by John Keller | Jan 15, 2013 | Industry News
As we continue to monitor the fuel price management arena, it’s important to be aware of what’s happening in the Electric Vehicle space. After all, there are now 5184 electric car charging stations across the US, according to the US Department of Energy’s Alternative Fueling Station Locator. That’s more than double the number for the next highest type of alternative fueling station, which is Propane.
Today Nissan made a bold move by cutting the price of their Nissan Leaf EV by 18%, which in some areas of the country with federal tax credits and state incentives brings the price down to $18,000. Nissan executives called this price drop a “tipping point” for driving up demand for the Leaf. The Nissan CEO acknowledged that customer feedback revealed that the price of the original model was a roadblock to purchasing.
From a fuel pricing strategy perspective, we need to continue to monitor sales of the EV in each of our markets, and decide whether or not it’s time to implement an EV charging station. In addition, if this price drop does prove to be a tipping point, it will be one more factor contributing to the ever shrinking fuel volume pie in an industry that is becoming increasingly competitive every quarter.
by John Keller | Jan 11, 2013 | Retail Fuel Margins
According to this week’s OPIS report, US national retail fuel margins reversed their two week trend and increased by $0.02 per gallon from last week. The national average retail fuel margin is now $0.146 per gallon.
So far the average 2013 retail fuel margin is $0.136 per gallon. According to the National Association of Convenience Stores, typical fuel margins are in the range of $0.18 per gallon over an annual period, so the c-store industry is bumping along the bottom of the fuel margin sea as we start off the new year.
From a gas pricing strategies perspective, this is the time of year when fuel managers need to simply hold on until the market improves and margins can return to more favorable conditions.
by John Keller | Jan 8, 2013 | Industry News
Today the US Energy Information Administration released their Short-Term Energy Outlook, and in the report they project US gasoline consumption to remain flat over the next two years.
In the report, the US EIA explains that while there will continue to be growth in the driving-age population and in highway travel, improvements in the average fuel economy of new vehicles and the retirement of older less fuel-efficient vehicles will net out a consumption value that is essentially unchanged through 2014.
From a gas pricing strategy perspective this would be welcome relief because US gasoline consumption has been on a steady decline since 2009. If the US EIA projections prove to be accurate, at least the size of the overall fuels volume pie will remain steady over the next two years.
by John Keller | Jan 8, 2013 | Fuel Price Management, Fuel Pricing Software
A closed loop system uses feedback from the output to affect the input. In modern fuel price management, the application of a “closed loop” system is a highly effective approach to maximizing fuel revenue margins.
Fuel Pricing Factors
There are many factors involved in calculating price changes for fuel. Survey information, changes in existing volume, margins, and environmental factors can all contribute toward price shifts. A lack of integration between fuel price management software and physical sites will lead to ineffective pricing. The practical way to make fuel price changes in the modern world is through application of a “closed loop” system, wherein all processes are handled within the same channel.
Given the volatility of gas prices over the past few years, installation of a single-channel pricing system has become vital. Coordinators should take care that the crucial steps involved in fuel price management can be coordinated easily. PriceAdvantage software makes this coordination simple. Managers can collect the aforementioned data such as surveys and margins which affect prices, analyze this information via real-time multi-source intelligence, change the prices offered and listed at all of their sites, and receive automatic confirmation that these pricing changes have completed.
A Fuel Price Management Example
A good example of the effectiveness of implementing practical fuel price management solutions is The Spinx Company. This company today uses a closed loop system which allows their employees to change fuel prices with just a few clicks at their personal kiosk, or from the corporate office. This eliminates interference from weather or high customer traffic and enables sites to update gas prices with a cost-effective and reliable system.
“We can move very quickly as costs change,” says Stewart Spinks, CEO of The Spinx Company, “some suppliers do multi-day changes. Central cost monitoring and speed of price changes can ‘signal the street’ of our desire to pass on increases or decreases to the market. If competitors don’t react within two hours, Spinx can react expediently. Furthermore, the staff does not have to stop serving customers to physically go ‘post the prices.'”
Customizable LED signage, when integrated with fuel pricing software, gives sites the ability to far exceed local competition with pricing that quickly reacts to changing market conditions. As consumers demand higher quality and green energy efficiency from their fuel providers, closed loop fuel price management solutions with LED signs enable companies to consistently meet customer expectations. This quality, integrated fuel management technology attracts more customers and drives revenue with increased visibility. The Spinx Company saw such success with their closed loop system that approximately 75 percent of their newly branded stores are shifting to this customizable LED signage as part of their fuel pricing strategy.
Looking Forward
Replacing outdated systems with electronic price signs and integrated message centers is the first, crucial step toward joining the world of tech-savvy fuel price management experts. These systems allow marketers to change prices with greater reliability and speed, increase customer attention at all of their locations, react quickly to all fuel market conditions, and most importantly, create greater revenue for their business.
by John Keller | Jan 2, 2013 | Retail Fuel Margins
According to the weekly OPIS retail fuel margin report, the weekly average fuels margin for the fourth quarter of 2012 ended at $0.23 per gallon. According to the average retail fuels margins reported by the National Association of Convenience Stores, this is up slightly from the five year average of $0.19 per gallon.
This $0.23 per gallon benchmark will be a crucial indicator for how c-stores performed in the quarter compared to the national average.
