The 2016 Forecast for Motor Fuels
NATIONAL REPORT — Falling gas prices are the story when it comes to motor fuels, and this trend is highly likely to continue, according to the Convenience Store News 2016 Industry Forecast Study.
Based on CSNews’ Forecast Study estimates for 2015, the average retail price per gallon dropped nearly $1 to $2.57 last year. The low-price environment is expected to last for the entirety of 2016, when the average price per gallon is forecasted to decline an additional 2 cents to $2.55.
Diesel saw an even bigger drop when comparing 2015 estimated figures to actual results posted in 2014. The average price per retail diesel gallon dropped an estimated $1.21 per gallon in 2015. This year, diesel prices are forecast to increase slightly by 4 cents per gallon to $2.76, however.
As expected with a lower fuel price environment, c-stores continue to sell more gallons of fuel, but the lower price per gallon is causing dollar sales in this category to drop significantly when comparing 2015 estimated data to 2014 actual figures.
Despite fuel dollar sales declining, margins are up and the low prices are a great boon to operators in other metrics such as in-store sales, as seen in other areas of the CSNews Forecast Study. More discretionary income translates into more in-store spending and uptrading.
On a whole, c-store operators are optimistic about their motor fuel sales in 2016. Fifty-three percent of retailers polled expect their fuel gallon sales to increase this year on a per-store basis, with only 9 percent expecting gallon sales to decrease. This represents a 3.5-percentage-point increase vs. 2015 on a per-store basis.
The low unemployment rate, strong fuel-based loyalty programs, more travel due to lower gas prices and a milder winter throughout much of the country were cited by retailers as the top reasons why fuel gallon sales should remain robust.
Of note, though, c-store chains are more optimistic regarding fuel sales than their single-store counterparts. Nearly two-thirds of chain retailers expect gallon sales to increase in 2016 on a per-store basis, vs. just 4 percent of chains who expect fuel gallon sales to decrease.
Conversely, only 27 percent of single-store operators expect fuel gallon sales to increase this year. A majority (54.5 percent) expect gallon sales to stay the same as in 2015, while 18 percent expect gallon sales to decline year over year.
For full results of our 14th annual Forecast Study, including dollar and unit projections in other key c-store product categories, look in the January issue of Convenience Store News.