OAKBROOK TERRACE, Ill. -- In 2015, the fueling business truly saw some firsts—and at the same time, failed to meet expectations.
For example, who would have thought that Congress would be able to muster enough bipartisan spirit to lift the 40-year ban on oil exports, or approve a long-term highway funding bill for the first time in more than a decade?
But 2015 was just as noteworthy for what did not happen: Despite repeated attempts by Republicans in Congress to force the issue, President Obama said no to approval of the Keystone XL pipeline after a seven-year review by the U.S. State Department. And despite repeated attempts by individual legislators, the federal gas tax held steady at 18.4 cents per gallon, the same spot it has occupied since 1993 (although several states passed their own increases).
Following are the five biggest developments in fuel for 2015 (in no particular order), although in a category this big, it’s tough to choose just one.
1. Renewable Fuel Standards (RFS)
RFS volumes, finally, … and no one’s happy. One court order and nearly two years later than planned, the Environmental Protection Agency (EPA) finalized the volume requirements under the Renewable Fuel Standard (RFS) program for 2014, 2015 and 2016. Fuel suppliers will be required to blend 16.93 billion gallons of ethanol and other renewable fuels into gasoline for 2015 and 18.11 billion gallons for 2016, which are volumes below the levels originally mandated in the RFS but above those the EPA floated back in 2014 when it announced plans to use its waiver authority for the first time.
Fuel marketer groups were happy because the new volumes could be met without forcing retailers to introduce E15. The ethanol industry argued that more E15 would have met the intent of the RFS, while the oil industry said any increase in ethanol volumes was unrealistic.
2. Gas Prices Plummet
Consumers got drunk on low gas prices, and retailers got drunk on high gas margins. OPEC’s all-out effort to protect global market share from North American shale oil producers resulted in a year when oil prices flirted below $40 per barrel, and by year’s end sent gasoline prices to a six-year low.
Consumers took their time spending the savings from lower gas prices, although by year’s end, c-store retailers reported increases in in-store sales. “[This year] was fantastic,” said Kyle McKeen, president and CEO of Dallas-based Alon Brands. “The fall in crude prices translated to lower fuel prices and more money in customers’ pockets. We couldn’t have asked for a better year.” In fact, 40% of c-store retailers surveyed by CSP said the lower gas prices resulted in higher in-store traffic in 2015.
For fuel retailers in much of the country, this meant fat gas margins for much of the year, although whether they will prove better than second-half 2014 is yet to be seen.
3. Volkswagen’s Diesel Setback
Volkswagen singlehandedly set diesel back in the United States. Just when it seemed like diesel was gaining traction in the U.S. automotive market, news hit that Volkswagen had installed software in some diesel models to cheat emissions tests. The fuel has always been a distant second to gasoline in the light-duty vehicle market, but many expected tougher fuel-economy standards would provide a wind to its back in the coming years and make it a real challenger. Now that diesel’s top light-duty champion has been knocked off its game, the question is, can the fuel make a comeback?
4. On-Demand Fueling
It was only a matter of time before the Uber model touched fueling. At least a half dozen on-demand fueling services launched in 2015, mostly in California and Texas, but with nationwide ambitions. Filld, Purple, FuelMe, Booster Fuels and Joule Refuel promise consumers the convenience of a fill-up when and where they want it, while cutting out that dreaded trip to the gas station. The diversity of the models is interesting—some charge a delivery fee; some don’t. Some offer a subscription, some a la carte pricing. Some are focused strictly on corporate clients, while others specialize in the everyday consumer. But all share the same goal: Make the weekly trip to the gas station obsolete.
5. Hydrogen Launches (Quietly).
Is hydrogen sound and fury signifying nothing or the start of a new fueling age? After years of careful planning, California began opening its first wave of hydrogen fueling stations in 2015, while automakers such as Toyota, Honda and Hyundai began selling fuel-cell electric vehicles (FCEV) in the state. Mapping out the fueling infrastructure has proven an especially tricky task given the very immature state of the market, although analysis by the government, state and other parties has shown that existing gas stations are a good place to start.
Heading into 2016, infrastructure development will hit its real test. That’s because while about 50 fueling sites are in some stage of development or planning, only a few were actually in operation.
The fun part about fuel is it is always in flux. Will gas prices stay relatively low in 2016, or will a surprise oil-price spike hit? Can Volkswagen make a dramatic turnaround? Stay tuned …
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