by John Keller | Jul 8, 2014 | Fuel Price Management Solutions, Fuel Pricing Strategy, Industry News, Retail Fuel Margins
It has been a tough first half of the year as far as retail fuel margins go. According to the weekly OPIS margin reports, the year to date average currently stands at $0.165 per gallon compared to $0.180 this time last year. Alimentation Couche-Tard, whose outlets include Mac’s and Circle K, just reported in their financial earnings their gross fuel margin in the United States fell more than 23% this quarter to $0.1485 per gallon from $0.193 per gallon same quarter last year. While same-store fuel volumes increased 2.8% at Couche-Tard, that wasn’t enough to prevent the company from missing analysts’ expectations.
But according to Brian Milne of Schneider Electric, now that ISIS (the extremist militants, not the mobile wallet company) has been contained in Iraq, and Libya is expected to increase their output from roughly 200,000 bpd to 500,000 bpd in the near term, supply disruptions are perceived as being much less likely. That explains why global oil prices are down from early June and should continue on that trend. The Brent crude contract is already down $5 bbl from its June high.
That means now is the opportunity to gain margins the fuel retailing industry lost while the cost of oil was climbing. Keep careful watch on the competition, but don’t be too quick to drop your retail fuel prices – use retail fuel pricing software like PriceAdvantage to protect your margins.
by John Keller | Jul 4, 2014 | Fuel Price Management, Fuel Pricing Strategy, Industry News, Retail Fuel Margins
The OPIS report today revealed a restoration of retail fuel margins back to levels last seen June 13. The average retail fuel margin rose $0.038 per gallon this week to $0.195 per gallon. That’s still a far cry from this same time last year where the average retail fuel margin was over ten cents higher at $0.302 per gallon.
The year to date and last six week retail fuel margin averages were both up $0.001 per gallon, at $0.165 and $0.174 per gallon respectively.
This week last year the retail fuel margin average took a $0.13 nose dive to $0.171 per gallon. If we can hold our retail fuel margin average steady this week, we’ll be back over the number last year, which would be the first time since June 13.
by John Keller | Jul 3, 2014 | Fuel Price Management, Fuel Pricing Strategy, Industry News
It seems that everywhere we turn heading into this July 4th weekend we see news stories about the high price of gas. In the Wall Street Journal today the top story in the third section is “Pump Prices Wallop Wallets: Fuel Cost Hits a Holiday High Unseen in Years; ‘It Eats Away at Your Lifestyle”.
Whew – how’s that for an attention grabbing headline!
The article goes on to say that gas prices this holiday season are the highest since the record highs of 2008. The US national average is $3.67 which is $0.20 higher than this same time last year. The average gas price this year is the second highest of the past ten years.
The article attributes the blame to oil investors and traders who are worried that the unrest in Iraq will cause a prolonged increase in the barrel of crude. Iraq was the sixth-largest oil exporter to the US this past April.
Michael Green, a spokesman for AAA, cautioned that drivers may cut back on shopping, dining or going out because the higher gas prices affects their budget. The article emphasizes the point that because of the increased domestic oil production in the past years, the US has near record oil inventories, and so we are not on the same level of dependence as we were in 2008 when oil prices hit $150 a barrel. That means we are buffered from a repeat of 2008 when gas prices hit $5 a gallon in some parts of the country.
The AAA also says the number of Americans expected to drive 50 miles or more during this holiday weekend is 34.8 million people, the highest in seven years.
Another interesting statistic quoted in the article: gas prices dropped an average of $0.21 in June over the past three years, but gas prices rose this year.
What can we take away from all this from a fuel price management perspective?
1. Drivers are expecting to see higher prices at the pump, so they won’t be experiencing sticker shock as they travel this weekend.
2. The US economy continues to improve, and consequently we’ll see more miles traveled this weekend, and more demand than last year’s holiday weekend. That means more volume available to capture overall. Combine the increase in volume with the higher gas prices, and we can expect to see higher fuel revenues this year than last.
3. We know that retail fuel margins suffer during times of retail fuel price increases, and that is proving to be true once again as we compare OPIS reported margins this year to last year. We’ll likely see margins in the range of $0.17 per gallon lower this holiday weekend than last year.
4. The more volatile the rack price, the more at risk you are of losing pennies on every gallon. And with higher gallons available in the market this year, those opportunity losses are amplified.
Only with the rich analysis and rapid speed to the street of fuel price strategies provided by PriceAdvantage can you make the most of the market this holiday weekend, and the entire summer season.
by John Keller | Jun 27, 2014 | Fuel Price Management, Industry News, Retail Fuel Margins
The latest OPIS report revealed that retail fuel margins last year at this time were $0.117 per gallon higher than this year.
The current retail fuel margin average stands at $0.157 per gallon, $0.003 below last week. Last year at this time the average retail fuel margin was a robust $0.274 per gallon.
The year to date retail fuel margin average remains unchanged at $0.164 per gallon while the Q2 average dipped to $0.169. The six week average took the biggest hit in four weeks, dropping $0.015 per gallon to $0.173 per gallon.
Overall, June was a tough month, with the retail fuel margin averaging only $0.171 per gallon. In 2013 the June average was $0.210 per gallon. In 2013 the Q2 average was $0.191 per gallon, $0.022 above this year.
After the rough first half of the year we can only hope wholesale costs will give us a reprieve so we can allow margins to catch up. Unfortunately, with all the unrest in Iraq and the rest of the Middle East, there is no certainty in our wholesale cost trends, and we’ll be forced to make the most of anything we can, squeezing every penny out of every hour.
by John Keller | Jun 27, 2014 | Fuel Price Management, Fuel Pricing Technology, PriceAdvantage
As reported by CSPNet.com, gas taxes will change in California and Indiana on July 1.
In California, the excise gas tax will drop $0.035 per gallon from $0.395 to $0.36 per gallon for the 2014-2015 fiscal year, ending June 30, 2015.
In Indiana, the state will be switching from a prepaid sales tax on gasoline, which was collected from retailers, to a gasoline-use tax based on a rolling monthly statewide average that is collected from distributors. The tax rate could change from month to month depending on the average price for gasoline. For the month of July 2014, the tax will be $0.229 per gallon.
From a fuel price management perspective, it’s critical that all your fuel pricing systems can be quickly adjusted to adapt to the new taxes. PriceAdvantage is built with this kind of flexibility in mind, allowing you to make these tax changes to your system without having to call in expensive consultants and pay them to open the hood and make the changes.
Does the fuel pricing software you have make it easy to change tax rates?
by John Keller | Jun 20, 2014 | Fuel Price Management Solutions, Industry News, Retail Fuel Margins
The OPIS report today revealed that the average US retail fuel margin dipped below this equivalent week last year. The average retail fuel margin now stands at $0.160, which is a $0.036 per gallon drop from last week. Last year at this time the average retail fuel margin across the US was $0.199 per gallon.
With the unrest in Iraq, this comparison to last year is likely to remain gloomy, as last year the subsequent week saw an increase to the retail fuel margin of $0.075, when it finished the second quarter at a whopping $0.274 per gallon.
Last year the average retail fuel margin across Q2 was $0.210. So far this year the average Q2 retail fuel margin is $0.170, meaning we’ll likely see an average for the 2014 quarter in the $0.17 range, or four cents less than last year.
Year to date, the average retail fuel margins for 2014 are standing at $0.164 compared to $0.171 at this time last year.
From a fuel price management perspective, unquestionably these numbers indicate just how competitive a market it is this year. It really is a penny up, penny down game, and only the most sophisticated fuel price management software like PriceAdvantage can help you determine the best price for each location and deliver those prices quickly to the street.
