Watch lower wholesale fuel prices drive down retail fuel prices

  • Watch lower wholesale fuel prices drive down retail fuel prices

    According to an article written by Brian Milne of Schneider Electric and published in Convenience Store Decisions, US refineries are increasing their production after being down for maintenance, bringing the run rate above 90%. That’s a run rate last seen in mid-September.

    What does that mean from a fuel price management perspective? The higher run rate will lead to a greater supply of gasoline, gas inventories will increase, wholesale fuel prices will push lower, and ultimately retail fuel prices will continue to decrease leaving open the opportunity for robust fuel margins.

    In November, the US Energy Information Administration lowered their predicted average retail fuel price to $2.94 per gallon in 2015, which is 13% lower than their predicted price in October. Likely that will lead to increased demand for fuel, or at least steady demand levels compared to this year.