The Good Times Keep Coming

Following a 2014 that was one of the best in recent years in terms of fuel margins, most metrics were up again in the first half of this year, according to the exclusive 2015 Convenience Store News Motor Fuels Study, which covers convenience store chains. The greatest gain can be found this year in fuel margins, which increased a stellar 10.2 percent year over year to $7.3 billion.

Motor fuel profit in cents per gallon for the first half of this year was also strong, ticking up by a penny per gallon — a rise of 7 percent — to 20 cents per gallon.

When comparing the first half of 2015 to the first half of 2014, a major difference in the fuel environment is price. Prices at the pump at convenience store chains averaged $2.46 per gallon in the first half of 2015, a whopping $1.06-per-gallon decrease compared to the same period last year. By comparison, the average price only dipped by 5 cents per gallon when comparing the first half of 2014 to the same time period in 2013.

These lower pump prices helped gallon volume at c-store chains increase by 3.1 percent in the first half of the year. In addition, 77.5 percent of c-store chain retailers said gallons sold per transaction either increased or stayed the same in 2015’s first half.

Lower gas prices did cause one negative effect, however. Overall, c-store chains sold $89.8 billion worth of fuel in 2015’s first half, a 28-percent decrease compared to the $124.6 billion sold in the first half of 2014.

ALTERNATIVE FUELS GAINING GROUND

Perhaps the most fascinating findings from this year’s study involve the types of motor fuels that c-store chains offer and what they plan to offer in five years’ time.

As expected, all c-store chains currently offer traditional petroleum (defined as fuel containing 10 percent or less ethanol). Surprisingly, however, only 88 percent of c-store chains expect to offer this fuel in five years.

E15, an alternative fuel blend containing 15-percent ethanol and 85-percent gasoline, could be the biggest beneficiary. Among all c-store retailers (both chains and single-store owners), 6.7 percent offered E15 in 2014. This figure rose by 10.2 percentage points in this year’s study to 16.9 percent.

Among just c-store chains, 17.1 percent currently offer E15, with 24.2 percent saying they plan to offer it within five years. The alternative fuel was approved in 2011 by the Environmental Protection Agency for cars manufactured in the model year 2001 and newer.

Also noteworthy is that despite the plethora of new payment methods entering the marketplace, nearly all fuel transactions at c-store chains are paid for via cash, credit cards and debit cards. The use of cash as a payment method did drop by 1 percentage point year over year to 35.1 percent of all transactions. Credit cards picked up the majority of these transactions — not mobile payments or other fledgling forms of payment.

A final takeaway from the study is the loyalty c-store chains show for the branded fuels they offer. Nearly three-quarters of chains currently carry branded fuels on the forecourt and just one in 10 said they plan to drop branded fuels when their current contract runs out.