National Petroleum News (NPN) has been the independent voice of the petroleum industry since 1909 as the opposition to Rockefeller’s Standard Oil. So, motor fuels marketing and retail is not just a sideline for us, it’s our core competency.
Issue link: https://read.dmtmag.com/i/193494
includes the people that generate the invoices and the people that pay the invoices." He noted an extreme case where, with one customer, more than half of the invoices were wrong in some material way. Key insights from the FuelQuest Eye on Energy Survey revealed: Fuel Price Volatility Demands New Ways to Manage Margins Prior to 2004, fuel buyers were less concerned with day-today price changes - five cents or more moves occurred only 1.5 percent of the time; today, they happen 25 percent of the time. Worse, price swings of three cents or more happen nearly 50 percent of the time versus just 6 percent pre-2004. This volatility and its potential to impact margin negatively are permanent fixtures for retailers. According to survey respondents, the following top three strategies would help them navigate these price swings: • Real-time margin visibility (31%) • Diversified supply portfolio and optionality (26%) • Improved demand forecasting (22%) Energy Independence Needs More Action, Less Words Most Americans share a desire for energy independence, but a debate has raged for the past 30 years on how to achieve this independence. Although recent attention has focused mostly on divisive solutions, such as the Keystone Pipeline or alternative sources of energy, survey respondents indicated the following are the most urgent drivers for gaining energy independence: • Alternative sources of energy - biofuels, nuclear power, solar power, wind power (37%) • Increased oil exploration (18%) or specifically increased Arctic exploration (7%) • Less regulation (13%) Only 2 percent of respondents said "stay the current course," signaling an industry call for more action. Businesses Brace for Super Storm Impact The total number of global tropical storms continues to rise and now approaches 80 to 90 each year. Companies know that they must prepare for severe weather to maintain business continuity and to aid in recovery efforts within their community. According to survey respondents, ahead of a hurricane or other significant supply- and demand-disrupting event, fuel retailers should focus on establishing the following: • Emergency preparedness plan (18%) www.npnweb.com n NPN Magazine • Contracted supply of fuel (13%) • Established communication plan (13%) • Secondary or tertiary fuel supply arrangements (13%) Natural Gas Liquids, Electric Adoption on the Horizon With NGL prices well below traditional fuel prices, survey respondents are examining CNG and LNG as potential portfolio fuels. In fact, 20 percent are reviewing adoption options today, and 18 percent plan to adopt within the next five years. Respondents also cited availability of fuel sources (18%), cost of conversion (16%) and tax incentives (16%) as the top three areas that will impact their future plans for NGLs. In the next three years, when it comes to electric vehicle charging station adoption, 60 percent of respondents said they are not considering it, 23 percent do not know yet, and 17 percent are currently adopting. Margin Management Becomes Top Business Priority Successful management of fuel margin is challenging for fuel retailers in an unceasingly volatile market. Retailers know that fuel pricing is a lynchpin to their overall business success, and as such, nearly a third (31%) of the survey respondents stated that they want real-time margin visibility. The largest segment, 16 percent, listed better margin management as their top strategic business priority for 2013. In addition, respondents singled out certain governmental policies as significant cost drivers for their business. They indicated the following would have a negative effect on margins: • Affordable Care Act (43%) • EPA Tier 3 standards (38%) • Excise taxes (25%) Excise Fuel Taxes Need a Revamp Driven by shrinking tax revenues due to more fuel-efficient cars, less miles driven, and non-inflation adjusted taxes; states are looking closely at introducing new legislation to increase revenue. In fact, in the last year alone, there were 522 motor fuel tax changes in the U.S. While there is great debate at the state and federal level on the appropriateness of higher taxes or changes in tax law, survey respondents recommended these changes as ones the government should consider for motor fuels: • Simplified forms and processes (24%) • Streamlined and consistent processes across all the states (22%) • Required electronic filing (16%) OCTOBER 2013 13