Small Fleet recap: How diesel pump prices are set

This fireside chat recap is from the FreightWaves Small Fleet & Owner-Operator Summit on Wednesday.

FIRESIDE CHAT TOPIC: Setting the price: How that number on the diesel pump gets created.

DETAILS: In a fuel market this volatile, it can be a mystery to the consumers of diesel just why the pump price is where it’s at given some of the headlines they are hearing about oil prices. An expert on the wholesale and retail fuels business tries to bring clarity to the process.

SPEAKER: Gary Bevers is the president and owner of Bevers & Co, a consulting and advisory firm. He is interviewed by FreightWaves’ petroleum market expert John Kingston. 

BIO: Bevers has been in wholesale and retail fuel markets for more than 30 years. During that time, has been involved in marketing, product branding and business development, not just in the downstream part of the fuels distribution business, but also in the upstream and petrochemical sectors. He has real-world experience in developing markets for traditional fuel products and renewable biofuels, helping clients develop executable plans to introduce new products to market and maximize margins in a volatile economy.

KEY QUOTES FROM BEVERS: 

“Usually the retailers will keep the margin. He isn’t giving it to you.” 

(Noting that oil companies do not own the “rack,” the wholesale distribution point): “In a typical rack there are 40 or more suppliers selling through that rack. It’s like a warehouse.”

“Wholesale prices used to change back in the ’80s once a month. Then they moved up to once a week. By now in some markets it can change up to eight times a day.” 

“The individual guy on the street corner who buys a station is not usually sophisticated in markets, and he’s not connected enough to manage the spot or wholesale markets to fluctuate his price.” 

Comment from Kingston: “Retailers are not really set up for this kind of a market to move that quickly on their prices. They are probably moving faster than they ever have but not as fast as the rate in the spot or wholesale market.”

Source: freightwaves - Small Fleet recap: How diesel pump prices are set
Editor: John Kingston