Drop in Gasoline Margins Poses Risk for Pantry, Susser Holdings
Report shows CPG down 26% from year ago
ST. PETERSBURG, Fla. -- National retail fuel margins for regular unleaded gasoline dropped an average 26% below year-ago levels in May, according to the latest "C-Store Monthly Grab-N-Go" research report from Raymond James & Associates, citing data from the Oil Price Information Service (OPIS).
"By region, retail gasoline margins varied dramatically for the five weeks ended June 3," the report said. "Though margins held relatively close to year-ago and month-ago levels in the Midwest region, margins in both the Southeast region and the state of Texas were approximately 40% lower [than a year ago] for the month."
Although industry margins improved into June--averaging 22 cents per gallon compared to 12 CPG a few weeks earlier--"convenience retailers face an uphill battle following the mid-April/early-May climb in oil prices coupled with negative demand growth across most of the country," the St. Petersburg, Fla., financial research company said. "Unless fuel margins meaningfully rebound over the next few weeks, we see downside risk to estimates for The Pantry and Susser Holdings."
Some of the least-profitable U.S. gasoline markets recently have included regions in Texas where Susser operates, including Lubbock, Laredo and Corpus Christi, according to the report. In Texas, fuel margins decline 10.6 CPG year over year or about 45% to 13.1 CPG. In the Southeast, home to The Pantry and its Kangaroo Express convenience stores, fuel margins decline 8.1 CPG year over year or about 37% to 14.3 CPG.
Meanwhile, gasoline demand also continues to decline, according to Raymond James. "The most recent miles-driven data (from March) depicts negative demand growth nationally, declining 1.5% year over year to approximately 248 billion vehicle miles. Weekly gasoline supplied is also running lower year over year nationally, according to EIA data."