John Eichberger is the NACS Motor Fuels Director and always a great advocate of the fuel retailer.
In this video clip from CNBC, John explains how despite the highest retail fuel prices we’ve seen in years, the 2014 retail fuel margin has taken a 20% hit over the past three weeks.
It seems that everywhere we turn heading into this July 4th weekend we see news stories about the high price of gas. In the Wall Street Journal today the top story in the third section is “Pump Prices Wallop Wallets: Fuel Cost Hits a Holiday High Unseen in Years; ‘It Eats Away at Your Lifestyle”.
Whew – how’s that for an attention grabbing headline!
The article goes on to say that gas prices this holiday season are the highest since the record highs of 2008. The US national average is $3.67 which is $0.20 higher than this same time last year. The average gas price this year is the second highest of the past ten years.
The article attributes the blame to oil investors and traders who are worried that the unrest in Iraq will cause a prolonged increase in the barrel of crude. Iraq was the sixth-largest oil exporter to the US this past April.
Michael Green, a spokesman for AAA, cautioned that drivers may cut back on shopping, dining or going out because the higher gas prices affects their budget. The article emphasizes the point that because of the increased domestic oil production in the past years, the US has near record oil inventories, and so we are not on the same level of dependence as we were in 2008 when oil prices hit $150 a barrel. That means we are buffered from a repeat of 2008 when gas prices hit $5 a gallon in some parts of the country.
The AAA also says the number of Americans expected to drive 50 miles or more during this holiday weekend is 34.8 million people, the highest in seven years.
Another interesting statistic quoted in the article: gas prices dropped an average of $0.21 in June over the past three years, but gas prices rose this year.
What can we take away from all this from a fuel price management perspective?
1. Drivers are expecting to see higher prices at the pump, so they won’t be experiencing sticker shock as they travel this weekend.
2. The US economy continues to improve, and consequently we’ll see more miles traveled this weekend, and more demand than last year’s holiday weekend. That means more volume available to capture overall. Combine the increase in volume with the higher gas prices, and we can expect to see higher fuel revenues this year than last.
3. We know that retail fuel margins suffer during times of retail fuel price increases, and that is proving to be true once again as we compare OPIS reported margins this year to last year. We’ll likely see margins in the range of $0.17 per gallon lower this holiday weekend than last year.
4. The more volatile the rack price, the more at risk you are of losing pennies on every gallon. And with higher gallons available in the market this year, those opportunity losses are amplified.
Only with the rich analysis and rapid speed to the street of fuel price strategies provided by PriceAdvantage can you make the most of the market this holiday weekend, and the entire summer season.
The latest OPIS report revealed that retail fuel margins last year at this time were $0.117 per gallon higher than this year.
The current retail fuel margin average stands at $0.157 per gallon, $0.003 below last week. Last year at this time the average retail fuel margin was a robust $0.274 per gallon.
The year to date retail fuel margin average remains unchanged at $0.164 per gallon while the Q2 average dipped to $0.169. The six week average took the biggest hit in four weeks, dropping $0.015 per gallon to $0.173 per gallon.
Overall, June was a tough month, with the retail fuel margin averaging only $0.171 per gallon. In 2013 the June average was $0.210 per gallon. In 2013 the Q2 average was $0.191 per gallon, $0.022 above this year.
After the rough first half of the year we can only hope wholesale costs will give us a reprieve so we can allow margins to catch up. Unfortunately, with all the unrest in Iraq and the rest of the Middle East, there is no certainty in our wholesale cost trends, and we’ll be forced to make the most of anything we can, squeezing every penny out of every hour.
As reported by CSPNet.com, gas taxes will change in California and Indiana on July 1.
In California, the excise gas tax will drop $0.035 per gallon from $0.395 to $0.36 per gallon for the 2014-2015 fiscal year, ending June 30, 2015.
In Indiana, the state will be switching from a prepaid sales tax on gasoline, which was collected from retailers, to a gasoline-use tax based on a rolling monthly statewide average that is collected from distributors. The tax rate could change from month to month depending on the average price for gasoline. For the month of July 2014, the tax will be $0.229 per gallon.
From a fuel price management perspective, it’s critical that all your fuel pricing systems can be quickly adjusted to adapt to the new taxes. PriceAdvantage is built with this kind of flexibility in mind, allowing you to make these tax changes to your system without having to call in expensive consultants and pay them to open the hood and make the changes.
Does the fuel pricing software you have make it easy to change tax rates?
The OPIS report today revealed that the average US retail fuel margin dipped below this equivalent week last year. The average retail fuel margin now stands at $0.160, which is a $0.036 per gallon drop from last week. Last year at this time the average retail fuel margin across the US was $0.199 per gallon.
With the unrest in Iraq, this comparison to last year is likely to remain gloomy, as last year the subsequent week saw an increase to the retail fuel margin of $0.075, when it finished the second quarter at a whopping $0.274 per gallon.
Last year the average retail fuel margin across Q2 was $0.210. So far this year the average Q2 retail fuel margin is $0.170, meaning we’ll likely see an average for the 2014 quarter in the $0.17 range, or four cents less than last year.
Year to date, the average retail fuel margins for 2014 are standing at $0.164 compared to $0.171 at this time last year.
From a fuel price management perspective, unquestionably these numbers indicate just how competitive a market it is this year. It really is a penny up, penny down game, and only the most sophisticated fuel price management software like PriceAdvantage can help you determine the best price for each location and deliver those prices quickly to the street.
Today’s OPIS report reveals that the average US retail fuel margin increased for the second consecutive week, this time rising $0.025 per gallon to an average of $0.196 per gallon. That raised the year to date retail fuel margin average to $0.164 and the Q2 average to $0.171 per gallon.
For the seventh consecutive week, the six week average increased, this time up $0.007 to hit $0.197 per gallon.
Last year at this time, the average retail fuel margin across the US was $0.152 per gallon. That means after being below last year for two weeks, this year’s average retail fuel margin is back above last year, a position we’ve held this year four times over the past six weeks.
Last year at this time, the average retail fuel margin had three consecutive weeks of increases, capping at a whopping $0.302 per gallon reported on July 5. With the political unrest in Iraq having an impact on the Brent Crude and WTI levels, where they are now trading at the highest levels of the year, it may prove difficult to reach the margin heights we attained last year.
Shell Oil Company has added the NCR Radiant POS (RPOS) as a new option for Shell Branded Wholesalers. Shell retailers can now opt for a complete software, hardware and services solution from NCR to reduce costs and enhance customer service.
Shell branded wholesalers not only have a new choice to handle the everyday transactions inside the store and at the fuel pump, but also handle the demands of complex food service operations.
“Consumers have a variety of choices today when it comes to fueling and convenience,” said Eric Stecker, vice president and general manager, Petroleum and Convenience, NCR Retail. “We can now offer Shell branded wholesalers the RPOS solution, allowing them to add mobile, tablet, cloud, and food service solutions that can dramatically reduce wait times, increase customer satisfaction and increase efficiency of operations. NCR looks forward to helping Shell create an improved customer experience – one that separates their service from competitors.”
This is exciting news for PriceAdvantage because NCR Radiant has been a strong integration partner for many years. PriceAdvantage customers including Sheetz, Rutter’s, and Royal Farms have been executing their PriceAdvantage retail fuel price changes through the Radiant POS since 2007 with full confirmation feedback. Now that Shell Oil has added NCR Radiant to their list of available POS systems, we look forward to offering our solution to every Shell fuel retailer.
The OPIS report today revealed that the average retail fuel margin across the US ticked up $0.006 per gallon this week to $0.171 per gallon. That moves the year to date average to $0.163 per gallon and the Q2 average to $0.169 per gallon. The six week average climbed for the sixth consecutive week to $0.190 per gallon.
This same day in 2013 the average retail fuel margin was $0.216 per gallon. But last year at this time, the average retail fuel margin dropped $0.06 per gallon the subsequent week to $0.152. If we can hold our retail fuel margins steady next week, we’ll be above last year for the first time in three weeks.
For the first time, a US company has won the International Convenience Retailer of the Year award – Rutter’s was named the winner by the National Association of Convenience Stores in London.
“We’ve been very fortunate to be recognized by both our customers as well as our industry peers as the best not only locally in our central Pennsylvania marketplace, but also nationally and now internationally,” said Rutter’s CEO, Scott Hartman, “when you consider the impressive companies that entered, we take great pride in winning such a prestigious award and it feels especially great to know that we’re the first chain to bring this recognition home to the U.S.”
We at PriceAdvantage couldn’t be more proud. We’ve been working with Rutter’s since 2007, and they have been a great partner. View a short video here to listen to Gabe Olives, vice chair of Conexxus and a member of the PriceAdvantage Customer Advisory Board, explain why Rutter’s selected PriceAdvantage.
This prestigious award recognizes technology leadership as part of their criteria, so it feels good to contribute to their success. Congratulations Rutter’s!
May finished with a whimper as retail fuel margins dropped $0.023 per gallon according to the OPIS report released today. The average retail fuel margin across the US is now $0.165 per gallon, returning to the level last seen four weeks ago.
The year to date average is $0.162 while the Q2 average is $0.168 and the six week average is $0.185.
This equivalent week last year, retail fuel margins jumped $0.09 per gallon. With the drop this year and the increase last year, the current retail fuel margin now stands $0.053 per gallon below this time last year. That marks the first time since May 2 that retail fuel margins this year are below last year.
Now that the Memorial Day holiday is behind us, we settle into the strong and steady summer driving volumes. From a fuel price management perspective, that means careful monitoring of margins and using every trick of the trade to maximize and optimize so we can get the most of what this season has to offer. Often times that means making multiple price changes in a single day, especially when the store manager at the competitor across the street has gone home for the day and there is no one there to respond to your price changes. Thanks to the patented technology licensed exclusively to PriceAdvantage, rapid and frequent price changes are as easy as clicking a mouse and watching the magic happen.
