by John Keller | Feb 21, 2013 | Fuel Price Management, Fuel Pricing Strategy, Industry News, Retail Fuel Margins
In the latest US Energy Information Administration “This Week In Petroleum” report, the US EIA says there are signs that improved fuel margins may be on the horizon.
From the report: “Despite the significant rise in retail gasoline prices since the start of the year, a part of the even steeper rise in wholesale prices has not yet been fully reflected in pump prices. Thus, if wholesale prices were to remain steady rather than decline, a modest further increase in pump prices would be expected.”
That means the potential is there for retail fuel prices to increase a little more to cover the wholesale price increases seen since the beginning of the year. That would allow c-stores to catch up in their margins. How likely are wholesale fuel prices to remain steady? The report states that refinery maintenance typically peaks in February, so we should be nearly finished with that part of the season. The report also states that 11 million barrels of waterborn gasoline are on their way to the US and Canada. And finally, the report states that reformulated gasoline blendstock for oxygenate blending (RBOB) futures and Brent spot prices have declined recently.
It has been a tough start to the 2013 year for c-store fuel margins. We can expect Q1 retail fuel results to reflect these low fuel margins in January and February. Hopefully the wholesale prices will settle and allow c-stores to return to normal retail fuel margins in March and on into the spring when retail fuel demand begins its annual increase.
by John Keller | Feb 15, 2013 | Industry News, Retail Fuel Margins
In the weekly report from OPIS, national retail fuel margins have shown a reverse in their three week trend, rising $0.038 this week to $0.122 per gallon. Retail fuel margins are now a penny better than they were at the beginning of February.
Average retail fuel margins for 2013 now stand at $0.130 per gallon.
by John Keller | Feb 7, 2013 | Fuel Price Management, Fuel Pricing Strategy, Fuel Pricing Technology, Industry News
According to a new University of Michigan study, new vehicles sold in the US have a record miles per gallon rating, reaching 24.5 mpg. That is a full 1 mpg increase from January 2012, 2 mpg increase from January 2011, and 4 mpg increase from January 2008. A month by month detailed table can be found here.
Last month I wrote a summary of the US Energy Information Agency January report, where the USEIA explained that the primary cause for ongoing decreased fuels consumption in the US is increased auto fuel efficiency. This Michigan study correlates well to that study, and in combination, the two studies help us predict the future of US retail fuel sales volumes – we can expect lower volumes this year than last.
From a fuel pricing strategy standpoint, we can anticipate an increasingly competitive fuels market, as the overall fuels volume pie continues to shrink. The practice of fuel price management is not for the weary, and requires careful attention to monitor margins and volumes store by store, market by market, with a well executed fuel pricing strategies plan.
by John Keller | Jan 23, 2013 | Fuel Price Management, Fuel Pricing Strategy, Fuel Pricing Technology, Industry News
IGS is an independent retail supplier of natural gas, and a company with a vision of an energy independent United States. They now plan to build a network of CNG (compressed natural gas) fueling stations along I79 from West Virginia to Pennsylvania. IGS plans to finish this first corridor by the end of 2013, and continue to expand with more stations into the future.
IGS touts the main advantages of CNG fueling stations as 1) less expensive fuel than gasoline or diesel, and 2) refueling time is about the same as traditional fuels.
According to the US Department of Energy, there are now 558 CNG fueling stations in the US, excluding private stations. That is the fourth most common alternative fueling station behind electric, propane, and ethanol. But CNG expansion continues to be in the news, with municipalities announcing conversions of their fleets to CNG, announcements of more CNG fueling station networks being built, and auto manufacturers announcing the availability of stock CNG versions of their vehicles. It could be that 2013 becomes the year of CNG, laying the groundwork for a tipping point where we see a rapid increase of CNG vehicles on the road.
From a fuel price management standpoint, CNG presents another indicator of the overall traditional fuels volume pie shrinking, and the potential opportunity of a whole new fuels market for the taking. Which c-store chains will be the pioneers in this new opportunity, and which will follow?
by John Keller | Jan 15, 2013 | Industry News
As we continue to monitor the fuel price management arena, it’s important to be aware of what’s happening in the Electric Vehicle space. After all, there are now 5184 electric car charging stations across the US, according to the US Department of Energy’s Alternative Fueling Station Locator. That’s more than double the number for the next highest type of alternative fueling station, which is Propane.
Today Nissan made a bold move by cutting the price of their Nissan Leaf EV by 18%, which in some areas of the country with federal tax credits and state incentives brings the price down to $18,000. Nissan executives called this price drop a “tipping point” for driving up demand for the Leaf. The Nissan CEO acknowledged that customer feedback revealed that the price of the original model was a roadblock to purchasing.
From a fuel pricing strategy perspective, we need to continue to monitor sales of the EV in each of our markets, and decide whether or not it’s time to implement an EV charging station. In addition, if this price drop does prove to be a tipping point, it will be one more factor contributing to the ever shrinking fuel volume pie in an industry that is becoming increasingly competitive every quarter.
by John Keller | Jan 8, 2013 | Industry News
Today the US Energy Information Administration released their Short-Term Energy Outlook, and in the report they project US gasoline consumption to remain flat over the next two years.
In the report, the US EIA explains that while there will continue to be growth in the driving-age population and in highway travel, improvements in the average fuel economy of new vehicles and the retirement of older less fuel-efficient vehicles will net out a consumption value that is essentially unchanged through 2014.
From a gas pricing strategy perspective this would be welcome relief because US gasoline consumption has been on a steady decline since 2009. If the US EIA projections prove to be accurate, at least the size of the overall fuels volume pie will remain steady over the next two years.