You can’t take a practice swing with a 6-iron here at the BPAMA gasoline marketers’ convention in Doral, Florida, without nearly hitting someone who is optimistic about gasoline.
Not crude, mind you. There is plenty of sour feeling about that. But about 450 regional fuel executives have gathered this week at the Trump National golf resort at Doral, with Platts as one of the sponsors of the event. (The attendees will miss the really big show, which happens in a few days when resort namesake Donald Trump is expected as part of his campaign tour.)
Things are funny at the far end of the supply chain. Cheap gasoline has its champions. Sure, profit margins are smaller. But pump prices south of $1.50/gal are seen as a lure to get the folks out to the gasoline station on the way to far-flung adventures. Who knows, maybe it’s even time to take the family to that new Harry Potter thing in California.
And if you buy a frozen-ice slush creation for 99 cents on the way, more power to you. Just keep it off the upholstery, Rusty.
“It’s funny how lower crude is a good thing for us,” BP Fuels Chief Operating Officer Doug Sparkman told about 400 regional “jobbers,” the execs who buy fuel from the majors on the way to getting it into your tank. “There is a good story on the demand side. We don’t see $100/b oil in the near future, but we are bullish on demand.”
Sparkman said growth in US gasoline demand will offset losses to stout fuel economy that will be required in US vehicles in the 2020s and 2030s.
Also boosting demand: a shift to bigger cars.
Blog post continues below…
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“The US is switching back to SUVs, and drivers are putting their hybrids up for sale, and you can count me as among the people who are happy about that,” Sparkman said.
I thought that statement might need a reality check. Edmunds.com, which tracks vehicle sales, backed Sparkman up. (Edmunds is not at the conference in Doral.)
“The data is very conclusive,” Edmunds analyst Jeremy Acevedo said. “SUV market share is at its highest ever level and our nation’s preference for utilities continues to grow. Hybrids and plug-ins have seen their market share tumble to the lowest levels since 2011. It’s important to note that in this SUV renaissance, the soaring popularity of more efficient compact SUVs are powering the segment to these record levels.”
The one segment of the gasoline market where few are optimistic is premium product: the fuel at 91 octane and up. Many I am talking to here are saying the grade is dead or dying, with a few exceptions. In northern Florida and southern Georgia, I am told that many stations are eliminating premium gasoline. That also means 89 octane is gone at those stations, too, because you can’t have the 89 without the 93. At most fuel pumps, 87 and 93 are mixed just seconds before they reach your car to make 89.
We’ll be preparing a story on this for Platts soon, as well as another story on what I like to call “the unicorn”: the ethanol-free gasoline at 93 octane about which we are hearing of pockets of strong retail demand.
Meanwhile, BP is telling the people who buy its fuel to be ready to hold out longer in an era of cheaper crude, and to keep looking for positives.
“Our view has been ‘lower and longer’ for oil, and now we have revised that to ‘lower and even longer,'” Dan Filo, BP’s Midwest US fuel supply manager, told attendees.