GAITHERSBURG, Md. -- It is going to be hard for marketers to see a repeat of last years’ stout rack-to-retail margins that characterized the fourth quarter of 2014.
Prices for oil and refined products remain depressed when compared to the early parts of this decade. Oil prices have been consistently in the range of $40, and while many were forecasting a rebalancing of the market by this time a year ago, the timeline has been extended into at least 2016 before oil prices recover some of the steep losses seen over the past 12 months.
Retail gasoline prices are looking very similar to the autumn of 2014 and winter of 2015, with a very legitimate shot of the national average spending some time below the $2 per gallon level before 2015 is over. Although the calendar is entering a traditional weak point for gasoline demand, lower retail prices are certainly providing a demand floor, preventing it from falling to 2014 levels.
While demand should continue to be respectable, and while gasoline prices are expected to stay low through the remainder of this year and into early next year, downstream marketers need to stay on high alert as margins are not anticipated to be as robust.
According to OPIS data, the average U.S. rack-to-retail margin came in at 26.6 cents per gallon in the third quarter, an improvement of 2.5 cents vs. the same period in 2014. A solid third quarter does not appear as if it will carry over into the fourth quarter, though, especially when compared with 2014.
Currently, the fourth quarter is a little more than a month old, and if the 2015 version of margins is going to be anything like last year, there is a lot of catching up to do. OPIS data shows that the 2014 fourth-quarter average margin stood at an outstanding 31.5 cents per gallon. As of early December, the fourth-quarter to-date margin was 22.6 cents per gallon—almost a dime less than the fourth quarter of 2014.
However, nimble, savvy marketers and retailers are can still gain some advantages over their competitors with a period of weaker demand and softening margins staring them in the face. To help marketers accomplish this, OPIS has launched PricePro, a new, easy-to-use web-based software program for gas station and convenience-store operators that provides real-time competitive street price moves.
Many OPIS PricePro customers are reporting additional fuel profits of up to $500 per month per store, as well as steadier volumes on top of the boost in margins. Alan Meyer, fuel manager for Mach1 convenience stores in Indiana, said he’s “seen an increase in fuel profitability since I started using OPIS PricePro. Because PricePro instantly tells me when my competitors raise or lower prices, I can react quickly with price adjustments, getting the best margins possible for my stores."
OPIS PricePro allows marketers to cut back, if not eliminate entirely, the need for store-manager surveys. This means big savings on liability insurance and keeps your managers where they are most valuable to your operations—inside the store.
Click here to learn more about OPIS PricePro or call (888) 301-2645.
This post is sponsored by PricePro