by John Keller | Apr 11, 2014 | PriceAdvantage, Retail Fuel Margins
The OPIS report today showed average retail fuel margins across the US lost ground again this week. The average US retail fuel margin now stands at $0.127 per gallon, a $0.027 decline from last week. That’s the second consecutive decrease and the fourth drop in five weeks.
The year to date average dipped slightly to $0.156 per gallon, as did the six week average to $0.149 per gallon. The Q2 average is now $0.141 per gallon.
The current retail fuel margin is substantially lower than last year at this time, when it was $0.268 per gallon. The April 2013 average retail fuel margin finished the month at $0.219 per gallon last year. Half way into April, it’s not likely we’ll catch up to that monthly average this year.
by John Keller | Apr 10, 2014 | Fuel Price Management, Industry News, PriceAdvantage, Retail Fuel Margins
In the US EIA “Short-term and Summer Fuels Outlook” released today, we see these predictions for the summer of 2014 (April – September).
- US consumption of gasoline will be slightly higher (10,000 gallons) than the same period in 2013
- Brent crude oil prices will be $2 per barrel lower than the same period in 2013
- The US regular unleaded retail gas price will average $3.57, one cent lower than the same period in 2013, with these regional averages:
- East Coast $3.53 (same as 2013)
- Midwest $3.55 ($0.05 lower than 2013)
- Gulf Coast $3.37 (same as 2013)
- Rocky Mountain $3.52 ($0.09 lower than 2013)
- West Coast $3.85 ($0.02 lower than 2013)
- The US diesel retail gas price will average $$3.87, two cents lower than the same period in 2013
From a fuel price management perspective, what does it mean if these predictions come true?
- Fuel volumes would essentially be unchanged across the entire US market, unlike in the summer of 2013 when the overall US fuel market increased by 90,000 gallons.
- Wholesale costs to fuel retailers would be slightly less than last year, possibly as much as $0.048 per gallon less.
- Depending on the region, fuel retailers may be able to see an increase of fuel margins where the fuel price holds relatively steady but wholesale costs are less.
- Overall fuel sales as measured in dollars would be less for regions such as the Midwest, Rocky Mountain, and West Coast. Publicly held companies who have their sites in these regions may report lower overall fuel revenues if volumes are essentially the same and street prices are lower. That’s why financial analysts shouldn’t pay too much attention to this metric that is outside the control of the retailer. But with careful attention played to margins, fuel profits may remain strong, and that’s worthy of attention.
Obviously there is lots of uncertainty related to the future cost of crude, since a quick series of unexpected events could cause these predictions to be way off. That’s why the report shows a 95% confidence level of crude prices to be anywhere in the range of $60 to $130 per barrel. But for modeling purposes, this report does show one reference point that is useful for planning purposes.
by John Keller | Apr 4, 2014 | Industry News, Retail Fuel Margins
In the OPIS report today, average retail fuel margins across the US dropped $0.014 per gallon. The national US average is now $0.154 per gallon, just under the year to date average of $0.158 per gallon.
The six week retail fuels margin average is $0.150 per gallon. This same Friday last year had the average retail fuels margin at $0.175.
In 2013, we saw a dramatic increase in retail fuel margins the second Friday of April, where the average jumped to $0.268 per gallon. April was a strong year in 2013, with the average retail fuel margin for the month being $0.219 per gallon. Let’s hope retail fuel margins turn around again this year.
by John Keller | Mar 28, 2014 | Industry News, Retail Fuel Margins
The OPIS numbers released in the NACSDaily report today show US retail fuel margins rose for the first time in two weeks with an increase of $0.025 per gallon. The average retail fuel margin across the US now stands at $0.168 per gallon. This same day last year the average retail fuel margin was $0.22 per gallon. The six week average now stands at $0.146 per gallon, up $0.004 from last week.
The March retail fuel margin average this year finished at $0.153 per gallon, compared to $0.212 in March 2013. The first quarter margin average this year finished essentially the same as last year, with an average of $0.158 per gallon in 2014 compared to $0.159 per gallon in 2013.
In 2013, the Q2 average retail fuel margin was $0.191 per gallon. Let’s hope that 2014 can repeat that margin gain so we can see a more profitable quarter.
by John Keller | Mar 24, 2014 | Customer News, Fuel Price Management Solutions, Fuel Pricing Software, Fuel Pricing Strategy, Fuel Pricing Technology, Fuel Software, PriceAdvantage, Retail Fuel Margins
Earlier this month, CSPnet.com reported that CST Brands has identified 100 stores that are candidates for sale. You may find the article here. This is part of an ongoing effort at CST Brands to “assess its asset base and close convenience stores that are no longer core to its ongoing strategy”.
Kim Bowers, the CEO of CST Brands, said in the latest earnings call that in 2013 CST Brands closed 11 stores based on their “lower cash flow levels”. In other words, CST Brands pruned their portfolio of stores to rid the company of their bottom performers.
PriceAdvantage provides the analysis views and reports to quickly zero in on the under-performing locations by comparing store performance to target, to last year, and to other stores. Easy to read tools such as heat maps with color coded push pins show at a glance stores that are dragging down entire regions with their lower fuel volumes and fuel margins.
CST Brands, when they were under the Valero umbrella, worked closely with the PriceAdvantage team to develop precisely these sorts of views and reports so they could optimize their entire fuels business. Since rolling out PriceAdvantage across all their stores in 2012, CST Brands now reaps the benefit of this rich information in PriceAdvantage to deliver on the promise to Wall Street that CST Brands will continue to identify the stores that are the best candidates for sale, and the best candidates for the CST Brands wholesale business.
by John Keller | Mar 24, 2014 | Customer News, Fuel Software, Industry News, Retail Fuel Margins
According to a recent research note from Raymond James & Associates, retail fuel margins averaged $0.185 per gallon in January (up 39% year over year) and $0.141 per gallon in February (down 13% year over year). The research is based on tracking retail fuel margins from Casey’s General Stores, CST Brands, Murphy USA, The Pantry, Susser, and TravelCenters of America.
Raymond James & Associates uses this information, as well as data from OPIS and futures contracts, to predict retail fuel margins of the first quarter to be $0.11 per gallon for CST Brands. That would be a 38% improvement year over year, attributed to a new pricing strategy that has a greater emphasis on margins, implemented after CST Brands spun off from Valero last year.
CST Brands uses PriceAdvantage as their fuel software across all their US stores.
