by John Keller | Mar 8, 2013 | Fuel Price Management, Fuel Pricing Strategy, Retail Fuel Margins
An NBC News article published in their Online Business section discusses the addition of Propane to the list of alternative fuels being considered for vehicle retrofitting.
The home satellite provider DISH Network Corp has announced they will run 200 of their trucks on Propane. The DISH Network Corp expects a 55 percent reduction in fuel costs for the Ford E-250 cargo vans that will run on propane – amounting to a saving of about $2,500 per vehicle per year. There are more than 13 million vehicles using Propane worldwide but Propane is a niche product in the United States.
But over the past 3-4 years, the wholesale cost of Propane has dropped in half, and Propane production has increased nearly 50%. The cost of adding a Propane fueling station is less than $50,000 and takes less than one day. That makes it much less of a commitment than adding CNG or LPG fueling stations.
According to the US EIA map of the alternative fuel stations in the lower 48 United States, the number of Propane stations is second only to Electric, and just ahead of E85 stations. But while Electric stations are concentrated in the urban areas on the coasts and Great Lakes, Propane stations are more widely distributed across the whole US, including Texas and the Mid-west.
As we monitor the growth of alternative fuels in the retail fuel management industry, retail fuel pricing managers would be wise to consider adding Propane to their product portfolio as a market differentiator, and an opportunity for high fuel margins.
by John Keller | Mar 7, 2013 | Fuel Price Management, Fuel Pricing Software, Fuel Pricing Technology
If one thing is consistent in a reading of historical fuel prices, it’s their tendency to change. With constant changes in the market due to shifts in supply and demand for crude, gasoline, heating oil, and natural gas, coupled with ever-evolving government regulations and random natural disasters, staying on top of change becomes a difficult task for any manager. Making sure that fuel pricing software is optimized to monitor and correct for change becomes a vital part of fuel operations management.
The onslaught of pricing data received each day by stations around the country requires that all information be immediately accessible by multiple vendors at different locations. Without guaranteeing the accessibility of this data, the petrol management system used by a corporation becomes useless. When reviewing and selecting fuel pricing software, only accept a solution which offers mobile integration. This technology allows users to access the system from their iPad, Blackberry, or other mobile device and helps fuel analysts to remain a step ahead of the competition when making fuel pricing decisions.
Upgrading on-site technology or equipment is also a crucial part of staying ahead of the competition in modern fuel pricing. Outdated signage or displays can reflect poorly on the business, especially in a metropolitan or high-traffic environment. LED price signs allow managers to make price changes to any location directly from headquarters. Corporate fuel pricing software can be integrated with these signs, allowing for remote management and greater adaptability to sudden changes in the marketplace. These changes not only streamline processes, but generate substantial savings. One PriceAdvantage customer was able to save over $141,000 in annual service maintenance on its signage after upgrading, increasing face time with customers by up to 50 hours annually per store. Technology has become vital to the success of the retail fuel business, and is a tremendous boon to fuel profits.
Fluctuations in the fuel pricing market affect all of us. Retailers, consumers, and agencies suffer when prices shift dramatically overnight. Contractual disputes between vendors and retailers can delay price changes and hurt potential revenue. This has shown itself time and again in historical fuel prices. Therefore, all agencies should establish a reasonable investigative framework that is both transparent and straightforward. Cultivate honest, open relationships with all partners and customers. A lack of reliability means a lack of business, especially in the current economic environment.
The fuel pricing market is a very stormy environment. By implementing these recommendations and ensuring your fuel pricing software is optimized and upgraded, managers can continually adapt to a tumultuous market.
by John Keller | Mar 1, 2013 | Fuel Price Management, Fuel Pricing Strategy, Retail Fuel Margins
The latest OPIS report showed retail fuel margins jumped $0.062 for the week, the largest weekly gain since late October 2012. The average retail margin throughout the US now stands at $0.164 per gallon.
The gain this week brings the retail fuel margin for the month of February to $0.096 per gallon. The average US fuel margin for all of 2013 now stands at $0.131 per gallon.
This week’s number is a welcome relief to the fuel pricing manager and we can only hope the roughest times for this season are behind us.
by John Keller | Feb 23, 2013 | Fuel Price Management, Industry News
In their weekly report, OPIS revealed another loss in retail fuel margins. This week retail fuel margins lost $0.02 per gallon across the US to settle at $0.102 per gallon.
The loss this week brings the year to date average down to $0.127 per gallon. The average US fuel margin for February is likely to be nearly $0.02 lower than January.
With these numbers it’s clear to see that despite all the bad press around rapidly fuel prices this year, it is not the c-store industry that is making money.
by John Keller | Feb 22, 2013 | Fuel Price Management, Industry News
Compressed natural gas is continuing to gain mindshare with Convenience store retailers this year. According to CSNews.com, Convenience Store News lists among their top 10 predictions for 2013 “Natural gas gains more believers”.
Specifically, CSNews writes “Compressed natural gas and liquefied natural gas generated a lot of buzz in 2012, as several c-store operators added natural gas to their fuel offer. We expect the buzz to keep building, with more convenience stores joining in on the trend in 2013.”
Earlier this week, Qwik Trip announced that based on the success of their nine natural gas fueling stations, they are planning to build an additional 12 over the next few months. Both fleet vehicles and individual consumers are buying the natural gas.
Not only does natural gas provide a significantly lower price point for the retail customer, it provides dramatically higher retail fuel margins for the retailer as well. This is the year for fuel managers to ask themselves “Is there a market for natural gas in my customer base?”
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.
