By Sara Counihan
ALEXANDRIA, Va.—Gasoline prices were at a historic high in mid-June, hitting the highest recorded average price of $5.02 a gallon on June 14, according to AAA. However, prices have dropped every day for the past seven weeks. As the fall months approach, here’s what consumers and retailers can expect from the gas, diesel and oil markets, according to Denton Cinquegrana, chief oil analyst, OPIS.
“For me, the biggest one right now is diesel. Diesel inventories in the United States are well below where they would normally be at this time. And it’s not just a United States issue. It’s a global issue,” said Cinquegrana on this week’s NACS Convenience Matters podcast episode.
Diesel matters to consumers because the effects of high diesel prices touch everything they buy. Whether a product is on the shelf of a convenience store, grocery store or big box retailer, it got to the shelf by a truck running on diesel.
“If diesel prices get too high or as high as they have been, the fleet owners are going to pass those costs onto the customer, which is the store. And those are being passed onto the end user, whoever is shopping in those stores,” he said.
Heading into fall, demand for gasoline decreases, but diesel increases because of harvest and home heating (diesel is part of a broader category called distillate, which is home heating oil). All this is going to put even more pressure on diesel, Cinquegrana said.
Gas prices have decreased for a variety of reasons, including less demand, added production and refinery capacity. But overall, the way we use energy is beginning to shift.
“As the global population continues to grow, we need an all-hands-on-deck approach. … The fact that prices are coming down is obviously welcome news for gasoline retailers and station owners and refiners and producers,” said Cinquegrana.
“The biggest threat, I think, to retailers as far as gasoline demand is concerned, and this is over the next decade, it’s not necessarily electric vehicles … it’s the efficiency of vehicles. We have the new CAFE standards. That’s going to add up pretty quickly, and that’s going to take gasoline demand down over the longer term before electric vehicles really reach critical mass,” he added.
Listen to this week’s NACS Convenience Matters podcast episode No. 350 “Where Is the Retail Fueling Market Heading?” for more on the future of gas, diesel and oil markets.
Sara Counihan is contributing editor of NACS Magazine and NACS Daily. She can be reached at [email protected].