by John Keller | Jan 9, 2015 | Fuel Price Management, Fuel Price Optimization, Fuel Pricing Strategy, Fuel Software, Retail Fuel Margins
The OPIS report today revealed the average retail fuels margin across the US was $0.288 per gallon, down $0.047 from last week.
That is the third consecutive weekly decline, but the US retail average is still nearly double the margin of the equivalent week last year when the retail fuels margin was $0.146 per gallon. The six week average remains at a robust $0.326 per gallon. This is the fifth consecutive week when the six week average increased.
Last year at this time the retail fuel margin average bumped along the bottom until breaking above $0.20 per gallon the first week of March.
Perhaps the continued margin average decrease over the past three weeks is an indication that fuel marketers are now vying for volume and willing to sacrifice some of their margins. Only fuel pricing software like PriceAdvantage can allow the savvy fuel analyst to play the volume / margin game and make the most profit during these turbulent times.
by John Keller | Jan 2, 2015 | Fuel Price Management, Fuel Price Optimization, Industry News, Retail Fuel Margins
The OPIS report today reported that the average US retail fuel margin started the new year at $0.335 per gallon. That margin is down $0.041 from last week, but a whopping $0.209 higher than the equivalent week last year when the average retail fuels margin was $0.126 per gallon.
The six week average was up $0.011 per gallon from last week and reached $0.321 per gallon.
Retail fuel prices across the US have been falling 99 days in a row, according to AAA. And there is no end in sight, with the cost of crude continuing to drop, and gasoline futures dropping as well.
What does this mean from a fuel price management perspective? It means these are the days of margins, when we need to make the best of the time given to us, knowing full well that the market cannot continue like this forever. Soon we’ll enter into the days of transition from winter to summer blends and scheduled refinery maintenance. Typically that means the season of wholesale cost increases and margin decreases.
We can make the best of these days by using fuel pricing software that allows us to react quickly in this volatile environment.
by John Keller | Dec 23, 2014 | Fuel Price Management, Fuel Price Optimization, Industry News, Retail Fuel Margins
According to Brian Milne, Energy Editor of Schneider Electric, the months of November and December this year have yielded some of the highest weekly fuel demand numbers of the year.
According to Mr. Milne, two of the three highest weekly demand rates in 2014 happened in November and December. The retail fuels price drop we’re seeing began in mid-October, and since then only two weeks have had gasoline demand below the five-year average. The second week of December had some of the highest retail fuels demand of the year, quite an oddity since typically the highest demand weeks are in the summer months during high travel season.
What does this mean from a fuel price management perspective? Take these high volumes and multiply them times the high margins at the time, and we can expect exceptionally strong financial results from the publicly held retail fuel companies when they report their calendar year Q4 earnings.
by John Keller | Dec 5, 2014 | Fuel Price Management, Fuel Price Optimization, Fuel Pricing Technology, Fuel Software, Industry News, Retail Fuel Margins
OPEC announced on Thanksgiving that they would not cut back their production. According to the Wall Street Journal, Venezuela was pushing for a considerable cut in OPEC production prior to the meeting. When Russia, which isn’t a member of OPEC, decided to maintain their production levels and not join in any plan to cut output, Saudi Arabia argued that the group must defend market share rather than prices. That decision became final as the cartel is now appearing that they will not push for supply cuts in the immediate future.
Saudi Arabia is now anticipating oil prices could settle at $60 a barrel, approximately $9 a barrel less than now. According to the US Energy Information Administration, if every $10 drop in the price of a barrel of crude is passed on to the consumer, that would equate to a $0.24 drop in the price of a gallon of gas.
From a fuel price management perspective, that means we could see average gas prices in the $0.20 to $0.30 range lower than today in the coming weeks. And as always, falling gas prices mean lower fuel revenues but stronger retail fuel margins.
What else can we expect from these lower oil prices? Auto manufacturers have reported robust November sales, especially in trucks and luxury vehicles that get lower gas mileage, and perhaps require premium fuel. Meanwhile, Toyota has reported that sales of its hybrid Prius are down 14% year over year. This could mean a slowing of the ongoing trend of reduced demand for fuel caused by increasingly more fuel efficient vehicles on the street. But of course it is important to consider that even today’s less than highly fuel efficient new vehicles are likely more fuel efficient than the vehicles they are replacing. So it is unlikely that the reduced fuel demand trend will reverse completely.
We live in historic times, as witnessed by the constant news articles about oil prices and gas prices. If savvy fuel analysts play their cards right and invest in premiere retail fuel pricing software technology, there is quite a bit of money to be made.
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 | 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.
