by John Keller | Aug 24, 2011 | Customer News, Fuel Price Management Solutions, PriceAdvantage
Skyline Products is proud to congratulate Stewart Spinks, Founder and CEO of long-time customer The Spinx Company based out of Greenville, SC, for being inducted into the Convenience Store News Industry Hall of Fame. This Hall of Fame recognizes convenience store industry pioneers and innovators.
The Spinx Company uses PriceAdvantage for their enterprise fuel price management solution across all their stores. With over 65 stores, the Spinx Company is the largest privately held gasoline convenience retailer in the state of South Carolina.
The Spinx Company uses PriceAdvantage in conjunction with Skyline signs to manage the four-phase closed loop fuel pricing process from survey collection, to fuel price analysis and optimization, to pushing fuel price changes from headquarters, to fuel price change confirmation at the sign, POS and pump. Stewart Spinks personally uses his PriceAdvantage fuel pricing software daily to monitor competitor changes and to push fuel price changes to each of his stores.
by John Keller | Aug 10, 2011 | Fuel Price Management, Fuel Price Management Solutions, Fuel Pricing Strategy, Industry News
Fuel Price Managers should base their fuel pricing strategies on the general consensus that retail gas prices will continue to drop through the rest of 2011.
USA Today picked up a story from the New York Times, proclaiming that gasoline prices are sure to continue to drop. The article predicts that next month, the national average for Regular Unleaded could drop to $3.25/gallon. That would be over $.40/gallon less than today’s national average. A spokesman from NUS Consulting, the often quoted specialist firm in energy sourcing, risk management and sustainability, was quoted as predicting that crude will fall from today’s price of $82 to between $55 and $60 before finishing the year at $70.
UPDATE 8/12/11 The Los Angeles Times published an article saying “motorists should see pump prices drop as much as 50 cents a gallon over the next several weeks…”.
Today’s US Energy Information Administration Short-Term Energy Outlook projects Unleaded fuel price national averages to drop $.09/gallon in the 3rd quarter of this year and reach $3.58/gallon; predictions for the 4th quarter include an additional $.14/gallon drop to reach $3.44/gallon. That’s about $.06/gallon lower than what the US EIA published last month. On August 8th, the US EIA announced the national average for Unleaded was $3.67/gallon, a $.04 drop from the previous week.
Fuel Price Management strategies should include consumer expectations that fuel prices will fall.
by John Keller | Jul 27, 2011 | Fuel Price Management, Fuel Price Management Solutions, Fuel Price Optimization, Retail Fuel Margins
Valero Energy in their quarterly report announced that US retail fuel margins for the past three months were $.204 per gallon. That’s an increase of nearly $.02 compared to the same time period last year.
For the six months ended June 30, retail fuel margins were $.142 per gallon, essentially unchanged compared to $.148 for the same six months the previous year.
For the three months ended June 30, Valero retail sales in the US were 5,094 gallons per day per site (154,518 gallons per month per site), down 2% from 5,196 gallons per day per site the previous year. For the six months ended June 30, Valero retail sales in the US were down 1.5% from the previous year, with 2011 sales reaching 4,995 gallons per day per site (151,515 gallons per month per site) compared to 5,070 gallons per day per site for the same period in 2010.
According to NACS, the average US c-store sells 121,000 gallons of fuel per month annually. That means over the past three months, Valero stores sold about 27% more than the US national monthly average.
According to Valero’s press release, “Valero’s retail segment continued its record-setting performance with $135 million in operating income, which was the best second quarter in Valero’s history. The increase in operating income was mainly due to higher retail fuel margins….”
Clearly Valero is tremendously successful with their retail fuel price management solutions.
Valero has nearly 1000 company operated stores in the US.
by John Keller | Jul 18, 2011 | Fuel Price Management, Fuel Price Management Solutions, Fuel Pricing Strategy, Industry News
Walmart joined the retail fuel price loyalty game this summer, partnering with Murphy Oil to offer $.10 discounts on fuel when the purchase is made using one of the Walmart payment cards. Loyalty reward incentives are becoming mainstream across retail fuel c-stores and grocery store chains.
So the question is, how can the fuel manager compete? The answer lies in understanding the fuel pricing strategy at Murphy.
Murphy focuses their fuel price management solution around the urgency of fuel price changes. At Murphy, the fuel price strategy is a volume game. Murphy uses price as their number 1 advertising, as their billboard. Murphy advertises their price on enormous gas price signs, projecting such confidence that the consumer believes Murphy must have a low price since the sign is so bold. Murphy has reached such operational efficiencies in the fuel price change process, they can react extremely quickly to hourly wholesale price fluctuations. Murphy routinely changes fuel prices 2-3 times per day to squeak out the highest possible volume and profit hour by hour, based on these hourly wholesale price fluctuations. Speed to the street wins. When wholesale prices go up, retail price changes can happen almost immediately. When wholesale prices go down, Murphy can make it very difficult on the stores around them by dropping retail prices right away. Murphy sells such high volumes of fuel, the difference of a fraction of a penny, multiplied out times every gallon sold across their enterprise, yields huge profits.
The only way to compete against Murphy is to implement a fuel price management solution that watches Murphy prices like a hawk. Subscribe to the OPIS Radius report and get pricing feeds througout the day. Track every Murphy price move by allowing store and territory managers in the field to quickly report new Murphy prices to headquarters, or better yet, empower these managers to use their mobile device to change prices immediately when Murphy moves. Then the fuel manager can know what’s happening in the field in real time, and analyze store performance in terms of my price vs. competitor price, and gallons sold as compared to the same day of the previous four weeks. With this fuel price management solution, fuel managers can quickly make adjustments to their Murphy competitor strategy, and maintain the strategy that makes sense, whether it is matching Murphy, or staying within the price differential that the market will bear.
by John Keller | Jun 8, 2011 | Fuel Price Management Solutions, Fuel Price Optimization, Fuel Pricing Strategy
The Baltimore Sun recently published this letter to the editor from an owner of a convenience store. It’s interesting to hear the fuel pricing problems this local retailer is dealing with, as people report that his fuel prices are 10 cents higher than the competition.
“I am one of the owners of Ray Adolph’s Citgo on York Road in Lutherville. Earlier this week, our station was mentioned in an editorial (“A dime’s worth of difference,” May 23) for having gasoline prices more than 10 cents higher than neighboring stations. While that was accurate, I would like to enlighten the general public as to what occurred that week.”
“On May 9, our station was posting a competitive price for fuel. But looking ahead, I saw on my supplier’s web site that the cost of fuel was going to be 10 cents per gallon higher on Tuesday and 20 cents by Wednesday. Guess when we needed to purchase a load of fuel? Bingo. Mid-day Wednesday was when the “liquid gold” was dropped in to my tanks, and that was 20 cents per gallon higher then my previous purchase.”
“I had not only purchased the gas at the highest price for the week, but I found out later it was the peak price for the day. By 6 p.m. Wednesday, May 11, the price had already dropped 6 cents. By Friday, it had dropped an additional 7 cents, or 13 cents in all since I bought gas. I called my salesman and he made a 10-cent adjustment on what I had just purchased. However, at the time of this writing (May 26), the cost has dropped 35 cents per gallon since I purchased it. Even with the 10-cent credit, I am still the highest price in the neighborhood.”
“Our Citgo not only sells fuel but has nine service bays for general auto repairs. Consumers assume that since our gas price is so high that we will be gouging people for service work. One has no bearing on the other. Up until this recent roller coaster ride in fuel pricing, we would be as competitive as we could with selling a gallon of gas. Our service prices are very competitive.”Brian K. Adolph, Lutherville
The writer is president of Ray Adolph’s Citgo.
See the link below to read the article on the Baltimore Sun site:
http://www.baltimoresun.com/news/opinion/bs-ed-citgo-20110527,0,3108800.story
As I speak with Fuel Managers across the country, they tell me pricing fuel didn’t use to be as hard as it is today. In the 1970’s it was common to have the same fuel cost for an entire month. In the early 1980’s, there would be a new fuel cost every day, but prices never changed more than a few cents day to day. These days Fuel Price Management includes handling wholesale fuel cost swings of $.20-$.30 down one day, followed by $.20-$.30 up the next.
Blame it on fuel commodity speculators if you want, but fact is, the dramatic fluctuation of fuel costs coupled with the high consumer scrutiny of retail fuel prices has made Fuel Price Management more difficult than ever. The answer is to implement fuel price management solutions that allow for rapid monitoring of cost changes, tracking competitor retail price responses, and accelerating speed to the street to enforce the right price to the right store at the right time.
by John Keller | May 25, 2011 | Fuel Price Management, Fuel Price Optimization, Fuel Pricing Strategy
The fuel price speculative bubble is over, and the market is correcting now, according to Stephen Schork, president of Pennsylvania-based energy consultant The Schork Group Inc.
Bloomberg Business Week today reported that pump prices were $1.66 a gallon over crude oil futures in New York on May 6, the largest premium since September 2008, according to data compiled by Bloomberg. That compares with an average of 95 cents in the past five years. In 2008, it took two months for the gap to return to average.
The $4 per gallon U.S. gas prices are deterring motorists from driving, causing a 2% decrease in demand compared to last year, and likely a lower fuel prices by July. While gasoline prices may not be down by Memorial Day on May 30, history suggests they will be lower by July 4, when 32 million typically take to the roads for the Independence Day holiday.
From a Fuel Price Management perspective, that means volumes may be lower in May, but are likely to increase just as wholesale costs decrease, along with retail fuel price averages.
Read the complete Bloomberg article here.
