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- 21 Aug
Adjusting Gasoline Pricing Strategy
Today BP issued a public recall of 2.1 million gallons of gasoline produced by the BP Whiting refinery near the Indiana – Illinois border. Hundreds of reports of car trouble have flooded Northwest Indiana repair shops caused by contaminated gasoline that had higher than normal levels of polymeric residue.
BP is advising that anyone who has encountered car trouble because of their bad gasoline should hold onto their receipts, as BP needs a record of a credit or debit card purchase to provide a refund. Customers are also advised to document any repairs made to their cars because of the bad fuel. Any customer who paid cash needs to get a mechanic to get a fuel sample from his or her car, so BP can verify where it came from. BP has assigned 90 phone operators to staff a customer hotline fielding complaints by customers of the bad fuel.
From a fuel price management perspective, fuel managers offering brands other than BP in this market need to make the most of this opportunity with their gasoline pricing strategy to optimize their retail fuel margins. Fuel managers offering the BP fuel brand in this market need to monitor their volumes and mitigate their losses. This story has been carried by CBS News and the Chicago Tribune among other major media outlets, so the word is spreading quickly to the mid-west markets and potentially across the entire US. As a result, consumers will be leery of the BP fuel brand, and will be looking elsewhere to fill up. Competitors to BP may decide to leave their gasoline prices competitive to steal market share from the BP fuel brand. Or BP competitors may make the decision to maintain a slightly higher gasoline price for their brand with the expectation that former BP customers are willing to pay more for trusted gasoline.
In any event, it is critical for fuel price optimization software to allow the fuel manager to record the circumstances around this week for historical reference, so next quarter, and next year, the fuel management team can point to specific reasons why this week, and the weeks thereafter, are different than other weeks on the calendar.
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