- 17 Oct
Retail fuel margins: Happy days are here again!
There has been so much press lately about the falling gas prices this season. Everywhere you turn, it seems, there’s another article explaining why gas prices are falling and predicting how much lower they’ll go.
The beautiful thing about falling gas prices for the fuel retailer is that margins are strongest when retail prices are falling. Nothing proves that point better than the OPIS report today. Retail fuel margins on average rose $0.076 per gallon, making it a $0.156 per gallon increase over two weeks. The average retail fuel margin across the US stands at $0.370 per gallon, the highest in two years. That increase helped the year to date retail fuel margin to rise to $0.196 and the Q4 average to hit $0.332 per gallon. The six week average is now $0.265 per gallon.
The retail fuel margin now stands $0.18 per gallon above last year at this time. Will fuel revenue numbers be impacted by these lower gas prices? Absolutely. Will fuel profits be helped by these margins? Absolutely! And that’s the number you can take to the bank, to fund investments, and to grow the business.
The way things are going, the last quarter of the year may have the strongest margins of the entire year. Of course volumes this quarter can never match the numbers of Q3 which include the peak driving season. But this quarter may be as much as $0.10 per average retail margin above the average in Q2. And that makes for a great way to finish off the year.