NASHVILLE, Tenn. -- There are some strange things happening in the world of fuels lately. If you haven't noticed, gas prices are down--big time.
Across the nation, motorists are filling up for less than $3 per gallon, a far cry from the $4 and more of recent memory. And there's another surprise--motor fuel consumption is up, not by a lot perhaps but still 1%--a reverse from recent downtrends.
The reason these vignettes are so newsworthy is they underscore something sort of fun about fuel--it's hard to forecast.
So when the SIGMA 2014 Annual Meeting kicked off Monday afternoon in the country's backyard of Nashville, Tenn., few could be heard belting a song about heartache or lost love. Rather, it was a strumming session with simple beats about fuel profits being good so far and Chicken Little standing on the sidelines.
That doesn't mean there wasn't some forecasting, some prognostications and sentiment-sampling.
Nick Jones, energy advisor at ExxonMobil's corporate strategic planning department, said don't dump your pickup truck or feel like a tree killer if you believe energy consumption is going to grow in coming years.
In fact, he forecasted global energy demand to spike 35% by 2040, spurred by rapid development in Asia Pacific. As for the United States, interesting changes are afoot, including:
- Gasoline consumption will fall from eight million barrels a day to five million by 2040, due to improved technologies, superior fuel efficiencies and a more diverse vehicle fleet.
- Consumers in the United States will continue to love their pickup trucks, SUVs and other big vehicles. The good news is that these vehicles will deliver twice the mileage by 2040 as they do today, climbing from about 21mpg to 40.
- In the heavy-duty truck sector, diesel will remain dominant with natural gas (compressed natural gas, CNG, and liquefied natural gas, LNG) incrementally growing share to more than 10% over the next 25 years. But don't expect diesel to win the day on small vehicles, even though such offerings are more popular in Europe.
Losing My Hair
Of course no SIGMA event would be memorable without some entertaining contemplations from the industry's version of John Bon Jovi.
Tom Kloza, the glib, ubiquitous co-founder of Oil Price Information Service (OPIS), moderated a panel with three downstream vets: Tom Robison of Robinson Oil, Michael Ports of Ports Petroleum and Stewart Spinks of The Spinx Co.
Some highlights:
- Kloza asked for their biggest worry. Spinks said regulation from local all the way to the feds. "Even in South Carolina, we are getting more and more intrusion." Robinson said he worried about the car battery, noting how little it has changed. And Ports feared the demise of the commercial licensed driver. As for Kloza' biggest concern? "Losing my hair."
- Kloza brought up Marathon's acquisition of Hess's retail network and wondered whether we may be seeing a return of big oil company's infatuation with retail outlets--at least from the super refiners. "I've seen the cycles," Spinks said, "And I didn't think this was going to come back." Ports said, "One thing for sure is history will repeat itself in this business. I think you'll see a reintegration" at some point.
- And about these mercurial gasoline prices and gas demand climbing. Spinks said it's true--"South Carolina is up 3%. I'm seeing a vibrant economy all over the state." And Ports, the Ohioan speaking of the Rust Belt, agreed: "We've actually seen a significant uptick" in fuel traffic.
Founded as the Society of Independent Gasoline Marketers of America, SIGMA is a national trade association representing fuel marketers and convenience store chain retailers in the United States and Canada. Its approximately 260 corporate members command more than 40% of the petroleum retail market, selling approximately 75 billion gallons of motor fuel each year.
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