by John Keller | Aug 14, 2012 | Fuel Pricing Strategy, Retail Fuel Margins
Valero Corner Store extends gasoline pricing strategy to GasBuddy.
Valero Corner Stores is the second PriceAdvantage customer to extend their gasoline pricing strategy to the web via GasBuddy OpenStore. Rutter’s Farm Stores is also using GasBuddy OpenStore to publish their gasoline pricing to the Web. Corner Store and Rutter’s locations now appear on their GasBuddy browser map with their gasoline prices, easy for consumers to find.
Valero and Rutter’s recognizes that a key part of the fuel price optimization strategy is to not only push prices to the store POS, pumps and gas price signs, but to push it to the web as well. With the advent of smart phones and the plethora of gas price smart phone apps, travelers can now easily check the price of gasoline while on the go, and that means the fuel price optimization strategy must include marketing gasoline prices via virtual gas price signs on these apps.
by John Keller | Aug 13, 2012 | Fuel Pricing Strategy, Industry News
US EIA reports a $0.076 fuel price increase from last week.
In today’s Gasoline and Diesel Fuel Update, the US EIA reported regular unleaded retail fuel prices across the US increased for the 6th consecutive week, this time by $0.076 per gallon to $3.72. Fuel prices are now at levels last seen May 21, 2012. Unleaded regular fuel prices are now $0.117 per gallon higher than one year ago.
Retail gasoline prices increased everywhere tracked by the US EIA except the state of Ohio which saw a $0.126 per gallon drop, and the cities of Chicago and Cleveland which saw a $0.020 and a $0.102 per gallon drop, respectively.
The biggest fuel price increase was found in California at $0.228 per gallon, with a $0.28 increase in San Francisco and a $0.219 in Los Angeles.
From the fuel price management perspective, the Fuel Manager should use this data in their fuel price optimization software to optimize the gasoline pricing strategy in each of their markets.
by John Keller | Aug 13, 2012 | Fuel Pricing Strategy, Industry News
US EIA reports gasoline fuel consumption increases in April and May over 2011.
In the US Energy Information Administration report “Today in Energy” dated August 13, 2012, the US EIA reported gasoline consumption was up slightly in April and May this year compared to last. Bucking the trend going on for years, April 2012 showed a one month consumption increase of 55 thousand bbl/d compared to 2011. May 2012 showed a consumption increase of 200 thousand bbl/d compared to the same month previous year.
U.S. gasoline consumption peaked in 2007 at 9.3 million bbl/d and fell by an average of 3.2% (300 thousand bbl/d) in 2008 due to the recession and high gasoline prices, which topped $4 per gallon in June and July 2008. Gasoline consumption remained flat the next two years, increasing by just 0.1% in 2009 and falling slightly in 2010. In 2011 gasoline consumption fell by 2.9% (260 thousand bbl/d) from the year before.
The first three months of this year, gasoline consumption averaged 124 thousand bbl/d lower compared to last year.
From a Fuel Price Management perspective, this data is critical for comparing overall market size fluctuations vs. differences year over year, and manipulating the gasoline pricing strategy for various markets.
by John Keller | Aug 2, 2012 | Fuel Pricing Strategy, Industry News
In the Harvard report “Oil: The Next Revolution, The unprecedented upsurge of oil production capacity and what it means for the world”, Leonardo Maugeri predicts a change in the balance of power and and a long-term lower oil prices for the remainder of the decade. From a fuel price management perspective, this is a fascinating picture of where we are today and where we are likely to be in the coming decades.
Mr. Maugeri outlines a range of different scenarios with varying economic possibilities ranging from a new world-wide economic recession, a sudden solution to major political tensions, a collapse of the China economy, and a sudden recovery of the world economy. Mr. Maugeri writes “I have no particular preference for any of these scenarios…although I think the probability of a significant fall in oil prices is higher than all other scenarios.”
The paper asserts that its most important messages are these:
- Oil is not in short supply
- The oil market is global and none of its pieces/countries can be insulated from the other
- The shale boom in the US is the most important revolution in the oil sector in decades
- Conventional oil production is growing throughout the world
- The oil market will continue to remain volatile through 2015
- The Western Hemisphere could return to pre-World War II status of self-sufficiency
by John Keller | Mar 13, 2012 | Fuel Pricing Strategy, Industry News
The Centre for Global Energy Studies predicts Brent Crude prices to drop 20% over the next three years. While today Brent Crude trades in the neighborhood of $125 a barrel, the Centre predicts Brent Crude to drop to $112 a barrel by the end of 2013, $100 a barrel in 2015, and $95 a barrel by the end of 2016.
The drop in Brent Crude prices is attributed to the wide range of new discoveries throughout the world. “The world has become a very exciting place for energy and there are possibilities everywhere,” said B.C. Tripathi, chairman of GAIL India Ltd. (GAIL), the country’s biggest natural-gas distributor. “Our options to get oil and gas now range from America to Australia.”
Spending on oil and gas exploration rose to a record $72 billion last year, as drillers look to replace aging fields with finds in countries with little or no history of oil production. Shell is increasing their exploration budget by 35%, and BP is doubling their exploration this year.
The U.S. may surpass Russia as the world’s largest energy producer in the next 10 years as output of natural gas and crude from shale rock formations climbs. China, the world’s biggest energy consumer, is estimated to have more gas trapped in shale than the U.S. and plans a second auction of shale exploration areas as it seeks to triple its use of gas to 10 percent by 2020. Other exploration projects include Tanzania, French Guiana, Angola, Argentina, Guyana, and Ireland.
“The price of oil has to come down because supply prospects are so positive,” said Manouchehr Takin, an analyst at the Centre for Global Energy Studies. “The rate of demand isn’t going to grow as in the past as we use resources more efficiently.”
It takes four to eight years from exploration to bringing supply to the market. Then it takes 3-6 months for crude oil to make its way through the refining process and make it into retail fuel prices. All things being equal on the refining side, a drop in Brent Crude from $125 a barrel to $112 per barrel would reflect a retail fuel price drop of $0.43 a gallon. A drop in Brent Crude to $95 a barrel would reflect an additional retail fuel price drop of $0.56 a gallon.
From a fuel price management perspective, we can expect continued volatility in retail fuel prices over the next five to ten years.
Bloomberg Businessweek reported this article here.
by John Keller | Mar 12, 2012 | Fuel Pricing Strategy, Industry News
If the proposed Federal government Corporate Average Fuel Economy standards of 54.5 mpg in 2025 are adapted, there would be a reduction in retail fuel consumption of 44% . In other words, nearly half of the retail fuel transactions would be gone in 13 years.
And though electric autos are beginning to come to market, information provided by the US Department of Energy leads NACS to project that even as far into the future as 2035, we will see liquid fuels making up 96% of the energy used to move American consumers.
From a fuel price management perspective, we can expect retail fuel demand trends to continue their decline far into the future, and retail fuel pricing to continue to be more and more competitive. Though there will be fewer fuel transactions, by and large the fuel transactions will be liquid based, not electric plug-ins. The c-store fuel business continues to be a volume game, and fuel pricing software is critical for monitoring performance against retail fuel volume targets, and adjusting margins to maintain the competitive edge that allows stores, markets, and regions to hit the volume targets throughout the entire year.
NACS Online has a great video explaining the future of fuels on their website here.
