Three Fueling Predictions for 2024

By Jeff Lenard   read

Every day, 40 million Americans fill up and way more than that will be talking about gas prices. 

January 02, 2024

2024_pageimage.jpgAs the new year begins, it’s a perfect time to look at what might transpire in the retail fueling markets. Here are my three broad predictions: 

1. Fuel will continue to be politicized. 

Let’s start off with the biggest no-brainer: Gasoline doesn’t just fuel vehicles, it fuels political debates. And because 2024 is presidential election year, the rhetoric will be amped. 

As 2024 began, gasoline prices nationally stood at $3.11 a gallon. That’s quite a decrease from the record $5.02 national average we faced in June 2022, but still way above the $2.25 average gas price at the beginning of 2021, just before President Biden took office. Politics quickly aside, we'll be sharing how our industry peformed financially and operationally at the NACS State of the Industry Summit in April, and gas prices will be a highlight. 

Both sides of the political spectrum will use current gas prices—and any changes between now and the November 5 election—to try to score political points. They are smart to do so, based on the numbers. In a recent NACS national consumer survey, 77% of consumers said that gas prices have an impact on their feelings about the economy. And elections are often won and lost related to the narrative spun about pocketbook issues and the economy. 

Clearly, politicians spend a lot of time diving deep into polling data to determine their best messages. Unfortunately, that’s often where the link between ad campaigns and facts can became tenuous, at best. 

On one side, a common rallying cry is that fuel prices will come down if we drill for more oil and stop importing from countries that hate us. The fact is that the United States is the world’s largest producer of oil, and in 2023 pumped a record amount. Every day, the U.S. produces about 20 million barrels a day of oil and other hydrocarbons, essentially the exact amount of oil and hydrocarbons consumed every day in the country.  

Yet, the United States imports 6 million barrels every day. How’s that possible? It’s because of various imbalances related to the types of finished fuel needed (Europe uses more diesel fuel than the U.S.) and different types of oil. Some refineries are optimized to refine lighter oil, while others require heavier oil, and that means that the U.S. imports and exports oil, even though its total production roughly equals its consumption.  

Let me put it into context. When I was a kid, I bought packs of baseball cards. But just because I had 660 cards, which equaled a set, it didn’t mean I had a card for each player. That’s when the trading began. 

So, where does the United States get its imports? Canada supplies 60% of our total imports, and as far as I can tell, they don’t hate us—but they probably are beefed that a Canadian NHL team hasn’t won the Stanley Cup since 1993. 

While the “drill, drill, drill” facts don’t add up, neither does the other side’s insistence that big business is at fault for high gas prices. Approximately 60% of retail outlets that sell fuel are one-store operators and prefer low gas prices. After all, most fuel retailers generate the bulk of their profits from sales inside the store. Overall, 59% of drivers filling up at the pump go inside the store and buy an item. When gas prices are high, consumers are less likely to go inside the store, and that hurts profits. And “Big Oil” does not make the bulk of its profits at the gas pump. 

Traditionally, gas prices reach their low point a few weeks into the new year, but the transition to summer-blend fuel puts pressure on the system and that often impacts prices. Since 2020, gas prices have increased an average of 50 cents each spring, before moderating in May.  

While gas prices eventually moderate, political rhetoric does not. You’ll see the above two arguments used over and over and candidates will proclaim that on day 1 in office, they will do something dramatic to lower gas prices. The problem with that? The President has little control over gas prices

2. Electric vehicles will see continued growth, but in fits and starts. 

The year 2023 was a great and so-so year for electric vehicles. EV sales overall topped 1 million units—equaling the total sold over the six-year period of 2015-2020—and more than a 50% increase over sales in 2022. Overall, EV sales will account for almost 8% of all new cars sold in 2023, which is pretty amazing considering the first EV sold in the United States was only 14 years ago.  

However, EVs ran into some challenges in 2023. Because of higher price points and a powertrain unfamiliar to many drivers, electric vehicles tend to sit on car lots longer than internal combustion engines (ICE). Also, sales tend to be concentrated in coastline states. While car rental agencies offer EVs at a competitive price, my test drive was quite stressful. 

EV enthusiasts will tout that charging is ubiquitous (one headline erroneously stated “EV charging locations will soon outnumber gas stations”), the charging infrastructure needs to grow to reduce range anxiety.  

The U.S. Department of Energy counts approximately 60,000 public charging stations, which may be at a convenience store, large parking lot, shopping mall, apartment complex, or seemingly in the middle of nowhere. They cumulatively have 160,000 charging nozzles, but only 37,000 are fast chargers. Meanwhile, there are approximately 145,000 retail outlets that sell fuel. Each one averages 10 fueling positions, meaning that there are about 1.5 million outlets to refuel quickly, 40 times the number of public fast chargers now available. 

Then there is the math associated with states, countries and automakers pledging to have 100% of new cars sales be zero-emission vehicles in 2025, 11 short years away. While there are more than 2 million EVs on the road today, there are 290 million registered ICE vehicles. Meanwhile, some automakers recently announced they are cutting back on their EV production plans. 

None of this is to say that EVs are not the future. The only thing up for debate is when that future will take place. As the EV market matures, and zero-emissions mandates grow closer, it will take more breakthroughs and creative thinking to get there—and some of those zero-emissions solutions may even be less-known options like hydrogen and eFuels. It will also take a concerted effort to do more than install new EV chargers—a focus on the cost-benefit to retailers and other locations also needs to be refined. 

3. The gas station is not going away. 

What’s the best way to advance what you want? If you follow California’s lead, it’s to implement a ban. Community activists are even transparent in their misguided reasons: “This is a matter of leading with our values,” a gas-ban advocate told a local newspaper.  

Values are great, but elected leaders need to make sure that that values are aligned with constituents. As discussed earlier, consumers hate high gas prices but eliminating competition does nothing to help push prices downward, or encourage existing businesses to upgrade their offer. That doesn’t help communities. 

What about air quality? That’s also an argument used to ban gas stations. “Everybody is filling up their cars,” complained one activist. But if everybody is filling up (or needs to fill up) and they aren’t able to in a convenient manner, won’t that require them to waste gas (and money) driving across town?  

Yet another proponent of gas station bans cites another factor: dirty nozzles that are full of germs. This proponent may be a little biased because he’s also a seller of EV chargers, which must magically be touch-free. He got a hold of bad math by saying that the demise of the gas station is closer than we think because the number of fueling locations has shrunk to 115,000. There are 120,000 c-stores alone that sell gas, so someone’s math is off. (And it’s not mine.) 

These were three broad trends that will be most talked about this year. Beyond that, here's the good news about fueling in 2024. There has never been a time of more innovation in convenience and fuel retailing. The industry continues to redefine convenience however the consumers want it redefined, whether it’s great good, faster and more enjoyable experiences or anytime/anywhere service.  

More broadly looking at the big picture, there are smart solutions out there that will also redefine your next fill-up. I’ll go out on a limb and say I hope we can get there if we all work together for the common good, but that’s not a prediction.  

Jeff Lenard still has all of his baseball cards, even though he has been “encouraged” to get rid of them. He still has a soft spot for the 1974 Tito Fuentes card that completed his set that year, even though it begged the question: “Why is Tito wearing a headband over his hat?”