by John Keller | Feb 22, 2013 | Fuel Price Management, Industry News
Compressed natural gas is continuing to gain mindshare with Convenience store retailers this year. According to CSNews.com, Convenience Store News lists among their top 10 predictions for 2013 “Natural gas gains more believers”.
Specifically, CSNews writes “Compressed natural gas and liquefied natural gas generated a lot of buzz in 2012, as several c-store operators added natural gas to their fuel offer. We expect the buzz to keep building, with more convenience stores joining in on the trend in 2013.”
Earlier this week, Qwik Trip announced that based on the success of their nine natural gas fueling stations, they are planning to build an additional 12 over the next few months. Both fleet vehicles and individual consumers are buying the natural gas.
Not only does natural gas provide a significantly lower price point for the retail customer, it provides dramatically higher retail fuel margins for the retailer as well. This is the year for fuel managers to ask themselves “Is there a market for natural gas in my customer base?”
by John Keller | Feb 21, 2013 | Fuel Price Management, Fuel Pricing Strategy, Industry News, Retail Fuel Margins
In the latest US Energy Information Administration “This Week In Petroleum” report, the US EIA says there are signs that improved fuel margins may be on the horizon.
From the report: “Despite the significant rise in retail gasoline prices since the start of the year, a part of the even steeper rise in wholesale prices has not yet been fully reflected in pump prices. Thus, if wholesale prices were to remain steady rather than decline, a modest further increase in pump prices would be expected.”
That means the potential is there for retail fuel prices to increase a little more to cover the wholesale price increases seen since the beginning of the year. That would allow c-stores to catch up in their margins. How likely are wholesale fuel prices to remain steady? The report states that refinery maintenance typically peaks in February, so we should be nearly finished with that part of the season. The report also states that 11 million barrels of waterborn gasoline are on their way to the US and Canada. And finally, the report states that reformulated gasoline blendstock for oxygenate blending (RBOB) futures and Brent spot prices have declined recently.
It has been a tough start to the 2013 year for c-store fuel margins. We can expect Q1 retail fuel results to reflect these low fuel margins in January and February. Hopefully the wholesale prices will settle and allow c-stores to return to normal retail fuel margins in March and on into the spring when retail fuel demand begins its annual increase.
by John Keller | Feb 15, 2013 | Industry News, Retail Fuel Margins
In the weekly report from OPIS, national retail fuel margins have shown a reverse in their three week trend, rising $0.038 this week to $0.122 per gallon. Retail fuel margins are now a penny better than they were at the beginning of February.
Average retail fuel margins for 2013 now stand at $0.130 per gallon.
by John Keller | Feb 9, 2013 | Customer News, Fuel Price Management, PriceAdvantage, Retail Fuel Margins
Valero announced in their 2012 end of year financial results that margins were up and volumes were steady.
Margins for the quarter were at $0.208 per gallon up from $0.139 in 2011. For the entire year, margins were up from $0.144 in 2011 to $0.162 in 2012.
Volumes per day per site for the quarter and for the year were relatively steady, down only 1.6% for the quarter, and up .004% for the year. According to the US Energy Information Administration, 2012 fuels demand was down .3%. That means Valero gained market share in 2012.
According to the report, Valero’s retail segment reported $95 million of operating income in the fourth quarter of 2012 versus $83 million of operating income in the fourth quarter of 2011. The increase in operating income was mainly due to higher fuel margins in the U.S., which was somewhat offset by lower fuel margins and a non-cash asset impairment loss of $9 million before taxes in Canada. For the full-year 2012, the retail segment generated $348 million of operating income, and those results were second only to the 2011 record-high results of $381 million.
We at the PriceAdvantage team would like to congratulate the Valero retail fuels group on their success in 2012. The fourth quarter of 2012 was the first full quarter when PriceAdvantage was in production at all the 1000+ Valero company stores.
by John Keller | Feb 8, 2013 | Uncategorized
According to the latest OPIS report, retail fuel margins have dropped for the third consecutive week. Retail fuel margins across the country now average $.084 per gallon, which is $0.028 per gallon lower than last week.
The average retail fuel margin so far in 2013 dipped slightly from last week to $0.132 per gallon.
As a comparison, according to NACS, the overall fuel margin for 2012 was $0.184 per gallon, and the average fuel margin for the past five years was $0.169 per gallon.
The US Energy Information Administration provides a chart showing an annual consistent price increase from this time of year through May. From a fuel price management and fuel pricing strategy perspective, we can expect margins to remain difficult as we face the annual steady increase in retail fuel prices through the spring, and we see margins struggle to maintain pace with those price increases.
by John Keller | Feb 7, 2013 | Fuel Price Management, Fuel Pricing Strategy, Fuel Pricing Technology, Industry News
According to a new University of Michigan study, new vehicles sold in the US have a record miles per gallon rating, reaching 24.5 mpg. That is a full 1 mpg increase from January 2012, 2 mpg increase from January 2011, and 4 mpg increase from January 2008. A month by month detailed table can be found here.
Last month I wrote a summary of the US Energy Information Agency January report, where the USEIA explained that the primary cause for ongoing decreased fuels consumption in the US is increased auto fuel efficiency. This Michigan study correlates well to that study, and in combination, the two studies help us predict the future of US retail fuel sales volumes – we can expect lower volumes this year than last.
From a fuel pricing strategy standpoint, we can anticipate an increasingly competitive fuels market, as the overall fuels volume pie continues to shrink. The practice of fuel price management is not for the weary, and requires careful attention to monitor margins and volumes store by store, market by market, with a well executed fuel pricing strategies plan.
by John Keller | Jan 28, 2013 | Retail Fuel Margins
In their most recent report, OPIS revealed a drop in retail fuel margins of $0.021 per gallon to reverse a two week trend. The national retail fuel margin is now $0.150 per gallon.
The average retail fuel margin for 2013 remains the same as last week at $0.148 per gallon.
From a fuel price management and fuel pricing strategy perspective, these margin numbers represent what NACS calls typical fuel margins for an overall one year period. That’s welcome news as we start off the new year with much stronger margins than we did in 2012.
by John Keller | Jan 23, 2013 | Fuel Price Management, Fuel Pricing Strategy, Fuel Pricing Technology, Industry News
IGS is an independent retail supplier of natural gas, and a company with a vision of an energy independent United States. They now plan to build a network of CNG (compressed natural gas) fueling stations along I79 from West Virginia to Pennsylvania. IGS plans to finish this first corridor by the end of 2013, and continue to expand with more stations into the future.
IGS touts the main advantages of CNG fueling stations as 1) less expensive fuel than gasoline or diesel, and 2) refueling time is about the same as traditional fuels.
According to the US Department of Energy, there are now 558 CNG fueling stations in the US, excluding private stations. That is the fourth most common alternative fueling station behind electric, propane, and ethanol. But CNG expansion continues to be in the news, with municipalities announcing conversions of their fleets to CNG, announcements of more CNG fueling station networks being built, and auto manufacturers announcing the availability of stock CNG versions of their vehicles. It could be that 2013 becomes the year of CNG, laying the groundwork for a tipping point where we see a rapid increase of CNG vehicles on the road.
From a fuel price management standpoint, CNG presents another indicator of the overall traditional fuels volume pie shrinking, and the potential opportunity of a whole new fuels market for the taking. Which c-store chains will be the pioneers in this new opportunity, and which will follow?
by John Keller | Jan 22, 2013 | Fuel Price Management, Fuel Pricing Strategy, Retail Fuel Margins
The latest OPIS report shows that retail fuel margins increased for the second straight week, this time by $0.025 per gallon. The national average retail fuel margin is now $0.171 per gallon.
The average retail fuel margin for 2013 now stands at $0.148 per gallon.
From a fuel price management and fuel pricing strategy perspective, this is welcome relief to the margins we were dealing with at the turn of the new year. Current margins are now settling in to what NACS calls typical fuel margins for an overall one year period.
by John Keller | Jan 15, 2013 | Industry News
As we continue to monitor the fuel price management arena, it’s important to be aware of what’s happening in the Electric Vehicle space. After all, there are now 5184 electric car charging stations across the US, according to the US Department of Energy’s Alternative Fueling Station Locator. That’s more than double the number for the next highest type of alternative fueling station, which is Propane.
Today Nissan made a bold move by cutting the price of their Nissan Leaf EV by 18%, which in some areas of the country with federal tax credits and state incentives brings the price down to $18,000. Nissan executives called this price drop a “tipping point” for driving up demand for the Leaf. The Nissan CEO acknowledged that customer feedback revealed that the price of the original model was a roadblock to purchasing.
From a fuel pricing strategy perspective, we need to continue to monitor sales of the EV in each of our markets, and decide whether or not it’s time to implement an EV charging station. In addition, if this price drop does prove to be a tipping point, it will be one more factor contributing to the ever shrinking fuel volume pie in an industry that is becoming increasingly competitive every quarter.
