by John Keller | Jun 8, 2011 | Fuel Price Management Solutions, Fuel Price Optimization, Fuel Pricing Strategy
The Baltimore Sun recently published this letter to the editor from an owner of a convenience store. It’s interesting to hear the fuel pricing problems this local retailer is dealing with, as people report that his fuel prices are 10 cents higher than the competition.
“I am one of the owners of Ray Adolph’s Citgo on York Road in Lutherville. Earlier this week, our station was mentioned in an editorial (“A dime’s worth of difference,” May 23) for having gasoline prices more than 10 cents higher than neighboring stations. While that was accurate, I would like to enlighten the general public as to what occurred that week.”
“On May 9, our station was posting a competitive price for fuel. But looking ahead, I saw on my supplier’s web site that the cost of fuel was going to be 10 cents per gallon higher on Tuesday and 20 cents by Wednesday. Guess when we needed to purchase a load of fuel? Bingo. Mid-day Wednesday was when the “liquid gold” was dropped in to my tanks, and that was 20 cents per gallon higher then my previous purchase.”
“I had not only purchased the gas at the highest price for the week, but I found out later it was the peak price for the day. By 6 p.m. Wednesday, May 11, the price had already dropped 6 cents. By Friday, it had dropped an additional 7 cents, or 13 cents in all since I bought gas. I called my salesman and he made a 10-cent adjustment on what I had just purchased. However, at the time of this writing (May 26), the cost has dropped 35 cents per gallon since I purchased it. Even with the 10-cent credit, I am still the highest price in the neighborhood.”
“Our Citgo not only sells fuel but has nine service bays for general auto repairs. Consumers assume that since our gas price is so high that we will be gouging people for service work. One has no bearing on the other. Up until this recent roller coaster ride in fuel pricing, we would be as competitive as we could with selling a gallon of gas. Our service prices are very competitive.”Brian K. Adolph, Lutherville
The writer is president of Ray Adolph’s Citgo.
See the link below to read the article on the Baltimore Sun site:
http://www.baltimoresun.com/news/opinion/bs-ed-citgo-20110527,0,3108800.story
As I speak with Fuel Managers across the country, they tell me pricing fuel didn’t use to be as hard as it is today. In the 1970’s it was common to have the same fuel cost for an entire month. In the early 1980’s, there would be a new fuel cost every day, but prices never changed more than a few cents day to day. These days Fuel Price Management includes handling wholesale fuel cost swings of $.20-$.30 down one day, followed by $.20-$.30 up the next.
Blame it on fuel commodity speculators if you want, but fact is, the dramatic fluctuation of fuel costs coupled with the high consumer scrutiny of retail fuel prices has made Fuel Price Management more difficult than ever. The answer is to implement fuel price management solutions that allow for rapid monitoring of cost changes, tracking competitor retail price responses, and accelerating speed to the street to enforce the right price to the right store at the right time.
by John Keller | May 25, 2011 | Fuel Price Management, Fuel Price Optimization, Fuel Pricing Strategy
The fuel price speculative bubble is over, and the market is correcting now, according to Stephen Schork, president of Pennsylvania-based energy consultant The Schork Group Inc.
Bloomberg Business Week today reported that pump prices were $1.66 a gallon over crude oil futures in New York on May 6, the largest premium since September 2008, according to data compiled by Bloomberg. That compares with an average of 95 cents in the past five years. In 2008, it took two months for the gap to return to average.
The $4 per gallon U.S. gas prices are deterring motorists from driving, causing a 2% decrease in demand compared to last year, and likely a lower fuel prices by July. While gasoline prices may not be down by Memorial Day on May 30, history suggests they will be lower by July 4, when 32 million typically take to the roads for the Independence Day holiday.
From a Fuel Price Management perspective, that means volumes may be lower in May, but are likely to increase just as wholesale costs decrease, along with retail fuel price averages.
Read the complete Bloomberg article here.
by John Keller | May 24, 2011 | Industry News
The American Petroleum Institute reported that in April 2011, total demand for distillate fuel rose 15 percent to 4.27 million barrels a day, while consumption of ultra-low sulfur diesel fuel increased 26 percent to average 3.42 million barrels a day.
Gasoline pump prices rose 6.6 percent last month, which slowed demand 2.2 percent to 8.91 million barrels a day from the same month last year.
Fuel demand increased in April as economic growth fueled diesel consumption by truckers, Bloomberg reports.
This article was reported by NACSOnline here.
by John Keller | May 20, 2011 | Fuel Price Management, Fuel Price Optimization
The American Petroleum Institute issued a monthly report today. Gasoline deliveries, a measure of gasoline demand, dropped by 2.2 percent compared with last year. Deliveries totaled 8.9 million barrels per day.
Rising retail gasoline prices seem to have crimped consumer demand for motor gasoline in April. Gasoline prices were up by 6.6 percent in April from March, a gain of 24 cents per gallon.
Gasoline production fell for the first time in 2011, down 3.1 percent to 8.8 million barrels per day. This level was still the second highest for gasoline for any April in the past 10 years and the highest on a year-to-date basis.
As Fuel Price Management reviews their fuel volume sales and market share for April 2011, they must keep in mind the potential for an overall decrease in total volume sales for each of their markets.
by John Keller | May 17, 2011 | Customer News, Fuel Price Management, Fuel Pricing Technology
A computer glitch was to blame for a Valero convenience store selling premium fuel at $1.10 a gallon over a four hour period on May 15. The owner reported that was over $3 a gallon less than the proper price, and cost him $21,000. Roughly 7000 gallons of premium fuel were sold at that price, and police had to be called in to control the long line of traffic.
According to the Los Angeles c-store owner, the fuel price change didn’t work properly, causing the POS system to set the price to the default of $1.10 per gallon. The attendant on duty at the time was too busy staffing the convenience store and Point Of Sale system to notice the problem.
From a Fuel Price Management lesson-learned perspective, this story highlights the risk of fuel price changes going awry. Without the proper Fuel Pricing Software solution, including the critical Fuel Price Management phases of Change and Confirm, every c-store is at risk of losses like this.
The source of this article may be found here.
by John Keller | May 16, 2011 | Industry News
According to an article on MarketWatch, several companies reported retail fuel sales in April were as much as 4% lower than in March. The article specifically mentions Marathon Oil Corp., Tesoro Corp., and Delek US Holdings, Inc.
High fuel prices were to blame for the drop in fuel volume, according to the company statements. Read the entire article here.
In this shrinking fuel market environment, Fuel Managers must fight for volume market share by investing in fuel price management solutions that allow for constant monitoring of competitor pricing, fuel replacement cost, optimization strategies, volume history vs. target, and price change processes.
