CHICAGO -- Transitionary: That sums up the state of the fueling market in 2018, although whether the pace of change remains gradual or becomes wild and disruptive in the year ahead is up for debate. The biggest stories in fuel retail in 2018 centered on efforts to reshape the industry—whether by policymakers, industries or by entrepreneurs in pursuit of consumers. Here are five developments that will have ramifications in 2019 and beyond.
1. E15 gains a foothold
In 2018, the Trump administration finally made good on its promise to enable year-round sales of E15, the 15% ethanol gasoline blend. After months of expressing support for E15, the White House directed the U.S. Environmental Protection Agency (EPA) to begin rulemaking that would provide the fuel with its summertime Reid vapor pressure waiver. Without this, fuel retailers in most markets have been unavailable to sell E15 to anyone other than flex-fuel-vehicle (FFV) drivers between June 1 and Sept. 15. The EPA’s acting administrator, Andrew Wheeler, has insisted that E15 will be available year-round by summer 2019, although this will likely face legal challenges.
The timing is great news for chains such as Casey’s General Stores and Rutter’s, which have recently expanded or added E15 in 2018. They join operators such as Kwik Trip, Kum & Go, QuikTrip, Thorntons, Sheetz and Murphy USA. A report even suggested that refiner Marathon Petroleum could be getting into the E15 business.
North of the border, at least one Canadian province is making an even bolder move. In December, Ontario, the largest fuel market in Canada, announced plans to make E15 its fuel standard in 2025.
2. A record year for retail margins and oil production
This year witnessed record-breaking fuel margins topping 40 cents per gallon thanks to price cuts on the wholesale side. In early November, retail margin shattered a previous record high set in August 2015, said Trilby Lundberg, publisher of Lundberg Survey Inc. It was, in fact, more than double the 19-CPG average retail margin for 2017, what many at the time considered “excellent.”
Tom Kloza, global head of energy analysis for the Oil Price Information Service (OPIS), Gaithersburg, Md., had described the last few months of 2018 as “glorious” for retail margins.
“It’s been a great year for gasoline retailers,” Kloza told CSP Daily News, adding that industry “nightmares” about electric vehicles (EVs) eroding sales have thus far proven unfounded.
Meanwhile, the United States should end 2018 as the top oil producer in the world, according to the U.S. Energy Information Administration (EIA), with production at a record 10.88 million barrels per day.
3. The internal combustion engine gets end dates
In 2018, Egypt, Israel and Denmark joined France, Great Britain, Norway and several other countries in setting deadlines for the sale of new gasoline- and diesel-powered vehicles. Most fall within the 2025-2040 timeframe, although many lack specifics on how the transition will happen, and some provide exceptions for hybrid vehicles, which still use gasoline and diesel.
In December, China—the largest automotive market in the world—reported its largest monthly decline in automotive sales since 2012, according to Reuters. This is as the country pushes the development of EVs to help combat air pollution and meet greenhouse gas reduction goals.
At the same time, some countries’ efforts to discourage gasoline consumption are getting pushback. In France, a series of violent protests have forced President Emmanuel Macron to drop a fuel-tax increase set for 2019 that was meant to help wean the country off gasoline, Associated Press reported. And in Canada some provinces are fighting Prime Minister Justin Trudeau’s carbon pricing and cap-and-trade efforts.
These developments suggest the transition from fossil fuels to electrification is going to be a long, rough and complicated ride.
4. The old school embraces the new
In an acknowledgement that transportation fueling will at some point transition toward electrification, many standard bearers of the old order announced initiatives and made investments in 2018 to put themselves on a better competitive footing in the decades ahead.
General Motors proposed a national strategy to move toward a “zero-emission, all-electric” future, while Volkswagen announced that, in less than a decade, it would produce its last generation of internal combustion engine vehicles, Reuters reported.
Separately, major oil companies such as Chevron, Shell and BP invested in EV charging and batteries. Chevron invested in EV charging network provider ChargePoint, while BP invested in rapid-charging stations and an Israeli ultrafast-charging startup. And Shell added to its network of Shell Recharge charging stations in the United Kingdom and targeted opening 100 EV charging stations at its branded sites in Europe by the end of 2019, through a partnership with Ionity, a joint venture among automakers BMW, Daimler AG, Ford and Volkswagen.
5. Mobile fueling goes mainstream
Mobile fueling, which began as a seemingly niche offer a few years ago, ramped up in 2018 as traditional fueling industry players invested in the app-centric model.
In February, ExxonMobil became an investor in Yoshi, a San Francisco-based mobile fueling service. As part of this relationship, ExxonMobil is supplying fuel and lubricants to Yoshi whenever possible.
This fall, Shell introduced its Shell TapUp mobile fueling service to the United States, with a business-to-business offer being tested in Houston after a success pilot in the Netherlands.
And in October, Parkland Fuel, a Canadian distributor of Chevron and Esso branded gasoline, became the first independent fuel marketer to get into mobile fueling through its investment in Filld. Parkland Fuel is the exclusive fuel supplier for Filld in Canada and a preferred supplier in the United States, where it has about 40 stores. It envisions expanding deliveries to c-store items as well—the next evolutionary step of this mobile-fueling model.