by John Keller | Aug 11, 2014 | Fuel Price Management, Fuel Price Optimization, Industry News, Retail Fuel Margins
The weekly OPIS report revealed a slight uptick in the average retail fuel margin across the US. The average retail margin increased $0.007 per gallon to tie the second highest retail fuel margin of the year at $0.276 per gallon.
The year to date average inched up for the seventh straight week to $0.181 per gallon. The average margin for this quarter increased to $0.256 the same margin as the six week average. The margin average this week is $0.058 above the equivalent week last year. This marks the fifth consecutive week when the average retail fuel margin this year is higher than last year.
We now have three solid weeks of the summer vacation travel season before Labor Day. If margins can maintain their current levels, this quarter will make for strong retail fuel profits across the c-store industry.
by John Keller | Aug 11, 2014 | Fuel Price Management, Industry News, Retail Fuel Margins
Susser announced their financial results for the quarter. Here are the highlights:
- Average gallons per store declined 0.4%. Sam Susser attributed the decline to the acquisition of the Sac-N-Pac chain of stores which have a smaller store size on average.
- After deducting credit card expenses, net fuel margin was $0.128 per gallon, compared $0.127 the prior-year. Sam Susser attributed the downward pressure on fuel volumes and profitability to additional competitor store openings.
It has been a tough quarter from both a volume demand and margin perspective. It will be interesting to see how these results compare to the CST Brands results to be announced August 12.
by John Keller | Aug 1, 2014 | Fuel Price Management, Industry News, Retail Fuel Margins
The OPIS report today revealed that the average retail fuel margin dipped $0.023 per gallon this week to $0.269 per gallon. The year to date average continued its gradual upward trend to hit $0.178 while the average for the quarter jumped $0.004 to $0.252 per gallon. The six week average continued its fifth consecutive weekly climb to hit $0.236 per gallon.
The current retail fuel margin average now stands $0.055 above the equivalent day last year. That makes four consecutive weeks that we’re at levels above last year.
So far we are tracking $0.059 per gallon quarter to date above the 2013 quarter to date at this time. Let’s hope this strong quarter can continue.
by John Keller | Jul 29, 2014 | Fuel Price Management, Fuel Price Optimization, Fuel Pricing Strategy, Fuel Software, Industry News
For a while now we’ve been tracking the growth of the Diesel fuel market from the fuel demand perspective and the number of Diesel vehicles on the road.
CSP.net published an excellent article here discussing the opportunity for fuel retailers to take advantage of the growing Diesel market. While the current market share of Diesel vehicles is only about 1% of the U.S. vehicle market, or 3% when expanded to include vans and light-duty trucks, the Diesel Technology Forum reports the number of diesel registrations has increased 30% since 2010.
A big reason for this is that auto manufacturers are turning to Diesel to help them hit their CAFE target of 36.5 mpg for cars in 2016. Diesel provides roughly 30% better fuel mileage than gasoline, and it has a far superior infrastructure and consumer familiarity than electric or hydrogen vehicles.
From the fuel manager perspective, this makes for a compelling case to consider adding Diesel to the product portfolio in markets where it has the best growth opportunity. In areas where the competition isn’t yet carrying Diesel, providing Diesel as a portfolio differentiator may be one way to help bring up overall fuel margins. Have your field managers keep an eye on the vehicle demographics in their regions, both on the road and in the dealerships, to see if Diesel models are becoming more popular. Test the most promising markets and then strike in those areas where the iron is hot. You may find that your fuel volumes are shifting from gasoline to Diesel, with a net result of increased fuel volumes, and fuel margins, overall.
by John Keller | Jul 25, 2014 | Fuel Price Management, Fuel Pricing Strategy, Industry News, Retail Fuel Margins
The report from OPIS today shows that with the $0.016 increase in the average retail fuel margin this week, the retail fuel margin level now stands at $0.292 per gallon, the highest in over 12 months. The last time we saw retail fuel margins above $0.290 was July 5, 2013 when the average retail fuel margin hit $0.302 per gallon, the highest margin of 2013.
This week marks the fourth consecutive margin increase, totaling an increase of $0.135 per gallon since June 27. We’re seeing a slow but steady rise in the year to date average, with the current year to date retail fuel margin being $0.175 per gallon. The average for this quarter is $0.248 and the six week average is $0.218 per gallon.
Last year at this time, we were at $0.176 per gallon. That means we’ve now seen retail fuel margins above last year for three weeks in a row. Interestingly, this time last year the average retail fuel margin up to that point was $0.177 per gallon, so we’re tracking nearly identically on an annual basis.
by John Keller | Jul 23, 2014 | Customer News, Fuel Price Management, Fuel Pricing Strategy, Fuel Pricing Technology, Fuel Software, Industry News, Retail Fuel Margins
According to an online article on the Barron’s site today, “CST Brands, one of the largest (c-store) operators, could ring up impressive gains for investors….Damian Witkowski, an analyst at Gabelli & Co., puts the private market value of the shares at $48. That’s nearly 50% higher than Tuesday’s close of $32.94. While that valuation gap might not close right away, in the next year the stock could jump 20% as earnings improve.”
Why is this analyst so bullish on CST Brands? Because of how well CST is managing the balance between fuel margins and volumes. “Since its spinoff from Valero ( VLO ) in May 2013, CST has been boosting fuel margins and opening new larger format stores under its Corner Store moniker…CST has been seeing success from its strategy. As an independent retailer of fuel, CST has been able to focus on improving fuel margins, rather than selling more fuel, as it had when it was part of Valero. In the March quarter, margins jumped 19% to 10 cents per gallon, from the same period a year ago.”
To what can we attribute this fuel price management success? PriceAdvantage, which CST Brands began implementing in July 2012, finishing the rollout by the end of that year. In the latest earnings report, retail fuel margins before credit card fees were$0.139 per gallon, up from $0.116 per gallon for the same period in 2013. Though volumes were down year over year, something easily attributed to the overall decline of fuel volumes in the industry, I wrote a blog article about the success CST Brands is seeing as they manage the balance between fuel margins and volumes.
The fuel team at CST Brands is a great partner of Skyline Products, both on the PriceAdvantage side and the Electronic Price Sign side. The CST Brands fuel team has worked closely with the PriceAdvantage team to help us develop the best-in-industry volume, margin, commodity, and competitor analysis interfaces. The benefit to the rest of the industry is that these interfaces are provided as part of the standard set of analysis views available with PriceAdvantage. These views are not custom one-offs that cause problems with future software upgrades – they are standard out-of-the-box features that pose no grief with upgrades.
We’re proud to work so closely with CST Brands, and look forward to including their ongoing wisdom and insight in future versions of the PriceAdvantage software.
