by John Keller | Jan 9, 2015 | Fuel Price Management, Fuel Price Optimization, Fuel Pricing Strategy, Fuel Software, Retail Fuel Margins
The OPIS report today revealed the average retail fuels margin across the US was $0.288 per gallon, down $0.047 from last week.
That is the third consecutive weekly decline, but the US retail average is still nearly double the margin of the equivalent week last year when the retail fuels margin was $0.146 per gallon. The six week average remains at a robust $0.326 per gallon. This is the fifth consecutive week when the six week average increased.
Last year at this time the retail fuel margin average bumped along the bottom until breaking above $0.20 per gallon the first week of March.
Perhaps the continued margin average decrease over the past three weeks is an indication that fuel marketers are now vying for volume and willing to sacrifice some of their margins. Only fuel pricing software like PriceAdvantage can allow the savvy fuel analyst to play the volume / margin game and make the most profit during these turbulent times.
by John Keller | Dec 5, 2014 | Fuel Price Management, Fuel Price Optimization, Fuel Pricing Technology, Fuel Software, Industry News, Retail Fuel Margins
OPEC announced on Thanksgiving that they would not cut back their production. According to the Wall Street Journal, Venezuela was pushing for a considerable cut in OPEC production prior to the meeting. When Russia, which isn’t a member of OPEC, decided to maintain their production levels and not join in any plan to cut output, Saudi Arabia argued that the group must defend market share rather than prices. That decision became final as the cartel is now appearing that they will not push for supply cuts in the immediate future.
Saudi Arabia is now anticipating oil prices could settle at $60 a barrel, approximately $9 a barrel less than now. According to the US Energy Information Administration, if every $10 drop in the price of a barrel of crude is passed on to the consumer, that would equate to a $0.24 drop in the price of a gallon of gas.
From a fuel price management perspective, that means we could see average gas prices in the $0.20 to $0.30 range lower than today in the coming weeks. And as always, falling gas prices mean lower fuel revenues but stronger retail fuel margins.
What else can we expect from these lower oil prices? Auto manufacturers have reported robust November sales, especially in trucks and luxury vehicles that get lower gas mileage, and perhaps require premium fuel. Meanwhile, Toyota has reported that sales of its hybrid Prius are down 14% year over year. This could mean a slowing of the ongoing trend of reduced demand for fuel caused by increasingly more fuel efficient vehicles on the street. But of course it is important to consider that even today’s less than highly fuel efficient new vehicles are likely more fuel efficient than the vehicles they are replacing. So it is unlikely that the reduced fuel demand trend will reverse completely.
We live in historic times, as witnessed by the constant news articles about oil prices and gas prices. If savvy fuel analysts play their cards right and invest in premiere retail fuel pricing software technology, there is quite a bit of money to be made.
by John Keller | Nov 19, 2014 | Customer News, Fuel Pricing Technology, Fuel Software, Industry News, Retail Fuel Margins
CST Brands announced their financial results for the quarter ending September 30, 2014. Earnings were $.90 compared to expectations of $.57.
From the report: “Motor fuel gross profit (per gallon) in the U.S. for the third quarter of 2014, after deducting credit card fees, was $0.25 compared to $0.16 in the third quarter of 2013, which was primarily caused by a declining crude oil and wholesale gasoline pricing environment combined with the Company’s fuel pricing strategy.” [bolded text from this author]
In the US stores separately, the numbers are as follows:
- Q3 retail fuel margin before credit card fees of $0.288 per gallon up from $0.203 for Q3 in 2013
- Q3 gallons per site per day of 4,921 gallons or approximately 152,000 gallons per month
- Q3 NTI stores gallons per site per day of 9,547 gallons or 295,000 gallons per month
The numbers are quite impressive, and the financial analysts are noticing. CST stock is now trading at $43.27 a share, up 23% over the past three months, and up 32% for the year.
by John Keller | Nov 7, 2014 | Customer News, Fuel Price Management, Fuel Pricing Technology, Fuel Software, Retail Fuel Margins
The quarterly financial report from Murphy USA, Inc. showed an increase in both retail fuel margins and volumes for the three months ended September 30, 2014.
Retail fuel margins hit $0.175 per gallon for the quarter, up from $0.148 per gallon year over year. Retail fuel volumes were up 2.7% year over year to 281,185 gallons per store per month. Combining both increases yielded a fuel margin dollar per store per month of $49,347, an increase of 2.7%.
The NACS industry research states that the average c-store sells approximately 123,000 gallons per month. That means Murphy is selling more than double the average.
Skyline Products and Murphy Oil have an exclusive license agreement for the PriceAdvantage fuel price management software. The patent is based on the PriceAdvantage software determining the price of a fuel product, sending those price changes to the store including the electronic price signs, the POS, and the pumps, and then verifying the completion of the change. This rapid closed loop fuel pricing software process is key to the Murphy Oil fuel price management success.
by John Keller | Oct 29, 2014 | Fuel Price Management, Fuel Pricing Strategy, Fuel Software, Industry News
A new research study performed by PIRA Energy Group, commissioned by the Fuels Institute, concludes that while global demand for diesel fuel will continue to grow to 2030, the US demand for diesel will peak in 2015 and decrease from 2016 to 2030.
The research study, “An Assessment of the Diesel Fuel Market: Demand, Supply, Trade and Key Drivers”, concludes that US diesel fuel demand will decrease from 4 million barrels per day in mid 2015 to 3.5 million barrels per day in 2030, a decrease of 12.5%.
The demand for diesel fuel in the US light-duty vehicle fleet will triple in size as more diesel vehicles are on the road. But demand will be tempered by increased fuel mileage, hybrids, plug-in hybrids, and electric vehicles.
The demand for diesel fuel in the US heavy-duty vehicle segment will decrease, according to the report. Natural gas and improved fuel mileage will cause the decrease.
What does this mean from a fuel price management perspective? Based on your customer profile at each of your locations, you may see changes in demand for diesel at specific locations, higher in some, lower in others. There may be opportunities for product differentiation in locations where diesel is selling to more vehicles on the street and the competition doesn’t offer that fuel type. As other stores stop selling diesel, there may be opportunities for strong margins in areas where your store provides the only source of diesel. As always, it’s one more area to monitor volume sales and margins gained at individual locations, market segments, and the company as a whole.
by John Keller | Oct 24, 2014 | Fuel Price Management, Fuel Software, Industry News, Retail Fuel Margins
The average retail fuel margin remained at the top level of the year this week, according to OPIS. The average retail fuel margin dipped $0.001 per gallon to $0.369 per gallon. That’s $0.175 per gallon higher than this week last year.
The year to date average inched upward again to hit $0.200 per gallon while the Q4 average broke $0.30 to hit $0.312 per gallon. The six week average is now $0.293 per gallon, the highest of the year.
We’re now counting down nine weeks until the end of the year. Last year, these nine weeks averaged $0.19 per gallon. Even if retail fuel margins go into a free fall through the end of this year, and there are no industry indications that we will, we’re still looking at what will likely be the best quarter of the year.
