by John Keller | Dec 5, 2014 | Fuel Price Management, Fuel Price Optimization, Fuel Pricing Technology, Fuel Software, Industry News, Retail Fuel Margins
OPEC announced on Thanksgiving that they would not cut back their production. According to the Wall Street Journal, Venezuela was pushing for a considerable cut in OPEC production prior to the meeting. When Russia, which isn’t a member of OPEC, decided to maintain their production levels and not join in any plan to cut output, Saudi Arabia argued that the group must defend market share rather than prices. That decision became final as the cartel is now appearing that they will not push for supply cuts in the immediate future.
Saudi Arabia is now anticipating oil prices could settle at $60 a barrel, approximately $9 a barrel less than now. According to the US Energy Information Administration, if every $10 drop in the price of a barrel of crude is passed on to the consumer, that would equate to a $0.24 drop in the price of a gallon of gas.
From a fuel price management perspective, that means we could see average gas prices in the $0.20 to $0.30 range lower than today in the coming weeks. And as always, falling gas prices mean lower fuel revenues but stronger retail fuel margins.
What else can we expect from these lower oil prices? Auto manufacturers have reported robust November sales, especially in trucks and luxury vehicles that get lower gas mileage, and perhaps require premium fuel. Meanwhile, Toyota has reported that sales of its hybrid Prius are down 14% year over year. This could mean a slowing of the ongoing trend of reduced demand for fuel caused by increasingly more fuel efficient vehicles on the street. But of course it is important to consider that even today’s less than highly fuel efficient new vehicles are likely more fuel efficient than the vehicles they are replacing. So it is unlikely that the reduced fuel demand trend will reverse completely.
We live in historic times, as witnessed by the constant news articles about oil prices and gas prices. If savvy fuel analysts play their cards right and invest in premiere retail fuel pricing software technology, there is quite a bit of money to be made.
by John Keller | Nov 28, 2014 | Fuel Price Management, Industry News, Retail Fuel Margins
The latest OPIS report shows the average retail fuel margin across the US declined $0.014 per gallon to $0.258 per gallon. The year to date average is $0.208 and the quarter to date average is $0.290 per gallon. The six week average is $0.289 per gallon.
The retail fuel margin level this week remains $0.129 higher than this time last week.
Retail fuel margins have dropped five of the last six weeks, behavior similar to what we saw last year at this time. Despite this six week drop of $0.112 per gallon, we’re still seeing a Q4 retail fuel margin average that is $0.09 per gallon higher than Q4 of 2013.
The Thanksgiving holiday weekend is still underway, and if demand turns out to be as predicted, retail fuel marketers will end the month on a solid note.
by John Keller | Nov 21, 2014 | Fuel Price Management, Industry News, Retail Fuel Margins
According to the AAA, the number of Americans who will drive 50 miles or more for the Thanksgiving holiday will be 4.3% higher than last year and the highest number since 2007.
According to Marshall L. Doney, AAA President and Chief Operating Officer, Americans are more optimistic about the future, based on several key economic factors including employment, GDP and disposable income, causing an increased desire to travel.
With fuel retailers seeing some of the strongest margins of the year, this holiday should turn out to be a highly profitable one. With retail fuel prices being about $0.43 per gallon lower than this time last year, that gives everyone plenty to be thankful for, both on the consumer and the retailer side.
by John Keller | Nov 21, 2014 | Fuel Price Management, Industry News, Retail Fuel Margins
After four consecutive weekly declines, the average retail fuel margin across the US rebounded $0.025 per gallon this week, according to OPIS. That brings the national average to $0.272 per gallon, which is $0.13 per gallon higher than last year at this time.
The year to date average is $0.207, slightly higher than this time last year when the year to date average was $0.191 per gallon. The average for the quarter is a robust $0.294 per gallon, while the six week average is $0.308 per gallon.
According to Schneider Electric, US refineries are at a strong run rate, yielding a greater supply of gasoline and increased gas inventories. That means we can expect a different trend over the upcoming weeks than what we saw last year at this time, and retail fuel margins should remain strong as gas prices continue to decline.
by John Keller | Nov 21, 2014 | Fuel Price Management, Fuel Pricing Strategy, Industry News, Retail Fuel Margins
According to an article written by Brian Milne of Schneider Electric and published in Convenience Store Decisions, US refineries are increasing their production after being down for maintenance, bringing the run rate above 90%. That’s a run rate last seen in mid-September.
What does that mean from a fuel price management perspective? The higher run rate will lead to a greater supply of gasoline, gas inventories will increase, wholesale fuel prices will push lower, and ultimately retail fuel prices will continue to decrease leaving open the opportunity for robust fuel margins.
In November, the US Energy Information Administration lowered their predicted average retail fuel price to $2.94 per gallon in 2015, which is 13% lower than their predicted price in October. Likely that will lead to increased demand for fuel, or at least steady demand levels compared to this year.
by John Keller | Nov 19, 2014 | Customer News, Fuel Pricing Technology, Fuel Software, Industry News, Retail Fuel Margins
CST Brands announced their financial results for the quarter ending September 30, 2014. Earnings were $.90 compared to expectations of $.57.
From the report: “Motor fuel gross profit (per gallon) in the U.S. for the third quarter of 2014, after deducting credit card fees, was $0.25 compared to $0.16 in the third quarter of 2013, which was primarily caused by a declining crude oil and wholesale gasoline pricing environment combined with the Company’s fuel pricing strategy.” [bolded text from this author]
In the US stores separately, the numbers are as follows:
- Q3 retail fuel margin before credit card fees of $0.288 per gallon up from $0.203 for Q3 in 2013
- Q3 gallons per site per day of 4,921 gallons or approximately 152,000 gallons per month
- Q3 NTI stores gallons per site per day of 9,547 gallons or 295,000 gallons per month
The numbers are quite impressive, and the financial analysts are noticing. CST stock is now trading at $43.27 a share, up 23% over the past three months, and up 32% for the year.
