by John Keller | Oct 4, 2012 | Fuel Pricing Software, Industry News
Gasoline wholesale prices in the Los Angeles area have gone up $0.70 per gallon this week, reaching wholesale fuel prices not seen since November 2007. Sources blame the Exxon Torrance refinery loss of power on Monday, as well as Chevron’s Kettleman-Los Medanos pipeline which was shut down Monday due to the detection of elevated levels of organic chloride in the oil. Maintenance work at the Phillips 66 plants in Rodeo and Arroyo Grande further reduces California state supplies.
Some c-stores are choosing to sell premium fuel at regular unleaded prices, or to shut down pumps altogether, rather than buy at these inflated costs or to sell at margins that aren’t worth it.
All this speaks to the ongoing volatility of the retail fuels market, and the ever increasing need for the robust features included in our PriceAdvantage fuel pricing software. PriceAdvantage makes it easier to navigate these rough market conditions in multiple ways:
- field and store managers record and send notes to fuel managers to keep the fuel pricing team current regarding which competitors are still actively selling fuel during these days, and which are shutting off pumps; these notes are automatically recorded in PriceAdvantage to allow the fuel management team to aggressively adjust retail fuel prices to take advantage of market opportunities as they arise.
- based on the current information of which competitors are still selling fuel and which ones aren’t, fuel managers can adjust fuel orders according to predicted sales volumes that are based on six week and one year historical averages; the predicted volumes minimize risk of getting stuck with high priced inventory when wholesale costs return to normal.
- fuel managers add notes for future reference in fuel volume performance charts to record that these were the days when the market went haywire, to remind future fuel teams a year from now why volumes were so dramatically off target in either direction, either missing targets because pumps were closed because there was no fuel, or exceeding targets because the competition was the one closing pumps.
- fuel managers see better optimized prices that reflect a historical Olympic average where the high and low volume over the past six weeks is excluded, providing a more realistic prediction of volumes when wholesale prices return to normal.
by John Keller | Oct 1, 2012 | Fuel Pricing Strategy, Industry News
Ever since Valero reported in their most recent quarterly earnings that they would like to divest their retail stores, there has been all kinds of speculation around what that divestiture might look like. Recently Reuters released a story that several large c-store chains were lining up as buyers.
But in an interview with the San Antonio Business Journal, Valero spokesman Bill Day explained the company is still reviewing different types of transactions. He explained that the tax bill for a spinoff would be less than the tax bill for selling the stores. “There are certain tax advantages to Valero to do a spinoff to our shareholders rather than a sale to an outside entity. So that tax advantage would have to be surmounted if another company were to come and make an offer.”
The Valero retail division operates 1027 company owned stores, all of which use PriceAdvantage for their fuel price management software. In the latest quarter, the retail division set a new record for their operating income, with retail fuel margins of $0.303 per gallon and increased fuel volumes from the same period last year.
by John Keller | Sep 28, 2012 | Fuel Price Management, Fuel Pricing Software
When optimizing fuel prices in the fuel price management process, there are numerous factors that play a role in determining the optimized price at any given point in time. Obviously the current price at each primary competitor is important, as well as the knowledge of which competitor moved recently. Another consideration is the current replacement margin, and the historical actual margin relative to corporate goals. Historical volumes compared to target are another important consideration. But there is one more less obvious yet still critically important consideration to make when optimizing fuel prices.
Fuel Managers must be aware of the published rack prices in each of their markets in order to compare store cost to the cost of the competition. The published rack cost allows you to compare your replacement margins with those of your competitors. The published rack cost tells whether your stores are at a competitive advantage or disadvantage relative to the competition, and can help you anticipate how the competition will react to your price move, based on whether or not they have the margin to respond.
This information is so integral to the fuel price management process that PriceAdvantage is now working with OPIS to import the OPIS published rack cost into the centralized PriceAdvantage fuel pricing software system. Each PriceAdvantage customer configures which markets and which terminals to include for comparison to their fuel costs, and the published competitor rack cost is then automatically imported multiple times a day.
The power of having this OPIS information in the PriceAdvantage fuel pricing software system is that it puts all the critical fuel price management information in one centralized system, allowing the fuel manager to react that much more quickly to market changes, and to optimize both volume and profit.
by John Keller | Sep 27, 2012 | Fuel Price Management, Industry News
The US Energy Information Administration reported that gasoline consumption for the first half of 2012 was down .3% compared to the first half of 2011. The year over year economic growth of 2012 was more than offset by the increased fuel efficiency of the in-use vehicle fleet, as well as higher gasoline prices, according to the US EIA.
From a fuel price management perspective, that means that across the enterprise, c-store fuel gallons sold are likely to be lower year over year, and that fuel volume targets set at the beginning of the year may need to be adjusted downward.
It also means that the trend for the past five years is continuing this year, where the overall market for gasoline continues to shrink, and c-stores are battling for pieces of a smaller pie. Only the c-store companies with robust fuel price management software and sophisticated fuel price optimization and analytics capabilities will be successful.
by John Keller | Sep 26, 2012 | Fuel Price Management, Industry News
On April 30 of this year when Energy Transfer Partners announced they were acquiring Sunoco, it left the fate of Sunoco’s 4,900 c-stores uncertain. Analysts speculate ETP will sell the 4,900 stores because the stores don’t fit well with the rest of the ETP assets.
In a Convenience Store News article today, there is a list of possible acquirers. Below is the list, with the number of stores they currently operate.
- Wawa: 599
- Marathon Petroleum: 2,670 stores
- The Pantry: 1,615
- Alimentation Couche-Tard: 3,585 stores
- Global Partners: 1,000 stores
It is immediately apparent from this list that should any of the above companies acquire all the Sunoco stores, it would be a dramatic growth in their business, essentially a minnow swallowing a whale. Even c-store giant 7-11 with their 7,341 stores would see a store count increase of over 60%. Perhaps a more likely scenario is the 4,900 Sunoco stores will be splintered and sold off in chunks.
It will be interesting to follow this story as it develops. But one certainty is this: the fuel price management market and strategies where these Sunoco stores operate are destined to be different after any sort of acquisition.
by John Keller | Sep 25, 2012 | Fuel Pricing Software, PriceAdvantage
As we build each screen for our PriceAdvantage fuel pricing software, we view it through the eyes of the people who will be interacting with that screen, and focus on what they are trying to accomplish using the information presented to them. As we do this, we apply a concise set of words to describe each user interface we build.
In the broadest categories, PriceAdvantage is made up of the Headquarters interface and the Store interface.
The primary user of the Headquarters interface is the fuel pricing manager. The set of words we use for the overall set of Headquarters screens are these:
- centralized information
- rich analysis
- fast pricing
The primary user of the Store software is the store manager. The set of words we use for the overall set of Store screens are these:
- drop-dead simple
- generate trust
The recurring feedback we receive from our customers and prospects is that PriceAdvantage is very easy to understand and easy to use. As we build new versions of PriceAdvantage, we will continue to build more robust capabilities, but we will apply these best practices to make sure we never allow the user interface to grow confusingly complex.
