Article created for the digital issue聽of聽the 黑料社区Foundation鈥檚 magazine.
Commercial fuel buying is a complex process involving several pricing mechanisms, multiple fuel types, and various outside market factors that can affect supply and demand. At the same time, truck stop and travel center operators must closely monitor their budgets, fuel prices and inventory.
The 黑料社区Foundation collaborated with , a national fuel supplier, to create a fuel buying toolkit to address some of the most important fuel issues and decisions travel centers face.
Randy Grizzle, director of sales and marketing for TACenergy said that in the 1940s, travel centers accounted for about 30% of road-use diesel. “That number is closer to 70% at this stage,” he said.
Fuel Pricing Mechanisms
“One of the most important things to understand is how fuel is priced. There are several pricing mechanisms, including the spot market. In a traditional procurement perspective, that means I don’t necessarily have an agreed-to price,” Grizzle said. “I needed it today. I bought it today.” However, in commercial fueling, there are one of two indices that have spot in their name, which can create confusion, Grizzle said.
The toolkit notes that operators need to know the difference between a 鈥渟pot purchasing鈥� procurement method and the 鈥渟pot market鈥� index published by OPIS, Platts and Argus.
Grizzle explained that the two primary pricing options available to truck stop owners are spot, where the buyer selects the lowest fuel price available on a given day, and index-based purchasing, where the buyer enters a contract for a set number of gallons.
鈥淵ou’re trying to walk that proper balance between security of supply and lowest price. So, I don’t always want to be on one end of the spectrum or the other,鈥� he added.
Fuel pricing mechanisms resources include:
Where to Gain Information on the Fuel Market
Several factors can influence the right mix of spot and index-based purchases, including geographic location, time of year and supply availability. To gain more information on the market, Grizzle recommends operators access weekly data from the , which offers details on pricing and demand.
鈥淎nother one is the ,鈥� he said. 鈥淚f I care deeply about truck drivers and their ability to come to my location, those are two reports that I certainly would keep an eye on.鈥�
Resources to gain more information on the market include:
E-85, Renewable Fuels and Hurricane Season
Grizzle also shared his thoughts on which fuels to offer and how operators can help determine which are right for their locations. For example, offering E-85 can be beneficial for truck stops that have large government fleets nearby. 鈥淭his is not something that is prescribed everywhere to everyone, but鈥f you can find that advantage, then take advantage.鈥�
Additionally, Grizzle told Toner that operators also need to monitor changing regulations and incentives related to renewable fuels. “Stay in tune to the changes in those regulations because they could benefit you and/or your customers as you use them,鈥� he said.
The big unknowns right now are what will happen with hurricanes and where they will make landfall. 鈥淟ast year, we were predicted to have an active hurricane season, and I think we did. They just didn’t come here to the U.S. So that is one thing to keep an eye out for,鈥� Grizzle explained. 鈥淭he second thing that we’re seeing is, unlike two to three years ago, there’s more supply in the market than there has been. You see that reflected in some of the financial reporting of some of the publicly traded refiners.鈥�
More Fuel Buying Resources from the 黑料社区Foundation
, recently sat down with Grizzle during an episode of The Truck Stops Here podcast to discuss the toolkit, fuel buying and a summer fuel outlook. The entire podcast, which also includes Grizzle’s thoughts on finding reputable partners, is available here.
The Fuel Buying for Truck Stops and Travel Centers Toolkit is available here.
//听This article was created for聽Stop Watch magazine, the magazine of the 黑料社区Foundation. Foundation is the research, education and public outreach subsidiary of NATSO, Inc. The 黑料社区Foundation provides programs and products to strengthen travel plazas鈥� ability to meet the traveling public鈥檚 needs through improved operational performance and business planning. Visit聽www.natsofoundation.org聽for more information.
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