Fuels Forward Blog: What's Taking So Long on Alt Fuels?
New-era retailers have best opportunity, greatest means to differentiate themselves
OAKBROOK TERRACE, Ill. -- The news this past April of Wawa's plans to open a compressed natural gas (CNG) fueling site, in partnership with a New Jersey utility, was a long time coming. It seems to me, of any type of fuel retailer, the "new-era" chains like Wawa seem to have the best opportunity and greatest means to differentiate themselves by offering alternative fuels.
And of course, some big chains have gotten into the business--Kwik Trip with CNG and Kum & Go with E85, for example. But why is it taking so long for the other big boys to step up to the plate, especially as declining gasoline demand makes alternative fuels a real business opportunity?
I posed this question recently to Norman Turiano, who oversaw fuel business development for Wawa up until a couple years ago, when he retired and founded Turiano Strategic Consulting, Cape Coral, Fla. He also sits on the board of the NACS Fuels Institute, a nonprofit research-oriented think tank that evaluates the market issues of future fuels.
"New-era retailers such as Wawa all have plans on the shelf regarding how to execute an alternative fuel offer," said Turiano, who incidentally was familiar with Wawa's plans on CNG. "While I was at Wawa I would have loved us to be on the cutting edge of putting CNG out there. And Kwik Trip has done so, as a leap of faith. … For most retailers, however, it depends on what their goals are.
"If your goal is growth--for example, such as Wawa did expanding into Florida--they're not going to invest that capital money in a leap of faith, when they can build stores and have cash flow coming in."
And there's the old chicken-and-egg scenario at play, of course.
"What we and a lot of us in the industry are doing is keeping a close eye on it, because … if there were vehicles out there, we would be building," said Turiano. "But there are not enough vehicles out there. Car manufacturers are not building cars because there's no infrastructure. Consumers don't care how much money they'll save on fuel if they have range anxiety over whether they can obtain it."
While hybrids take away much of this fear, they come at a premium to conventional vehicles. Turiano does see the greatest potential in diesel as a gasoline alternative; so much so he spearheaded Wawa's rollout of diesel a few years back. And according to figures from the Diesel Technology Forum, registrations on new diesel passenger cars--not heavy- or medium-duty trucks--are up 30% since 2010. Turn on the TV and you'll no doubt see a commercial from one of the automakers putting their chips on diesel.
But for the industry at large, which sells 80% of the fuel purchased in the country, there is no "favorite" fuel, insisted Turiano, not even gasoline. But that is in part due to the government's scattershot support of alternatives, which makes it hard to even pick a favorite.
"The convenience industry is not really interested in which fuel comes to market and is successful other than from the normal patriotic standpoint that we want it to be what's good for America, and of course from a pocketbook standpoint, we want it to be inexpensive," said Turiano. "That being said, nothing is being done in a unified fashion to make that happen."
Turiano cited the example of Brazil, which has built supports for an ethanol-based fuel infrastructure over time. In the United States, the support is shaped by the different business interests in each region.
"Our government isn't supporting anything in as much as what lobbyists are educating them on," he said. "If I was a senator in the Midwest, I might be predisposed to ethanol. In Oklahoma, I'm pretty sure it's CNG. Whereas retailers, we're not sure what it is, but if we can install it in an efficient, cost-effective manner and the public wants it and we can offer that convenience to them, we will support it."