5 Reasons Why More Fuel Will Be Purchased in the Years Ahead

Why c-stores could be experiencing higher fuel sales than previously anticipated

This past summer, the Department of Transportation’s National Highway Traffic Safety Administration (NHTSA) and the Environmental Protection Agency (EPA) issued a joint proposal to freeze the Corporate Average Fuel Economy (CAFE) standards at 36.9 miles per gallon (mpg). If this standard is adopted and other fuel consumption projections come to pass, convenience store operators could be experiencing higher fuel sales than previously anticipated. Here are five indicators that there could be better-than-expected sales of traditional fuels in the future. car fueling

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1. Vehicle Miles Traveled (VMT) will continue to increase. In its Spring 2018 Forecast, the Federal Highway Administration (FHWA) projected that VMT for all vehicle types will grow at an average rate of 1.2% annually through 2036 amid steady economic conditions. Travel by light-duty vehicles, which represents the largest group of motor vehicles, is expected to grow 1.1% through 2036. Truck VMT is projected to grow steadily at an annual rate of 1.6%.

2. Population growth is estimated to average 0.6% annually through 2046, according to the FHWA. Population increases generate additional VMT in a couple of ways:

  • More people require transportation (either by driving themselves or through a transportation service provider).
  • Demand for consumer goods increases, creating additional freight that needs to be hauled from place to place.

3. Gasoline and diesel prices are not expected to increase dramatically. If economic conditions remain steady, the FHWA projects that fuel prices will increase gradually through 2032 and then remain fairly constant through 2046. Gasoline prices are expected to average about $2.65 per gallon and diesel prices will be slightly higher. Historically, consumer interest in alternative automobiles with high fuel efficiencies corresponds with high fuel prices.

4. If lower fuel economy standards garner approval, it is reasonable to expect that fuel consumption will be higher than previously estimated. The former fuel economy targets called for automakers to increase their fleets’ fuel economy average to 54.5 mpg by 2025. The proposal seeks to hold the fleet average to the 2020 requirements of 36.9 mpg for cars and light-duty trucks through model year 2026.

5. When compared to sales of internal combustion engine vehicles in the U.S., electric vehicle (EV) sales growth remains slow nationally. EV sales have in fact increased—plug-in EV sales grew from 17,731 in 2011 to 144,035 in 2016, according to the Alternative Fuels Data Center. But EV sales only represent 1 to 2% of total U.S. auto sales. With less stringent fuel economy averages to meet, automakers may be less likely to invest in EV technologies.

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This post is sponsored by Source North America


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