by John Keller | Apr 10, 2014 | Fuel Price Management, Industry News, PriceAdvantage, Retail Fuel Margins
In the US EIA “Short-term and Summer Fuels Outlook” released today, we see these predictions for the summer of 2014 (April – September).
- US consumption of gasoline will be slightly higher (10,000 gallons) than the same period in 2013
- Brent crude oil prices will be $2 per barrel lower than the same period in 2013
- The US regular unleaded retail gas price will average $3.57, one cent lower than the same period in 2013, with these regional averages:
- East Coast $3.53 (same as 2013)
- Midwest $3.55 ($0.05 lower than 2013)
- Gulf Coast $3.37 (same as 2013)
- Rocky Mountain $3.52 ($0.09 lower than 2013)
- West Coast $3.85 ($0.02 lower than 2013)
- The US diesel retail gas price will average $$3.87, two cents lower than the same period in 2013
From a fuel price management perspective, what does it mean if these predictions come true?
- Fuel volumes would essentially be unchanged across the entire US market, unlike in the summer of 2013 when the overall US fuel market increased by 90,000 gallons.
- Wholesale costs to fuel retailers would be slightly less than last year, possibly as much as $0.048 per gallon less.
- Depending on the region, fuel retailers may be able to see an increase of fuel margins where the fuel price holds relatively steady but wholesale costs are less.
- Overall fuel sales as measured in dollars would be less for regions such as the Midwest, Rocky Mountain, and West Coast. Publicly held companies who have their sites in these regions may report lower overall fuel revenues if volumes are essentially the same and street prices are lower. That’s why financial analysts shouldn’t pay too much attention to this metric that is outside the control of the retailer. But with careful attention played to margins, fuel profits may remain strong, and that’s worthy of attention.
Obviously there is lots of uncertainty related to the future cost of crude, since a quick series of unexpected events could cause these predictions to be way off. That’s why the report shows a 95% confidence level of crude prices to be anywhere in the range of $60 to $130 per barrel. But for modeling purposes, this report does show one reference point that is useful for planning purposes.
by John Keller | Apr 8, 2014 | Customer News, Fuel Software, PriceAdvantage
The PriceAdvantage team would like to extend a warm family welcome to Kwik Chek / McCraw Oil, our latest partner and customer. Kwik Chek and McCraw Oil are based in Bonham, Texas, northeast of Dallas, and have locations throughout Texas and Oklahoma.
Kevin Smartt, CEO of Kwik Chek and Bill Wilson, President of McCraw Oil were looking for a fuel pricing solution that could find additional margins and efficiencies in their business. Smartt and Wilson needed a tool to reduce the time it takes to get data from the stores and then quickly turn around a price change to their Gilbarco and VeriFone POS systems. After months of evaluating various solutions, they decided that PriceAdvantage SMART Fuel Pricing was the best in class. They found that PriceAdvantage not only automated this process but also provided the price change confirmation feedback that was critical.
“We selected PriceAdvantage because their team understands our business needs and ultimately provides the best out-of-the-box solution giving us optimal fuel pricing control and management,” said Smartt.
“With our dealer locations we were experiencing delays in getting our pricing strategies implemented in a timely manner. PriceAdvantage allows us to be proactive to market changes, and gives us the pricing accountability and efficiency we need. This will allow us to capture additional profit for both our dealers and for McCraw Oil,” said Wilson. “We’re excited to begin the roll-out and look forward to a quick implementation.”
This implementation also includes the PriceAdvantage integration with PDI Enterprise.
Kwik Chek CEO Kevin Smartt is a member of the NACS Board of Directors, also serving on the NACS Research Committee along with Edward Holmes of Holmes Oil Company, Varish Goyal of Vintners Distributors, and Joseph Sheetz of Sheetz Inc., all of whom are PriceAdvantage customers.
Welcome Kwik Chek and McCraw Oil – we look forward to our mutual ongoing success together!
by John Keller | Apr 7, 2014 | Fuel Price Management Solutions, Fuel Software, Industry News
Today there’s a good article on NACS Online that includes several key statistics.
- Gasoline demand increased 1.1% in 2013, the largest annual increase since 2006 according to the US EIA.
- 5% of those surveyed say gas prices are too high at $3.30 per gallon.
- 65% of those surveyed say gas prices are too high at $3.50 per gallon.
- 91% of those surveyed say gas prices are too high at $4.00 per gallon.
- 53% of those surveyed say they are changing driving habits now, compared to 68% in the spring of last year.
What are the key takeaways from a fuel price management perspective?
- While regional fuel volumes may vary, on a national level across the US it’s worth noting that fuel volumes were higher last year. As you manage your fuel volumes and review the numbers from last year, it’s good to keep in mind this key benchmark for comparison sake.
- As you fine tune your fuel pricing strategy, bullets 2, 3 and 4 above point to specific gas price thresholds that you may want to stay clear of, opting instead for a price of $3.49 for example if margins support it.
- The numbers for fuel volumes aren’t yet in for this year, but bullet 5 above is an indicator that overall demand may hold steady this year or perhaps even increase a bit as the US economy continues to rebound. Perhaps in your specific markets there may be more fuel volumes available to grab.
The original article may be found here.
by John Keller | Apr 7, 2014 | Customer News, Industry News, PriceAdvantage
The New York Times published an interesting interview with Kim Bowers, CEO of CST Brands. The interview may be found here.
CST Brands became a PriceAdvantage customer in 2011 when they were under the Valero umbrella, completing their rollout to all stores in 2012. CST Brands has been using PriceAdvantage with great success, as the financial results show.
CST Brands has a representative on the PriceAdvantage Customer Advisory Board.
by John Keller | Apr 4, 2014 | Industry News, Retail Fuel Margins
In the OPIS report today, average retail fuel margins across the US dropped $0.014 per gallon. The national US average is now $0.154 per gallon, just under the year to date average of $0.158 per gallon.
The six week retail fuels margin average is $0.150 per gallon. This same Friday last year had the average retail fuels margin at $0.175.
In 2013, we saw a dramatic increase in retail fuel margins the second Friday of April, where the average jumped to $0.268 per gallon. April was a strong year in 2013, with the average retail fuel margin for the month being $0.219 per gallon. Let’s hope retail fuel margins turn around again this year.
