by John Keller | Sep 10, 2013 | Fuel Price Management, Fuel Pricing Strategy, Industry News
Both the US Energy Information Administration and the University of Michigan continue to release information about the downward trend of US fuels volumes. The conclusions have a direct impact on the c-store retail fuels marketer because both the US EIA report and the University of Michigan study reveal a continued decrease in the overall retail fuels market size.
The US EIA reports that in 2012, US drivers consumed 50,000 barrels a day less gasoline than in 2011. And in the first half of 2013, US drivers have cut back again, consuming 50,000 barrels a day less gasoline than in 2012. While the US economy continues to improve in 2013, the improved fuel efficiency of vehicles on the US roads more than offsets any expected increase in fuels volume consumption.
According to the University of Michigan study, the average fuel efficiency of new vehicles sold in the US is now at an all-time high, reaching 24.9 miles per gallon in August. The average fuel economy of 2013 year model vehicles that were sold from October 2012 through August was 24.7 mpg. That makes for an increase of 1.2 miles per gallon above the 2012 year model vehicles. The average fuel economy of new vehicles has increased 19.7% since 2008.
How does this pertain to fuel management? While markets will vary based on population shifts, it is critical that fuel marketers continue to compare their current fuel volumes to six week trends, and year to date trends to last year. Fuel software must provide rich analysis that provides answers quickly so fuel pricing strategies can be continually adjusted. Our customers agree, PriceAdvantage analytics are the best in the business.
by John Keller | Aug 30, 2013 | Fuel Price Management, Fuel Pricing Strategy, Industry News, Retail Fuel Margins
According to today’s OPIS report, retail fuel margin averages across the United States fell for the second straight week. This week retail fuel margins decreased $0.018 per gallon and now stand at $0.169 per gallon.
The year to date average dipped slightly to $0.181 per gallon. The Q2 average also slipped, to an average margin of $0.199 per gallon. The six week average stands at $0.203 per gallon and the average margin since Memorial Day is $0.204.
Retail margins this year are $0.025 per gallon higher than this time last year.
With the Syrian conflict in all the news and the rising cost of crude, there was fear of tanking retail fuel margins heading into the Labor Day holiday, but it looks like the c-store retail industry will be able to survive this weekend with reasonable margins and head into the next season with a solid year to date margin average.
by John Keller | Aug 29, 2013 | Fuel Pricing Strategy, Industry News
According to a recent CNBC article, next year we can expect to see a lot more diesel cars on the roads across the US. The 2014 US model year should have double the selection of previous years, with 40 diesel models on the market by the end of 2014. Diesel SUV’s are likely to see the biggest increase in sales.
For a long while, Volkswagen has had the majority of diesel models in the US. But GM is planning to offer new diesel models, as is Chrysler, Mazda, Nissan and Audi. Some experts predict that by 2018 diesel vehicle sales could represent 10% of all new vehicle sales.
Diesel technology typically boosts mileage by 30%, helping auto manufacturers meet federal mileage regulations. These regulations require a combined 39 mpg fuel mileage rating in the window across their model offerings by 2025.
Many diesel models can go 600 to 800 miles on a single tank, dramatically altering the behavior of gasoline consumers who stop to fill up twice as often as these models.
What does this mean from a fuel price management perspective? First, it may be a good time to start planning to add diesel to your product offering if you don’t already offer it, especially if your stores are in an area where SUV’s and trucks are popular. Second, monitor the ratio of diesel fuel sales to gasoline fuel sales from a historical perspective, and see if the current sales trends are tipping the balance in the favor of Diesel. If it hasn’t started yet, depending on your markets, you’re likely to see the shift over the next five years and beyond.
by John Keller | Jul 22, 2013 | Fuel Price Optimization, Fuel Pricing Strategy, Retail Fuel Margins
We’re seeing news stories all over the country, both nationally and on a local level, bracing US consumers for rising retail fuel prices in the coming weeks. The reasons given include unrest in Egypt, increased demand due to the summer season, and production disruptions in the US.
The source of the stories is consistently the American Automobile Association (AAA), which receives its pricing information from OPIS. The PriceAdvantage integration with OPIS allows PriceAdvantage customers to provide their latest pricing information to OPIS, and thus display the current gas prices on websites that receive pricing information from OPIS, including MSN Autos, Garmin, AAA, and MapQuest.
From a fuel management perspective, these news stories mean two things.
- If OPIS is correct, and wholesale prices continue to rise, fuel retailers are looking at more weeks with continued slim retail fuel margins. It will be a time period of holding on, waiting for the crest and fall of wholesale prices when retail prices can catch up, and retail margins can be restored.
- Consumers may not be happy with increased retail fuel prices, but at least they won’t be caught off guard. That means there will be opportunities for fuel retailers to adjust retail fuel margins and make up lost ground when wholesale fuel prices drop again.
In order to navigate these times of fluctuating retail fuel margins, analysts in the fuel management area need to maximize their investment and use of their fuel software to optimize fuel profits. Only the most sophisticated fuel software can provide the optimized balance between fuel margins and fuel volumes in times like these.
by John Keller | Jul 19, 2013 | Fuel Price Management Solutions, Fuel Price Optimization, Fuel Pricing Software, Fuel Pricing Strategy
The ability to make one-click price changes at all retail fuels locations is critical when optimizing fuel prices because it reduces the potential for human keying errors, streamlines the overall fuel pricing process, and ensures maximum fuel profitability. Retail fuel managers frequently face the frustration of not being able to react quickly enough to changing market conditions. Interference, be it from technology or the environment, can hold back price changes, and prevent the optimized prices from reaching the street. By the time the prices do change, it may be too late, as the competition has already leapfrogged to a new price based on newer market fluctuations.
A centralized process for managing fuel price changes to all locations removes the store manager from the loop and increases speed-to-the-street. Tracking and analyzing fuel prices can now be done by a fuel analyst at headquarters giving store managers more face time to interact with customers. By leveraging technology and improving traditional company processes, these overburdened store managers can be freed up to oversee tasks within the store, more effectively handle store operations, and provide better customer service.
The ability to automate fuel price changes at the POS, fuel pumps, and electronic price displays is one key differentiator between the patented PriceAdvantage SMART fuel pricing software solution and other solutions in the industry. The ability to immediately execute price changes within a region, location, or market means you have the right strategy prices in place at the right time to offset your competition. Traditional fuel pricing models relay fuel price changes gradually from one channel to another, allowing for interruptions, miscommunication, human error, and delay after delay. Removing store managers from the critical path eliminates these delays by creating a direct channel from pricing to implementation.
The patented PriceAdvantage SMART fuel price management solution provides analysis of the competitive landscape and a complete picture of the optimal prices in each market. Then fuel managers can use PriceAdvantage to automate the entire fuel price change execution process, including price change confirmation at the POS, sign and pumps, to maximize overall fuel profitability. PriceAdvantage provides a complete picture of the playing field, allowing fuel managers to attain true fuels price optimization day in and day out.
by John Keller | Jul 5, 2013 | Fuel Pricing Strategy, Industry News, Retail Fuel Margins
According to OPIS, retail fuel margins across the USA are now at the highest average levels of the year.
For the third consecutive week, retail fuel margins increased, this time up $0.028 per gallon to an average of $0.302 per gallon. The increase this week bumped the year to date average retail fuel margin to $0.180 per gallon.
For the past six weeks, the average retail fuel margin stands at $0.227 per gallon.
Oil prices have been on the rise however, so it stands to reason that wholesale prices may soon inch up, putting pressure on retail fuel margins. From a fuel management perspective, it makes sense to use profits from these margins to invest in fuel software in order to keep a close watch on the changing market conditions, and optimize fuels prices to balance margins and volumes.
