by John Keller | Jul 2, 2010 | Fuel Price Management, Fuel Pricing Strategy, Industry News, Retail Fuel Margins
July 1, 2010 – According to the latest edition of the US Energy Information Administration’s “This week in petroleum” report, the average retail fuel price for regular gasoline rose for the second straight week as of June 28th. Current retail gasoline prices are above their year-ago level, but lower than prices during the same period in 2008, 2007, and 2006.
For the second week in a row, the U.S. average fuel price for regular gasoline increased, moving up more than a penny to settle at $2.76 per gallon, $0.12 higher than last year. With the exception of the Rocky Mountains, average fuel prices increased in all other regions of the country. The average on the East Coast went up a penny to $2.70 per gallon. The increases in the Midwest and on the Gulf Coast amounted to a bit less than two cents, taking the prices to $2.73 per gallon and $2.61 per gallon, respectively. The Rocky Mountain price slipped a half cent but remained essentially unchanged at $2.77 per gallon. The West Coast average climbed the most of any major region, moving up over two cents to $3.06 per gallon. The average in California moved up nearly three cents to $3.13 per gallon.
From the supplier point of view, the US EIA expects gasoline retail fuel margins to remain moderate, with gasoline demand showing slight growth in 2010. This implies that retail prices are likely to average under $3 per gallon this summer barring unexpected events.
by John Keller | Jul 2, 2010 | Fuel Price Management, Retail Fuel Margins
OPIS reported today that for the first half of 2010, retail fuel margins across all US operators, including c-stores, were the best in many years. Oil prices stumbled, while demand at the pump held steady. Retail fuel margins from January to June 2010 were at the highest levels in 10 years.
The average gross retail fuel margin was at 16.9 cents per gallon. That’s a 64% increase over 2009. Some specific fuel retailers have reportedly doubled their retail fuel margins so far this year. Even the wholesale membership clubs of BJ’s, Costco and Sam’s Club have reported positive retail fuel margins this year. In previous years these wholesale retailers have sold fuel as a low price leader, sometimes at negative margins.
Perhaps it is these retail fuel margins that have attracted the attention of Green Equity Investors, the private equity firm who purchased roughly 10% of BJ’s stock on July 1, with an intent to discuss options for improving shareholder value. BJ’s stock closed 18% higher that day.
And with the beginning of the second half of the year seeing the barrel of crude trading at $6 under the previous month, these retail fuel margins are likely to continue into the summer.
These numbers reinforce the critically important role the Fuel Manager plays in contributing profits to the company. By carefully monitoring the fuel pricing strategy at each location, Fuel Managers can optimize their prices at each store, and keep these retail fuel margins strong. Now is the time to invest in a robust fuel pricing software application such as PriceAdvantage to continue this trend through the rest of 2010 and into the future. Fuel pricing software allows the Fuel Manager to make these retail fuel margins the new norm.
by John Keller | Jul 1, 2010 | Fuel Price Management, Fuel Price Optimization, Retail Fuel Margins
Associated Press reports BP will begin reimbursing their dealers with fuel rebates of $.01-.02 per gallon purchased at terminals to help offset the decline in fuel sales reported by many BP dealers after the gulf oil spill began. BP says the rebate money may be used however the dealers wish. While some may use the money to help cover lost sales since April, others may pass on the rebate directly to a fuel price reduction at the pump.
Given that studies have shown people will drive miles out of their way to save a few cents per gallon on fuel, I would expect most dealers will use this money to lower their fuel prices.
by John Keller | Jun 24, 2010 | Industry News, Retail Fuel Margins
According to the “This Week in Petroleum” report from June 23, 2010, the US Energy Information Administration reported that for the first time in six weeks, the U.S. average price for regular gasoline increased, moving up four cents to settle at $2.74 per gallon, 5 cents higher than last year. Although prices went up in all regions of the country, the range of change was considerable, from less than a half cent in the Rocky Mountains to seven cents in the Midwest. The average on the East Coast increased three cents to $2.69 per gallon, while the Midwest price jumped seven cents to $2.71 per gallon. Despite an increase of two cents, the average on the Gulf Coast remained the lowest of any region at $2.60 per gallon. Increasing less than a half cent, the average in the Rocky Mountains was essentially unchanged at $2.77 per gallon. The West Coast average climbed four cents to $3.03 per gallon, while the price in California moved up nearly a nickel to $3.10 per gallon.
The national average price for diesel fuel rose for the first time since May 10, 2010, climbing three cents to $2.96 per gallon, $0.35 above the price a year ago.
by John Keller | Jun 21, 2010 | Industry News, Retail Fuel Margins
The latest report from the US Energy Information Administration shows a continued drop in national fuel prices.
The U.S. average price for regular gasoline has declined for five consecutive weeks. Prices dropped by over 2 cents to hit $2.70 per gallon, 3 cents higher than a year ago. Over the last five weeks, the price for regular gasoline has decreased by over 20 cents per gallon. The averages fell in all regions of the country with the East Coast price falling by about three cents to $2.66 per gallon. The Midwest and Rocky Mountain averages slipped two cents to $2.64 per gallon and $2.77 per gallon, respectively. The lowest price was found in the Gulf Coast at $2.58 per gallon, after a decline of more than 3 cents. The prices on the West Coast and in California dipped a penny and a half to $2.99 per gallon and $3.05 per gallon, respectively.
The national average price for diesel fuel also fell for the fifth week in a row, dropping two cents to $2.93 per gallon, $0.36 above a year ago. Prices fell in all regions of the country as the East Coast declined two cents to $2.95 per gallon. The Midwest price dipped a cent to $2.89 per gallon. The Gulf Coast and Rocky Mountain averages fell about three cents to $2.87 per gallon and $2.99 per gallon, respectively. The average on the West Coast slid less than half a cent to $3.05 per gallon. In California, the average was unchanged at $3.07 per gallon.
by John Keller | Jun 9, 2010 | Fuel Price Management, Fuel Price Optimization, Fuel Pricing Strategy, Retail Fuel Margins
In the June 8, 2010 edition of the US Energy Information Administration’s monthly “Short-Term Energy Outlook”, the EIA revised their forecast for summer unleaded retail fuel price national averages down $.15 per gallon. The EIA now projects the national average fuel price for unleaded will be $2.79 per gallon for the summer 2010 driving season that lasts through September 30. The summer gasoline price forecast is down primarily as a result of the lower crude oil price forecast. The average price in the summer of 2009 was $2.44 per gallon.
This downward projection is despite the estimates of reductions in production resulting from a 6-month deepwater drilling moratorium announced by Secretary Salazar in May. The reductions in crude oil production resulting from the moratorium are estimated to average about 26,000 barrels per day (bbl/d) in the fourth quarter of 2010 and roughly 70,000 bbl/d in 2011.
EIA projects crude oil prices will average about $79 per barrel over the second half of this year and rise to $84 by the end of next year.
EIA projects that OPEC, which did not change its production targets at its March meeting, will keep its crude oil production largely unchanged for the remainder of 2010. The countries that have the bulk of OPEC ‘s spare capacity – Saudi Arabia, Kuwait, and the United Arab Emirates – have maintained their quota discipline at current levels for an extended period and are expected to continue doing so barring significant changes in the world oil market outlook.
