The Kalibrate fuel round up: March 2023

Kalibrate works with a diverse range of fuel organizations, so we always have our ear to the ground to see how the environment is evolving. This helps us understand the challenges and opportunities facing the brands we support, but it also helps us keep across the news, innovations, transformations, trials, and tribulations, within the fuel space.

Oil price volatility in March

Oil prices crashed earlier in the month, with Brent touching $72 per barrel before settling around the $75 mark. Bearish sentiment remains strong as demand is weakened by recession fears, concerns about potential bank runs, and strikes in France among other factors.

On the supply side, the expectation is that OPEC countries will not cut production in the short term, as this could be taken as a further signal of demand weakness – this means oversupply will remain a concern over the next month or two. Even Goldman Sachs, that expected oil prices to hit $100 in the second half of the year, has now revised its forecast.

Lower oil prices bring some margin pressure relief for fuel retailers, but the tide can turn very quickly. Kalibrate recommends retailers continue to watch the situation very carefully and make sure they have the tools in place to quickly react to sudden market movements.

Automation on the rise

Unmanned service stations are on the rise in Spain. Last year, this model accounted for 1,900 sites and 18.3% of the total Spanish fuel retail market – a 49% increase since March 2020.

Unmanned stations can be seen by fuel retailers as a way to increase their operational efficiency, and their lower pump prices are proving appealing to price-conscious consumers.

However, regulatory concerns remain relevant – several countries, such as Italy, have introduced norms to regulate and limit the diffusion of unmanned stations, and Spain may soon follow suit. Regulations aside, fuel retailers with world-class automation and operational excellence are the most likely to benefit from a switch from manned to unmanned.

Mergers across Europe – signs of the time?

Mergers and acquisition activity continues in the fuel retail sector, as Canadian giant Alimentation Couche-Tard announces the acquisition of 1,600 Total Energies petrol stations in Germany and the Netherlands, as well as a partnership for the operation of sites in Belgium and Luxemburg. The deal is worth $3.1b and all stations will remain under the Total Energies brand, with the fuel being supplied by the French company for at least five years.

Kalibrate’s Matteo Locane reflected on the announcement, “Following BP’s acquisition of Travel Centers of America, which we covered last month, acquisition activity continues to pick up. It will be interesting to see how the competitive landscape changes as a result of these operations”.

Alternative fuels gaining traction

Alternative fuels are making their way to customers. Esso is trialling renewable diesel at 20 sites across the South-East of England; Irish fuel retailer Certa has transitioned its entire fleet of delivery vehicles in Ireland to HVO; and both Jet2 and Orlen are set to open hydrogen stations.

Tom Hatton said, “News about alternative fuels are starting to hit the mainstream – a sign that the transition is underway. While there is no existential threat for petrol and diesel at the moment, fuel retailers should certainly be alert and start investigating the requirements for the provision of these fuels, so that they can be ready to take action when their context calls for it.”