by John Keller | Dec 2, 2011 | Fuel Price Management, Fuel Pricing Strategy, Industry News
NACS Online reported today that after 30 years of not allowing credit card payments at the fuel pump, Arco will now allow customers to use credit cards. Arco will advertise cash and credit fuel pricing on their fuel price signs.
The change in the Arco fuel price management strategy has already begun in Seattle and is expected to spread to the remaining Arco stores throughout the US west of the Rockies.
Since 1982, Arco has only accepted cash, debit and gas cards. A return to credit cards by Arco could have a major impact on pump prices in western states where the company and Costco often vie for the title of lowest-priced fuel retailer in the market, experts say.
The NACS article continues: “There’s no telling what the landscape would be like as to price and volume rankings if Arco is going to accept credit cards market-wide, but such a decision will be the second massive game-changing move in three decades, by the same brand,” says petroleum marketing analyst Trilby Lundberg.
“Everyone, from Chevron to Costco, and of course consumers, would be affected if Arco dumps its ultra low-price strategy. Brand loyalty would be transformed in one way or another. Arco’s price personality may or may not be revolutionized, but it would be affected not only by its taking credit cards but by the reactions of its competitors,” Lundberg added.
The fuel price differential between Arco and Costco has shrunk dramatically over the years, causing speculation for the basis of this change in Arco’s fuel price management strategy.
Fuel Pricing Analysts will be watching each of their markets carefully to see the impact of this fuel price strategy change across their competitors, and the fuel volume and margin impact. No question this is a significant change to the fuel pricing landscape.
The full NACS article may be found here.
by John Keller | Nov 16, 2011 | Fuel Price Management, Fuel Pricing Strategy, Retail Fuel Margins
The Bespoke Investment Group issued a statement saying that despite crude prices topping $100 a barrel today, retail fuels prices are not likely to rise in response. That’s because Bespoke says retail fuels prices have been responding much more closely to changes in Brent crude, than with WTI. And Brent crude has not gone up in price.
“As long as Brent crude continues to underperform WTI crude, rising oil prices will be less of a drag on US consumers than they have typically been in the past,” Bespoke wrote.
From a fuels price management perspective, this is important because fuel analysts may choose to stop tracking WTI prices, and instead focus on the performance of Brent crude, when anticipating future price moves.
by John Keller | Nov 9, 2011 | Fuel Price Management, Fuel Pricing Strategy, Industry News
In Spartanburg, SC, another fuel price war was initiated by a c-store grand opening. Promotional temporary fuel prices for a new QuikTrip caused a race to the fuel price basement. In response to the promotional pricing, the nearby Raceway and Kangaroo lowered their fuel prices, resulting in some of the lowest prices in the country, with unleaded fuel at one point hitting bottom at $2.80 per gallon. That was enough to cause unnatural traffic patterns to the point where state officials needed to be called in to solve the traffic problem.
This price war started over a month ago back in October, and still has a ripple effect in Spartanburg. GasBuddy reports as of today seven c-stores with unleaded fuel priced below $3.00 per gallon, with two stores at $2.83. The remaining 44 c-stores in Spartanburg are priced anywhere from $3.00/gallon to $3.35/gallon.
From a fuel price management perspective, it’s another lesson learned there is no substitute for fuel pricing analysts keeping up with local field market intelligence, and using human insight when setting optimized fuel prices. The retail fuel price market has too many unexpected influences that drive prices out of traditional patterns.
by John Keller | Nov 7, 2011 | Fuel Price Management, Fuel Pricing Strategy, Industry News
The announcement today from Alon Brands Inc. saying they will end the 51-year-old FINA fuel brand and replace it with the brand ALON is a case in point of just how dynamic the retail fuel pricing market is. From a fuel price management and fuel pricing strategy perspective, fuel analysts will need to carefully monitor the market reaction to this fuel branding transition.
Fuel Price Management software like PriceAdvantage is critical for allowing fuel pricing analysts to navigate their way through this transition, by monitoring the daily fuel volumes imported from PDI, tracking the competitor pricing strategies in each market from store surveys and OPIS, and adjusting fuel pricing strategies to maintain optimized prices at every store.
by John Keller | Oct 27, 2011 | Fuel Price Management, Fuel Pricing Strategy, Industry News
The Ball State Daily News reported a recent fuel price war between two c-stores racing each other to the basement. A new Phillips 66 store kicked things off with a grand opening celebration and a fuel price of $3.19 for regular. The BP station across the street lowered their price by $.10. The war was on, and each c-store kept dropping their fuel price by $.10 increments back and forth before settling on $2.19. For a brief time, the BP station was priced as low $1.99. The lines of cars to enter the c-stores got so long the local police department had to be called in to direct traffic. By 2pm, the BP store raised its price back to $3.19.
This is a great example of what happens when a fuels pricing strategy goes haywire. Once fuel prices get to be so out of whack with the market, abnormal traffic patterns ensue. From a fuel price management perspective, lesson learned is there is no substitute for fuel pricing analysts to use wisdom when setting optimized fuel prices. There’s no such thing as an easy button – the market is too dynamic to allow automation to run amok and take the place of human wisdom.
by John Keller | Oct 25, 2011 | Fuel Price Management, Fuel Price Management Solutions, Fuel Price Optimization, Fuel Pricing Strategy
One of the components of fuel price management strategies is the public expectations of short term future trends in gas prices. Public expectations of gas prices are influenced by the most recent news articles. Today MSNBC.COM published an article setting expectations that gas prices will likely lower throughout the remaining months of the year. The article cites the US Energy Information Administration as saying gas prices should decrease through the beginning of the new year. Patrick DeHaan, Senior Petroleum Analyst at GasBuddy, is cited as saying he expects gas prices to possibly lower to $3.25 by the end of the year.
The article goes on to explain that fuel prices should lower due to decreased demand in the winter months, and the lower cost of winter fuel.
Obviously this article isn’t enough to base an entire fuel price management strategy on, but it is a key piece of information worthy of attention. Articles like these lead to drivers keeping an eye out for lower fuel prices, and to some degree asking what is taking so long for gas prices to lower.
