The American Petroleum Institute reported that gasoline deliveries, a measure of consumer gasoline demand, increased 3.0% to 9.0 million barrels per day, the second monthly increase in demand since February 2011.
From a fuel price management perspective, the fuel volume sales benchmark is higher year over year.
There is a growing list of articles in the press predicting that fuel prices are going to drop in the coming months. Both a AAA report and a report from the US EIA say fuel prices should begin to drop, with regular unleaded fuel leveling out to $3.95 per gallon.
Fuel prices for regular unleaded from April to September should be $3.95 per gallon according to the US EIA. Average prices for that same period last year were $3.71.
According to the most recent MasterCard SpendingPulse study, fuel consumption declined 3% over the past 52 weeks. That equates to 4.2 billion gallons.
According to John Gamel, who oversees MasterCard SpendingPulse’s weekly consumption report, part of the reason for the decline is that people have purchased vehicles with better gas mileage. Average gas mileage is now 24 miles per gallon, compared to 20 mpg in 2008.
Experts agree this trend of declining fuel consumption is bound to continue. From a fuel price management perspective, it’s clear that as convenience stores continue to fight for an ever shrinking fuel market, competition will continue to be tough. Only the c-store chains with the most effective fuel pricing technology will survive.
This information was reported by Convenience Store News in an article here.
In the March 21, 2012 issue of the Convenience Store News Special Features > Business Focus, the section “Issues and Leaders with Don Longo” is an interview with Greg Parker of The Parker Companies, a PriceAdvantage customer.
The Parker Companies uses PriceAdvantage in the cloud for their fuel price management of 27 convenience stores in South Carolina and southeast Georgia. In the interview, Don Longo lists fuel price management software among the key industry-leading latest technology programs in place at The Parker Companies. Mr. Parker explains how critical managing the price of fuel is to the business, given the current market conditions.
Longo: Please comment on the most significant developments relating specifically to the convenience industry.
Parker: As the number of stores increases and the overall consumption of gas decreases, there is greater competition in our industry than ever before. Gas consumption has decreased by 4.5 percent as consumers drive more fuel-efficient vehicles and become more mindful of their driving habits in light of high gas prices. Everyone is fighting for a greater market share, which means everyone has to get better at what they do. To me, this is an inspiring development in our industry because it forces everyone to step up their game.
The CSN interview may be found here.
We’re now in a time of survival of the fittest, where only the strongest c-store chains in the retail fuel business will survive. An article in Convenience Store News today references the sale of another c-store chain, this time one that had been in business for 27 years. The original owning family cites a completely business environment – gas prices and competition are up, but fuel margins are down.
From a fuel price management perspective, this sale is just one more indicator of how tough it is out there, and how much an effective fuel price management solution is needed. Without a complete fuel price management technology solution to effectively monitor and manage volumes, competitor and store pricing, and daily retail fuel margin, a chain simply can’t compete. It’s too tough of an environment to take too long to respond to competitor and cost changes, and to miss the retail fuel margin windows of opportunity.
While it’s one thing to come up with what the fuel prices should be at each of your stores, it’s completely different to know when the price changes actually took effect. What good is it to know what the prices should be, when the prices don’t hit the street until 5 to 7 hours later, and you’ve missed your window? Fuel price change confirmation is critical to the entire fuel price management cycle.
The Convenience Store News article may be found here.
According to the US EIA, average unleaded retail fuel prices across the US rose another $0.03 a gallon this week. Hardest hit was the Rocky Mountain region where the average price for unleaded fuel rose $0.14 a gallon. Fuel prices in the Rocky Mountain region are still the lowest in the country, averaging $3.47 a gallon, $0.17 a gallon less than the next lowest region which is the Gulf Coast where the average gallon of unleaded is $3.647.
Average fuel prices increased in every region except New England, where the average price of a gallon of unleaded dropped $0.01 to $3.809.