Uncategorized
John Eichberger is the NACS Motor Fuels Director and always a great advocate of the fuel retailer.
In this video clip from CNBC, John explains how despite the highest retail fuel prices we’ve seen in years, the 2014 retail fuel margin has taken a 20% hit over the past three weeks.
