by John Keller | Oct 28, 2014 | Fuel Pricing Software, Fuel Pricing Strategy, Industry News, Retail Fuel Margins
According to Lundberg Survey, Inc., unbranded rack prices are starting to rebound, and that means we may very well start to see the average retail fuel price start to bounce back up as well. Read more at CSP.net here.
The retail price of unleaded has fallen $.1818 over the past two weeks to $3.0759. That’s $0.65 per gallon lower than the peak price of 2014 on May 2, and the lowest price in four years.
If we see rack prices drop again, it will be because global supply continues its downward pressure. As always, eyes are on OPEC to see if they continue their recent strategy of strong sales at current competitive but profitable prices, ignoring requests from Venezuela to cut production levels so prices can increase to a level closer to what Venezuela needs to be profitable. The next OPEC meeting is November 26.
My guess is that prices settle at current levels, with perhaps a slight increase, until the OPEC meeting.
by John Keller | Oct 10, 2014 | Fuel Price Management, Fuel Pricing Strategy, Fuel Pricing Technology, Fuel Software, Industry News
We just finished up the NACS 2014 show, and what a show it was. It was great to meet up with so many of our customers again and learn about the latest developments in their business. For some of our customers, it provided the opportunity for us to bring them up to speed on new features of PriceAdvantage. For others, it was the opportunity to talk about where they’re headed, and our product roadmap.
We did something different this year, and invited our newest partner Fuelzee to share our booth space. That proved to be a winning move, since many folks wanted to learn more about the free competitor pricing data Fuelzee is providing to PriceAdvantage, and how PriceAdvantage is pushing prices out to the Fuelzee mobile app for consumers to see. Loyalty, rewards, and mobile payment is a hot topic in our industry now, so Fuelzee was quite busy over the three days of the show.
The Expo floor was interesting because it showed a sample of how many integrations PriceAdvantage offers. Though it’s not a complete list, it included PDI, Fuelzee, GasBuddy/OPIS, NCR Radiant, Skyline signs, Pinnacle, and Gilbarco Veeder-Root. PriceAdvantage provides the Fuel Analyst with the aggregation of information, the views needed to make quick fuel pricing decisions, and the ability to act on those decisions by executing fuel pricing strategies to the street. Our theme this year was “It’s about time”, as in “It’s about time: the faster you can determine the right price, the faster you can increase profits”; “It’s about time: the quicker you can execute your fuel pricing strategies and know for certain the right price is at every store, the quicker you can move on to other responsibilities”; “It’s about time you make money off your fuel business”.
We look forward to seeing everyone at the NACS show 2015 next time – once again in Vegas.
by John Keller | Oct 3, 2014 | Fuel Price Management, Fuel Pricing Strategy, Industry News, PriceAdvantage, Retail Fuel Margins
The OPIS report today revealed the average retail fuel margin across the US dropped again this week, down $0.027 to $0.214 per gallon. The equivalent day in 2013 we had an average of $0.255. That makes the second consecutive week where retail fuel margins are lower than last year.
The year to date average is a solid $0.190 per gallon, and the six week average is $0.222 per gallon. The Q4 average in 2013 ended at $0.200 per gallon, so we’re starting the quarter above that number. However, 2013 began the fourth quarter at $0.255 so it lost $0.05 over the three month period. Let’s hope we can hold margins steady this year.
by John Keller | Oct 1, 2014 | Fuel Price Management, Fuel Pricing Strategy, Fuel Pricing Technology, Fuel Software, Industry News
The October issue of NACS Magazine has a great article “Weathering the Storm” discussing how weather impacts both fuel and in-store sales. Perhaps the best quote in the article is this: “As a stand-alone discipline, focusing on weather impact seems perhaps overstated, but as part of an overall retailing strategy it is essential, especially when it comes to reinforcing your brand’s value.”
The importance of incorporating weather into your fuel pricing strategy is a concept we at PriceAdvantage have embraced for a long time. It is in this vein that PriceAdvantage offers a free weather widget that not only shows current weather conditions at the store location, but a six day forecast, and a three day weather history as well. Ice storm in the forecast for Dallas? Prepare for virtually no traffic on that day. Nor’easter predicted to hit Boston this weekend? Plan on increased traffic exiting the city for home ahead of it, and increased skier traffic to the mountains after it.
Weather is a critical aspect of retail fuel pricing that makes optimization economic models on their own simply not good enough. Economic models are based on all things being equal. Introduce a random major weather event, and suddenly all things are not equal. Successful retail fuel pricing strategies must incorporate the wisdom and insight that only the fuel analyst and field intelligence can provide. That’s what we mean when we describe the “art and science” of fuel pricing.
NACS board member Chris Gheysens says in the article “It’s time to see weather as an opportunity … Understand what it does to you and solve for it going forward, coming up with different strategies.”
by John Keller | Sep 29, 2014 | Fuel Price Management, Fuel Pricing Strategy, Industry News, Retail Fuel Margins
On the online Convenience Store Decisions site today there is an excellent article written by Brian Milne, the Energy Editor of Schneider Electric. In the article Mr. Milne outlines the various factors influencing the expected price of gasoline through the rest of this year. Here is the list of influences going on right now:
Downward pressure:
- Seasonal decline in demand from August to September, as expected every year
- The move to a higher Reid vapor pressure specified gasoline, which is less costly for refiners to produce
- Growth in global crude production from the US, the North Sea, Libya, and Iraq
- Slowing growth in the China economy means weaker demand
Upward pressure:
- Refinery outages in the Gulf Coast and eastern Canada which supply the US Northeast
- The world traditionally uses the most oil during the fourth quarter leading to increased demand
Mr. Milne concludes that the only certainty in gas price predictions is the uncertainty. While it remains a safe bet that retail fuel prices will continue to decrease through the end of 2014, it may not be to the low levels that some predict. And from a fuel price management perspective, whenever we say declining retail fuel prices, we can insert rising retail fuel margins, since the opposite trends go hand in hand.
by John Keller | Sep 15, 2014 | Fuel Price Management, Fuel Pricing Strategy, Fuel Software, PriceAdvantage, Retail Fuel Margins
Brian Milne, Energy Editor for Schneider Electric, contributed another excellent update on Convenience Store Decisions today.
From a fuel price management perspective, the key takeaways are as follows:
- Brent crude oil dropped into the mid $90s bbl, below $100 bbl for the first time in over a year.
- West Texas Intermediate traded at $90.43, the lowest since May 2013.
- Retail fuel prices are likely to drop as much as $0.25 or more over the next 6-8 weeks.
We know that with the summer travelling season behind us, the annual seasonal trend should show us lower volumes from here through the end of the year. If Mr. Milne’s prediction holds true, and retail fuel margins increase as retail fuel prices drop, we’re heading into a season of strong retail fuel margins through Q4. In 2013, retail fuel margins hovered in the $0.188 to $0.191 range throughout the fourth quarter, and we didn’t see such margin increases. Hopefully 2014 will prove to be more profitable.
