A New Path Forward | ConvenienceStoreNews
0
Favorite this article 

Quick Stats

Quick Stats

    Poll

    Poll

    Would you be interested in selling marijuana if it were legalized in your state?

    A New Path Forward

    By John Eichberger

    The retail fuels market is undergoing massive change. Since 2007, gasoline sales volume has declined roughly 7 percent nationwide and the U.S. Energy Information Administration projects that by 2040, the market will lose another 18 percent. At the same time, the environment in which retailers operate is also shifting. New federal policies push for dramatic reductions in vehicle greenhouse gas emissions, fuel efficiency keeps rising, and renewable fuels continue to grow in volume — all of which will impose billions of dollars of costs on the market and ultimately, your consumers.

    As the market goes through a rapid upheaval, we are seeing disparate groups pushing for policy and market developments without much consideration for the effect their solutions might have on the rest of the industry. In one instance, as the auto industry seeks to meet certain emission reduction targets, a new national standard high-octane fuel comprised of 30 percent ethanol is being promoted. While E30 may alleviate one issue, it causes emissions problems for refiners, distribution and storage infrastructure challenges for retailers, and compatibility issues for consumers — not to mention the overall cost of such a transition.

    Then, there are alternative fuels: electricity, natural gas, even hydrogen. Each carries its own market and policy opportunities and challenges that need be thoughtfully nurtured through a coordinated approach that looks at the entire fuels infrastructure. Unfortunately, such a coordinated approach has not existed. This lack of coordination and absence of neutral, credible, fact-based analyses will ultimately lead to a more dysfunctional market — one that does not benefit retailers or, most importantly, consumers.

    In between this evolving consumer demand and the shifting legislative landscape are convenience retailers, which sell 80 percent of the fuels in the nation and rely upon fuel for roughly threequarters of their gross revenue dollars. Fuel is also an important driver of in-store traffic.

    Put simply: Convenience retailers are more connected to the consumer, with more skin in the game concerning the future of the fuels market than any other stakeholder.

    As the logical conduit between policy and consumers, NACS announced the creation of The Fuels Institute in February. The Fuels Institute is a nonprofit, independent think tank dedicated to producing factbased analyses of the critical issues facing the market. Managed by NACS, The Fuels Institute brings together fuel retailers, fuel producers and refiners, alternative and renewable fuel producers, automobile manufacturers, environmental advocates, consumer organizations, academics, government entities and others with expertise in the fuels and automotive industries.

    Through a collaborative process, The Fuels Institute commissions and publishes comprehensive, fact-based research projects that address the issues identified by the affected stakeholders. These projects will help to inform both business owners considering long-term investment decisions and policymakers considering legislation and regulations affecting the market.

    The goal of all stakeholders should be to develop a sustainable transportation energy system — sustainable both economically and environmentally. The Fuels Institute will help to achieve that objective by pulling together the diverse stakeholders, identifying the key market and policy issues, and delivering balanced and credible analyses to help inform decision makers.

    The first project The Fuels Institute commissioned was a forecast of the vehicle market over the next 10 years. Most vehicle forecasts focus on production or sales; very few look directly at the inventory of vehicles that will be on the road at a particular time. This report, released in September, takes a critical look at the vehicle market of tomorrow, breaking it down by vehicle class size and fuel system requirements, and projects the volume of each fuel that might be consumed by the appropriate vehicles. Armed with this information, the Institute will be able to commission additional projects that look more specifically at fuel and vehicle synergies.

    For example, the Institute is contemplating an indepth evaluation of the potential for a natural gas transportation market. The project would look at the developing trends in natural gas vehicles, the logistics of a refueling infrastructure, and the associated economic and environmental effect of such a market.

    In addition, the Institute may look to better understand the implications associated with the projected increase in diesel demand. The introduction of dozens of new light-duty vehicles powered by modern diesel engines will help the automobile industry meet their fuel economy standards requirements, but will also drive up demand for diesel fuel. What will be the effect of such a market transition on the economy and the environment? How should the market prepare to accommodate this shift and what will be the reaction of consumers?

    These are some of the initial topics on the radar of The Fuels Institute’s Board of Advisors.

    More information on The Fuels Institute is available online at fuelsinstitute.org, or please feel free to contact me directly to get involved.

    John Eichberger is executive director of The Fuels Institute.

    By John Eichberger
    • About John Eichberger
    0
    Favorite this article 

    Related Content

    Related Content
    Page execution time was 4849.27 ms. Memory used at: devel_boot()=2.75 MB, devel_shutdown()=36.09 MB, PHP peak=37 MB.