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.
by John Keller | Mar 6, 2012 | Fuel Pricing Strategy, Retail Fuel Margins
The US Energy Information Administration reported their Short-Term Energy Outlook report today, and the administration expects regular‐grade retail fuel prices to average $3.79 per gallon in 2012 and $3.72 per gallon in 2013, compared with $3.53 per gallon in 2011. During the April through September summer driving season this year, prices are forecast to average about $3.92 per gallon with a peak monthly average price of $3.96 per gallon in May.
The value of futures and options contracts imply a 2 percent probability there will be a monthly average regular-grade fuel retail price of approximately $5.00 per gallon.
From a fuel price management perspective, if history repeats itself, these fuel price averages will have a high impact on fuel volumes, causing a significant decline in fuel volumes in 2012 and 2013.
by John Keller | Feb 13, 2012 | Fuel Price Management Solutions, Fuel Pricing Strategy, Industry News, Retail Fuel Margins
Demand for ethanol fuel has dropped off dramatically since the tax credit expired earlier this year. The $.45 tax credit for ethanol fuel expired January 1, 2012.
In addition, an unfavorable currency exchange with Brazil has helped add to the overall ethanol fuel surpluses at plants across Iowa.
As demand wanes, and surpluses accrue, wholesale prices will have to adapt. We’ll keep an eye on the retail fuel pricing result. In the meantime, from a fuel price management perspective, expect lower ethanol fuel volume sales to be less than last year.
The Des Moines Register article reporting on the drop in ethanol fuel demand can be found here.
by John Keller | Jan 27, 2012 | Fuel Pricing Strategy, Industry News
The annual OPIS Retail Year in Review & 2012 Profit Outlook report reveals key fuel price management information about the US market.
Chevron achieved the largest premium of all brands with at least 0.5% market share, garnering a 3.42 cents per gallon premium to typical competition. That’s a 10% increase from 2010.
Shell maintained the lead in overall market share, with BP ranking second. Both brands saw a drop in their market share in 2011.
Regular Unleaded grade gas had the highest percentage ever of fuel sold among the two or three street grades. The price of Premium widened from Unleaded with a spread of $0.27 per gallon over Unleaded by the end of 2011. Exxon had the largest spread for Premium with $0.286 spread over Unleaded.
by John Keller | Jan 26, 2012 | Fuel Pricing Strategy, Retail Fuel Margins
Texas A&M professor of economics and fuel analyst of 30 years John Moroney says fuel prices may or may not hit $4/gallon this summer, and are unlikely to hit $5. “Could gas go to $4? It is possible, but not a certainty. Could it go to $5? I just don’t see it happening.”
Professor Moroney said that in order for fuel prices to reach $5/gallon, oil prices would need to be in the range of $140-$150 a barrel. And with oil production on the rise, including findings of huge oil reserves in recent years, and the increase of shale production, Professor Moroney doesn’t see that happening.
You may find the original interview at theeagle.com here.
by John Keller | Jan 9, 2012 | Fuel Pricing Strategy, Industry News
It’s a good time to be buying fuel in the Rocky Mountains these days. According to the US Energy Information Administration report today, fuel prices increased nationally $.08 per gallon on average, and as much as $.10 per gallon in the Central and Lower Atlantic regions. The only region where fuel prices declined was the Rocky Mountains, where fuel prices were $.02 lower than the previous week. The Rockies now have the lowest priced fuel in the nation, with an average fuel price for regular unleaded of $3.01 per gallon. The next lowest average fuel price is in the Gulf Coast region, where an average price for unleaded is $3.20. California has the highest average fuel price for unleaded at $3.70.
