by John Keller | Oct 21, 2011 | Fuel Pricing Strategy, Fuel Pricing Technology, Industry News, PriceAdvantage
Today Convenience Store News announced that Exxon just completed the sale of nearly 300 c-stores. Back in 2008, Exxon told USA Today they wanted to sell its c-stores because “it’s so hard to make money selling gas and diesel fuel to customers.”
Yes, Exxon, the days are over when you could simply open a store, fly your flag, and make money selling fuel. The retail fuel market is more dynamic and more competitive than ever. Fuel costs change daily, competitors are increasingly aggressive, and consumers are careful to pick where they buy fuel. It’s certainly not a business for the faint of heart.
And that’s precisely where fuel price management solutions like PriceAdvantage come in. Fuel Analysts use PriceAdvantage to quickly see what has changed in the market over night, and in a matter of minutes, their stores are implementing price changes to react. PriceAdvantage allows them to get the right price to the right store at the right time, not eight hours after the morning commute, but in time to maximize their fuel profits that same business day. Fuel Analysts use PriceAdvantage to carefully review their store / region / market performance by fuel margin and fuel volume, compared to target, and compared to last week, last month, and last year. Fuel Analysts make adjustments to fuel pricing strategies and tweak and tune to make necessary adjustments based on market changes, and to optimize prices across the enterprise. When competitor fuel prices change throughout the day, Fuel Analysts can choose to quickly respond with fuel price changes of their own no matter where they are, using their laptop or smart phone.
C-stores simply can’t compete by managing fuels prices with the old methods of spreadsheets, phone calls, and emails. It takes the closed loop fuels price management solution of PriceAdvantage to be profitable and to stay in the fuels price game.
by John Keller | Sep 26, 2011 | Fuel Price Management, Fuel Price Management Solutions, Fuel Pricing Strategy, Industry News
Convenience Store News reports that three New Jersey gas stations are being charged with illegal price changes after Hurricane Irene. The stations are accused of raising their fuel prices multiple times in one day which is illegal in the state of New Jersey, and could result in fines of $1500 each. The State Office of Weights and Measures also investigated the gas stations for raising prices more than 10%, what New Jersey calls price gouging.
Fuel Pricing solutions such as PriceAdvantage can help in situations like this in three ways:
- Keep control of fuel price changes at Headquarters. The Fuel Price Management solution PriceAdvantage can be configured to remove the Store Manager from the fuel price change process, and initiate all fuel price changes only at headquarters. This means no unauthorized fuel price changes starting at the store.
- Set price change thresholds. PriceAdvantage allows price changes to be kept below the set threshold, meaning a price change can never be more than the set percentage over the current price. In this case, if the threshold is set to 9%, any price change of more than 9% would be rejected as unauthorized.
- Reduce audit time. PriceAdvantage provides a series of reports making it easy to show auditors the price change history at each store. That means when an audit is inevitable, the time it takes to provide the needed information is reduced to minutes.
These New Jersey stores did not have PriceAdvantage in place, but if they had, their troubles would have likely been reduced, and possibly eliminated entirely.
The original NACS article is here.
by John Keller | Aug 10, 2011 | Fuel Price Management, Fuel Price Management Solutions, Fuel Pricing Strategy, Industry News
Fuel Price Managers should base their fuel pricing strategies on the general consensus that retail gas prices will continue to drop through the rest of 2011.
USA Today picked up a story from the New York Times, proclaiming that gasoline prices are sure to continue to drop. The article predicts that next month, the national average for Regular Unleaded could drop to $3.25/gallon. That would be over $.40/gallon less than today’s national average. A spokesman from NUS Consulting, the often quoted specialist firm in energy sourcing, risk management and sustainability, was quoted as predicting that crude will fall from today’s price of $82 to between $55 and $60 before finishing the year at $70.
UPDATE 8/12/11 The Los Angeles Times published an article saying “motorists should see pump prices drop as much as 50 cents a gallon over the next several weeks…”.
Today’s US Energy Information Administration Short-Term Energy Outlook projects Unleaded fuel price national averages to drop $.09/gallon in the 3rd quarter of this year and reach $3.58/gallon; predictions for the 4th quarter include an additional $.14/gallon drop to reach $3.44/gallon. That’s about $.06/gallon lower than what the US EIA published last month. On August 8th, the US EIA announced the national average for Unleaded was $3.67/gallon, a $.04 drop from the previous week.
Fuel Price Management strategies should include consumer expectations that fuel prices will fall.
by John Keller | Jul 18, 2011 | Fuel Price Management, Fuel Price Management Solutions, Fuel Pricing Strategy, Industry News
Walmart joined the retail fuel price loyalty game this summer, partnering with Murphy Oil to offer $.10 discounts on fuel when the purchase is made using one of the Walmart payment cards. Loyalty reward incentives are becoming mainstream across retail fuel c-stores and grocery store chains.
So the question is, how can the fuel manager compete? The answer lies in understanding the fuel pricing strategy at Murphy.
Murphy focuses their fuel price management solution around the urgency of fuel price changes. At Murphy, the fuel price strategy is a volume game. Murphy uses price as their number 1 advertising, as their billboard. Murphy advertises their price on enormous gas price signs, projecting such confidence that the consumer believes Murphy must have a low price since the sign is so bold. Murphy has reached such operational efficiencies in the fuel price change process, they can react extremely quickly to hourly wholesale price fluctuations. Murphy routinely changes fuel prices 2-3 times per day to squeak out the highest possible volume and profit hour by hour, based on these hourly wholesale price fluctuations. Speed to the street wins. When wholesale prices go up, retail price changes can happen almost immediately. When wholesale prices go down, Murphy can make it very difficult on the stores around them by dropping retail prices right away. Murphy sells such high volumes of fuel, the difference of a fraction of a penny, multiplied out times every gallon sold across their enterprise, yields huge profits.
The only way to compete against Murphy is to implement a fuel price management solution that watches Murphy prices like a hawk. Subscribe to the OPIS Radius report and get pricing feeds througout the day. Track every Murphy price move by allowing store and territory managers in the field to quickly report new Murphy prices to headquarters, or better yet, empower these managers to use their mobile device to change prices immediately when Murphy moves. Then the fuel manager can know what’s happening in the field in real time, and analyze store performance in terms of my price vs. competitor price, and gallons sold as compared to the same day of the previous four weeks. With this fuel price management solution, fuel managers can quickly make adjustments to their Murphy competitor strategy, and maintain the strategy that makes sense, whether it is matching Murphy, or staying within the price differential that the market will bear.
by John Keller | Jul 18, 2011 | Fuel Pricing Strategy, Industry News
In today’s US Energy Information Adminstration weekly fuel price report, the USEIA revealed a $.04 increase for the national average price of Unleaded Regular fuel. That’s an $.11 increase over the past two weeks. The US national average retail fuel price of unleaded gasoline now sits at $3.68/gallon, a gallon of midgrade rose to $3.79, and a gallon of premium rose to $3.93. These prices now reflect levels not seen since mid-June.
The regional area hit hardest was the Lower Atlantic, where the average price for unleaded rose $.07 to $3.72/gallon. The region with the lowest increase was the “West Coast Less California” region, where prices were unchanged from last week, remaining at $3.69.
As for individual states, Texas had the largest fuel price increase of the week, where prices rose $.08/gallon for unleaded, with an average price of $3.65/gallon.
The highest average price in the nation for Unleaded is now in New York, up $.06 reaching $3.97/gallon. In Chicago, a gallon of Unleaded is priced the highest in any major city, at $4.02 per gallon.
by John Keller | Jun 8, 2011 | Fuel Price Management Solutions, Fuel Price Optimization, Fuel Pricing Strategy
The Baltimore Sun recently published this letter to the editor from an owner of a convenience store. It’s interesting to hear the fuel pricing problems this local retailer is dealing with, as people report that his fuel prices are 10 cents higher than the competition.
“I am one of the owners of Ray Adolph’s Citgo on York Road in Lutherville. Earlier this week, our station was mentioned in an editorial (“A dime’s worth of difference,” May 23) for having gasoline prices more than 10 cents higher than neighboring stations. While that was accurate, I would like to enlighten the general public as to what occurred that week.”
“On May 9, our station was posting a competitive price for fuel. But looking ahead, I saw on my supplier’s web site that the cost of fuel was going to be 10 cents per gallon higher on Tuesday and 20 cents by Wednesday. Guess when we needed to purchase a load of fuel? Bingo. Mid-day Wednesday was when the “liquid gold” was dropped in to my tanks, and that was 20 cents per gallon higher then my previous purchase.”
“I had not only purchased the gas at the highest price for the week, but I found out later it was the peak price for the day. By 6 p.m. Wednesday, May 11, the price had already dropped 6 cents. By Friday, it had dropped an additional 7 cents, or 13 cents in all since I bought gas. I called my salesman and he made a 10-cent adjustment on what I had just purchased. However, at the time of this writing (May 26), the cost has dropped 35 cents per gallon since I purchased it. Even with the 10-cent credit, I am still the highest price in the neighborhood.”
“Our Citgo not only sells fuel but has nine service bays for general auto repairs. Consumers assume that since our gas price is so high that we will be gouging people for service work. One has no bearing on the other. Up until this recent roller coaster ride in fuel pricing, we would be as competitive as we could with selling a gallon of gas. Our service prices are very competitive.”Brian K. Adolph, Lutherville
The writer is president of Ray Adolph’s Citgo.
See the link below to read the article on the Baltimore Sun site:
http://www.baltimoresun.com/news/opinion/bs-ed-citgo-20110527,0,3108800.story
As I speak with Fuel Managers across the country, they tell me pricing fuel didn’t use to be as hard as it is today. In the 1970’s it was common to have the same fuel cost for an entire month. In the early 1980’s, there would be a new fuel cost every day, but prices never changed more than a few cents day to day. These days Fuel Price Management includes handling wholesale fuel cost swings of $.20-$.30 down one day, followed by $.20-$.30 up the next.
Blame it on fuel commodity speculators if you want, but fact is, the dramatic fluctuation of fuel costs coupled with the high consumer scrutiny of retail fuel prices has made Fuel Price Management more difficult than ever. The answer is to implement fuel price management solutions that allow for rapid monitoring of cost changes, tracking competitor retail price responses, and accelerating speed to the street to enforce the right price to the right store at the right time.
