OPIS reported this week that average retail fuel margins reversed a four week trend and increased by $0.03 per gallon this week. Retail fuel margins are now at $0.198 per gallon.
The increase this week virtually offsets the loss in fuel margins last week, resetting margin levels to those of November 23.
This news is welcome relief to the fuel analyst as we enter into the final weeks of 2012.
If you’re not already offering compressed natural gas (CNG) as a retail fuels alternative, next year may be the year to start planning for a future retail fuels product offering that includes CNG. Consider the following set of data points:
Without question, fuel analysts need to keep a close watch on their markets to gauge the growing CNG opportunities. This alternative fuel may be a critical new way to help with retail fuel margins, and to help maintain fuel volumes, as part of the overall fuel price management strategy.
Casey’s announced their retail fuel margins were $0.167 per gallon in Q2 of the 2013 fiscal year. That retail fuel margin is slightly ahead of their stated company goal of $0.140 per gallon. However, retail same store fuel gallons sold was down 2.9%, failing to meet the Casey’s corporate goal of increasing same store volume by 1%. This is the second consecutive quarter where same store retail fuel volume gallons sold was down by over 2.5%.
From a fuel price management perspective, these results indicate a classic case of pulling a lever to increase fuel margins to the point where volume results suffer.
Retail fuel margins for the same period last year were $0.149 per gallon.
In their Annual Energy Outlook 2013 Reference case released today, the US Energy Information Administration predicted the demand for motor fuels will continue to decline next year and beyond through 2040. In other words, the size of the fuel volume pie is going to continue to shrink, impacting all those in the fuel price management industry for the foreseeable future.
The US EIA cites as a root cause the new vehicle fuel economy requirement that increases vehicle efficiency from 32.6 miles per gallon in 2011 to 47.3 miles per gallon in 2025. The US EIA projects this vehicle efficiency requirement will reduce gasoline use in 2025 by .5 million bpd compared to 2012.
The report also projects that diesel fuel consumption will be somewhat offset by the use of liquid natural gas in heavy-duty vehicles.
From a fuel price management perspective, this highlights the ongoing competitive nature of the retail fuels business as c-stores and grocery chains continue to fight for an ever shrinking total fuels volume market. Only those companies with the most efficient fuel pricing software will be successful in such a highly competitive environment.
Today the NPD Group reported c-store traffic was down 2.1% in Q3 of the 2012 calendar year compared to the same quarter of 2011. The report went on to say that major oil company branded c-store chains saw an even sharper decline. Traffic declined to 5.9 visits per 30 days during the quarter.
The NPD Group is a global information and advisory services company providing store market research. The NPD Group provides the Convenience Store Monitor, tracking the purchasing behavior of more than 51,000 c-stores.
The complete article may be found here.
Fuel analysts may refer to this report as another benchmark for their fuel price management systems as they monitor fuel volumes for the quarter.
OPIS reported this week that retail fuel margins declined for the third straight week. Fuel margins now stand at $0.192 per gallon. That is a $0.022 per gallon decrease from last week.
Retail fuel margins have lost over $0.17 per gallon over the past three weeks and now stand at levels last seen in early October.
