by John Keller | Nov 26, 2013 | Customer News, Fuel Price Management Solutions, Industry News
According to the San Antonio Alamo City Beat, CST Brands plans to build 30 new stores in 2014. CST Brands opened 11 new stores in the past four months.
Additionally, CST Brands will ring the opening bell on Wall Street on December 3.
CST Brands has been rewarded favorably by financial analysts such as J.P. Morgan for their successful strategy of focusing on in-store margins by opening large c-stores. CST Brands has been quite successful at improving their fuel margins since being spun off from the Valero refinery parent.
CST Brands has been using PriceAdvantage as their exclusive retail fuel software since 2012.
by John Keller | Nov 25, 2013 | Customer News, Fuel Price Optimization, Fuel Pricing Software, Industry News, Retail Fuel Margins
In a recent update, J.P. Morgan announced they will begin financial coverage of CST Brands and Murphy USA. In their initial report, they make specific mention of their preference to the CST Brands strategy of focusing on higher margin in-store merchandise through larger store formats. The reason they gave was “Against a backdrop of stagnant gasoline demand and volatile fuel margins, the industry appears to be focused on growing higher-margin, in-store convenience merchandise through larger store formats. We prefer CST’s growth story, with new format stores driving margin growth over time and reducing the company’s dependence on fuel margins.”
In a blog dated November 14, 2013, I wrote about the correlation between fuel volumes an in-store sales. PriceAdvantage now allows you to select an unlimited number of product categories from an imported set of data from PDI, and run a report showing the correlation between retail fuel volumes and retail fuel prices with the selected data. That means you can see how fuel promotions impact in-store product category sales, along with the number of in-store transactions. You can even see how promotions of one in-store product category impact sales of another in-store product category, along with fuel volumes and fuel prices.
Clearly this strategic thinking is inline with what J.P. Morgan rewards. CST Brands has been a loyal PriceAdvantage customer since 2012. Does your fuel software allow you to investigate these correlations and maximize both fuel and in-store margins?
by John Keller | Nov 23, 2013 | Industry News, Retail Fuel Margins
OPIS reported today that average US retail fuel margins dropped by $0.08 per gallon this week to levels last seen in July of this year. The average retail fuel margin in the US now stands at $0.142 per gallon which is $0.10 per gallon lower than the beginning of the month. The six week average dipped to $0.204 per gallon and the average for Q4 lost one cent to $0.214 per gallon.
The last time retail fuel margins were below $0.15 per gallon was July 19, when retail fuel margins were at $0.10 per gallon. This week last year, the average retail fuel margin across the US was $0.192 per gallon. Last year at this time we saw one more week of margin declines, followed by three weeks of steady increases in December. In 2012 retail fuel margins ended the year at $0.132 per gallon.
Hopefully we’ll see this three week trend of decreases end soon and get a rebound heading into December.
by John Keller | Nov 21, 2013 | Fuel Pricing Technology, Industry News, Retail Fuel Margins
Hyundai just announced that beginning in the spring of 2014, they will make available hydrogen fuel cell vehicles in the limited US markets of Los Angeles and Orange County. Hyundai will offer these vehicles through selected dealers for $499/month over a 36 month term, with $2999 down. Perhaps the most interesting aspect of the offer is that the deal comes with unlimited free hydrogen refueling. That part of the deal is designed to remove any range anxiety of the potential buyer, something that continues to inhibit many who are considering buying electric vehicles. And if there is ever a problem with the fuel cell, Hyundai will pickup the vehicle and provide a loaner, then deliver the vehicle back to the customer’s home or business at no charge after the service is complete.
The initial set of dealers are in Tustin, Anaheim, Carson, and Van Nuys. More Hyundai dealers will follow as the program gains traction and spreads across the US as more hydrogen refueling stations are made available. According to the California Station Map, in California there are currently 9 hydrogen fueling stations available to the public, 19 hydrogen fueling stations in development, and 12 stations that are private or for demonstration purposes.
The announcement from Hyundai touts the advantages of fuel cell vehicles, calling them the next generation of electric vehicles. Not only do these vehicles provide a 300 mile driving range, comparable to petroleum based vehicles, but they are rated lower than electric vehicles for their well-to-wheel emissions rating. And here’s the kicker for the c-store fuel manager: these vehicles are capable of refueling in under 10 minutes, “similar to gasoline”, according to the Hyundai announcement.
No doubt this is a program geared toward the early adopter. And it’s not likely that next year will be the year to add hydrogen fuel to your fuels portfolio. But it is an important milestone to record; from here on in we will watch the reality of hydrogen fuel cell vehicles unfold into mainstream.
Yet to be determined: what kind of margins can the retail fuel marketer expect to see in a hydrogen fuel offering?
by John Keller | Nov 21, 2013 | Fuel Price Management, Fuel Pricing Technology, Industry News, Retail Fuel Margins
Today Ford announced that the first 2014 model F-150 that can run on either CNG or LPG is now rolling off the assembly line. With the combined gasoline and CNG, the range of the F-150 will be up to 750 miles, with an estimated mileage rating of 23 mpg highway and 19 mpg city. Ford is now the first manufacturer to offer a CNG / LPG capable half-ton pickup.
Natural gas upfits can range from $6000 to $9500 depending on tank capacity. At the time of this posting, the national average for unleaded fuel is $3.29 while the average for CNG is $2.10. Nearly 20 states in the US offer tax incentives or rebates for CNG converted vehicles. These vehicles are being targeted toward the business and fleet buyer. For example, in Florida, the fleet buyer can take advantage of $25,000 in rebates starting next year.
Ford also announced that by summer of 2014, they will be offering eight commercial vehicles with a natural gas prep option, more than any other full-line manufacturer.
Besides the advantage of a lower cost per gallon, natural gas also burns more cleanly and 85% of natural gas is produced in the US.
Add this all up for the convenience store fuel retailer, and it’s yet another indicator that natural gas is gaining momentum as an alternative fuel option. Is it time to consider adding it to your fuels portfolio?
by John Keller | Nov 18, 2013 | Fuel Price Management, Industry News, Retail Fuel Margins
As we read more and more about the growth of the natural gas fueling station infrastructure, and the coming of more natural gas engines, it’s important to be aware of how a natural gas product offering can impact retail fuel margins at the c-store.
Clean Energy Fuels is a provider of natural gas for transportation in north America, with a network of both CNG and LNG stations across the US and Canada, totaling more than 348 stations. In the most recent fiscal quarter, Clean Energy delivered 56.4 million gallons of fuel.
The typical quarterly margin for Clean Energy is in the $0.30 per gallon range. Compare that to the most recent Murphy quarterly margins of $0.148 per gallon, and the most recent CST Brands quarterly margins of $0.16 per gallon (after $0.04 credit card fees). That means the Clean Energy retail natural gas fuel margins are approximately two times the margins of traditional fuels.
Granted, the fuel volumes of natural gas are nowhere near the fuel volumes of petroleum fuels. But as the growth of natural gas continues, double margins become increasingly intriguing.
