Fuel: Gasoline's the Hero

Strong margins ‘save the day’ for retailer profitability in 2013

By  Angel Abcede, Senior Editor/Content Development Coordinator

Article Preview: 

If there was any good story in 2013, it was fuel margins—not necessarily sales, but definitely margins.

In reviewing the data revealed at the NACS State of the Industry (SOI) Summit, Glenn Plumby, vice president of operations for Speedway LLC, Enon, Ohio, said average fuel margins of 18.5 cents for the total industry were solid.

The numbers repeated themselves in NACS’ more specific study of same-firm companies, for which fuel pool margins were 18.64 cents, up 2.3% from 2012 at 18.22 cents. The good news continued with the figure minus credit card fees, at an increase of 3.4% (13.17 cents vs. 12.73 cents).

Plumby called the margin the “third best in the last seven years” and “very encouraging.”

The news was also good from the consumer’s perspective, because retail fuel-prices were down about 11 cents from $3.60 per gallon in 2012 to $3.49 last year.

“It explains why we have lower overall sales as an industry,” Plumby said. “Yet that 18.5 cents is something we needed to have in 2013.”

Plumby said he hoped the retail posting and margin stories will remain at a strong balance going into this year’s summer driving season.

“The summer is our heyday,” he said. “It’s time to make up for the first four months of [bad] weather. So gasoline margin in cents per gallon in the summer is where we need to make our hay.”

Looking back to 2013, the disconcerting thing about fuel gallons was that “from an overall industry perspective, gallons were up, margins were the third best in the last seven years, sales were up more than they were in 2012 and yet profitability was down,” he said. “That’s the kind of ‘Twilight Zone’ impact the numbers have.”

Plumby pointed to day-to-day expenses, which on a total direct-store operating level was 5.1% last year in terms of same-firm data, were eating retailers alive.

“In the end, gasoline saved our bacon in 2013,” Plumby said. “Volumes were up. We had strong margins. Overall fuel gross profit was up 3.2%. That was a negative number in 2012.”

Here’s to hoping the tide from 2013 will flow into the summer of 2014.


Fuel Margins, Gallons Strong in 2013

Though gasoline sales fell due mostly to falling street postings, the gasoline picture for 2013 was solid, according to NACS officials. Gas consumption actually rose 0.6%, but officials called it a “slight blip” of a recovery, considering that number fell 7.4% in 2007. That said, margins and gallons sold kept stable at 2.3% growth and 0.9% growth for NACS same-firm stores.

Industry Fuel Metrics   
 20122013% change
Fuel sales$501.0 billion$491.5 billion-1.9%
Fuel margin18.1c18.5c2.3%
Same-Firm Fuel Metrics   
Per Store Per Month20122013% change
Fuel gallons130,845132,0290.9%
Average selling price$3.57$3.47-2.9%
Fuel sales$467,390$457,754-2.1%

Source: Preliminary figures from NACS State of the Industry Survey of 2013 Data, CSX LLC, Nielsen and the U.S. Energy Information Administration

Click here to download full article