This is free marketing research on the gasoline stations industry and can include information on the background, market structure, definitions, competitors, trends and developments of gasoline stations and is related to other topics such as petrol, fuel, service station, automobile, oil and gas.

Table of Contents

[edit] Background

Gasoline service stations are a phenomenon of the twentieth century. Brought into being by the simultaneous maturity of petroleum production and refinement and the invention of the combustion engine, gasoline service stations began as suppliers for a "lunatic element" in the population who used "horseless carriages" for recreational transport purposes. These early stations were actually supplied by horse-drawn tank carts; conservative petroleum refiners did not initially trust such odd contraptions as fuel-powered trucks.

The mass production of the automobile spurred mass construction of gasoline servicing facilities, with all the major oil companies staking a claim on some corner of the fledgling consumer market. Small, family-run franchises were the norm and remained the mainstay of the market in remote areas well into the 1970s.

Domestic gasoline production capacity grew with World War I and II, as did the Big Three automakers' factories. Consequently, by the 1950s, average American families had at least one car, and that car was large, gas guzzling, and a source of intense pride. The heyday of the labor-intensive service station with several attendants in uniform to service every customer reached its peak in those post-war years.

[edit] Market Structure

In recent years, almost 127,000 gasoline service stations operated in the United States. These establishments took very different forms than they had before, with self-service islands and ancillary retail outlets—convenience stores, known as C-stores—creating major changes in the distribution of market share.

The total number of stations has been steadily decreasing since 1982, reflecting a trend by major oil companies to close smaller-volume franchises and concentrate on maximizing gallonage at major locations. Cost cutting in the oil industry in general, as well as environmental legislation mandating upgrades for the gasoline service station industry, meant that most dealers were looking for ways to reduce expenses and increase sales. This was especially true in the early 2000s. Traditional "mom-and-pop" style stations were frequently a casualty of market changes; consumer emphasis shifted more toward large, multifunction, automated outlets. To survive, gasoline service stations will continue to expand the range of goods and services they offer and emphasize convenience to the consumer through automatic pay machines, more self-service islands, and streamlined traffic flow organization.

[edit] Industry Definitions

There are gasoline service stations primarily engaged in selling gasoline and lubricating oils. These establishments frequently sell other merchandise, such as tires, batteries, and other automobile parts, or perform minor repair work. Gasoline stations that include other activities, such as grocery stores, convenience stores, or car washes, are classified according to the primary activity.

There are two types of gasoline stations:

• Gasoline Stations with Convenience Stores - This industry comprises establishments engaged in retailing automotive fuels (e.g., diesel fuel, gasohol, gasoline) in combination with convenience store or food mart items. These establishments can either be in a convenience store (i.e., food mart) setting or a gasoline station setting. These establishments may also provide automotive repair services.

• Other Gasoline Stations - This industry comprises establishments known as gasoline stations except those with convenience stores) primarily engaged in one of the following:

1) retailing automotive fuels (e.g., diesel fuel, gasohol, gasoline) or (2) retailing these fuels in combination with activities, such as providing repair services; selling automotive oils, replacement parts, and accessories; and/or providing food services.

[edit] Market Metrics

After rising from $209.4 billion in 1999 to $244.5 billion in 2000, retail sales for gasoline stations fell to $237.7 billion in 2001. A number of factors had a negative impact on the industry's health during the early 2000s, including weak economic conditions, a subsequent decline in consumer spending levels, and unstable gasoline prices. For example, gasoline prices increased from an average of $1.00 per gallon in early 1999 to $1.80 in May 2001 before declining again.

Terrorist attacks against the United States on September 11, 2001, as well as a U.S.-led war with Iraq in early 2003, further exacerbated already volatile gasoline prices. Responding to the latter situation, a number of concerned industry associations—the American Petroleum Institute (API), American Automobile Association, National Association of Travel Plazas and Truck Stops, Society of Independent Gasoline Marketers of America, Petroleum Marketers Association of America, and Service Station Dealers of America and Allied Trades—issued a joint statement to the news media on March 20, 2003, assuring American consumers that the industry was working to maintain adequate fuel supplies and urging them to continue purchasing gasoline and diesel fuels.

During the early 2000s, the industry was characterized by ever-increasing competition. Supermarkets, warehouse clubs, and mass merchandisers—known as high-volume retailers (HVRs)—were steadily taking market share away from traditional industry players by offering lower prices. In late 2002, National Petroleum News reported that between 1998 and mid-2002, HVRs' share of the gasoline market increased from less than 1 percent to almost 6 percent. While market share percentages varied by state, HVRs were most successful in Texas, where they held more than 14 percent of the market, followed by Washington (13.9 percent), Arkansas (11.4 percent), Tennessee (11.1 percent), and Kentucky (10.2 percent).

Demand depends mainly on driving volume and vehicle type, which in turn depends on economic activity. The profitability of individual stores is closely linked to location and product mix. Large companies have advantages in buying gasoline at bulk prices, but small companies can compete effectively with user-friendly locations (ATM, 24-hour service, etc.).

The industry’s players sell cigarettes (11 percent), beer and wine (4 percent), and prepared food (2 percent). About 15 percent of industry revenue comes from c-stores that don't sell gasoline, typically in urban locations. An average c-store covers 1,500 to 2,500 square feet and has three to four gassing stations with a total storage capacity of 30,000 gallons. Traditionally, merchandise sales are geared to impulse buying of high margin goods by walk-in customers. A typical store may stock from 500 to 1,000 different items. An average store may sell close to a million gallons of gasoline per year.

[edit] Industry Players

In 2003 Irving, TX-based Exxon Mobil was the No. 1 integrated oil company. The result of a merger between Exxon and Mobil, its 2002 sales reached $178.9 billion. The company currently operates more than 40,000 stations in the United States. The next largest competitor is ChevronTexaco, with sales listed at $98.7 billion in 2002 and some 25,000 gas stations in the United States.

Exxon Mobil engages in oil and gas exploration, production, supply, transportation, and marketing worldwide. In 2006 sales were $377,635 million. It has reserves of 13.6 billion barrels of oil equivalent and has the capacity to produces 6.4 million barrels a day at its 40 refineries in 20 countries. The company supplies refined products to more than 35,000 service stations in 100 countries. It also provides fuel to 700 airports and more than 200 ports. Exxon Mobil is also a major petrochemical producer. The company posted consecutive US records for annual corporate earnings for 2005 and 2006

Other key players in the U.S. market include the Netherlands-based Royal Dutch/Shell Group of Companies, with 46,000 stations worldwide and 2002 revenues of $179.4 billion.

Based in the United Kingdom, British Petroleum Plc (formerly known as BP Amoco) operated 29,000 stations throughout the world, including 15,000 in the United States operating under the BP, Amoco, and ARCO trade names. BP was the second-largest integrated oil company in the world. By late 2001, it had fixed U.S. assets totaling approximately $40 billion. With revenues of $174.2 billion in 2001, BP employed 110,159 workers worldwide, including 42,000 in the United States.

London-based BP is the world's third largest integrated oil concern, behind Exxon Mobil and Royal Dutch Shell. The company, which was formed in 1998 from the merger of British Petroleum and Amoco, grew by buying Atlantic Richfield Company. BP has proved reserves of 18.3 billion barrels of oil equivalent, including large holdings in Alaska. BP is the largest oil and gas producer in the United States and also a top refiner, processing 2.8 million barrels of crude oil per day. BP operates about 28,500 gas stations worldwide. With the success of its BP Solar International subsidiary, BP has created BP Alternative Energy (hydrogen, solar, and wind power generation) with an initial investment of $1.8 billion. In 2006, the company had sales of $274,316 million.

San Ramo, CA-based ChevronTexaco Corporation had 2006 sales of $210,118 million. The company is a creation of the 2001 merger of California-based Chevron Corporation, one of the many progeny of the Standard Oil Trust, and Texaco Inc., a company whose history traces back to the early boom years of the Texas oil industry. The company had some 11.5 billion barrels of oil and gas reserves and had daily production of 2.7 million barrels. Major producing areas included the Gulf of Mexico, California, Texas, Canada, Kazakhstan, Argentina, Angola, Nigeria, Republic of Congo, Venezuela, Australia, Indonesia, Thailand, China, Papua New Guinea, the North Sea, and the Middle East. On the downstream side, ChevronTexaco operated 22 refineries around the world and more than 25,000 service stations on six continents under such brands as Chevron, Texaco, Caltex, Delo, and Havoline. Within the United States, the company's marketing operations were strongest in the western, southwestern, and southern regions of the country. Among the company's other operations and interests were a 50 percent interest in Chevron Phillips Chemical Company LLC, a major petrochemical manufacturer (the other 50 percent was held by Phillips Petroleum Corporation); equity interests in 47 power projects worldwide; and a 27 percent stake in Dynergy, Inc., a marketer and trader of energy products, including electricity, natural gas, and coal.

[edit] Recent Trends and Developments

Beyond the traditional gasoline station

Supermarkets, mass merchandisers, and warehouse clubs are selling gasoline in growing numbers. While accounting for only a small share of the market in 2002, with less than 2,500 total locations, these operations have had a significant effect on industry margins in the areas where they have appeared. Their development is watched with great interest by the rest of the industry.

Non-fuel sales slip back

Total retail sales through gasoline stations (non-fuel) were US $81.7 billion in 2002. This number represents a decline of 1.9 percent from the previous year, which can be explained largely in terms of falling sales of cigarettes, as tax and price increases encouraged consumers to switch to lower cost channels, where such increases are more easily evaded. Key product offerings for gasoline stations in the US include cigarettes, beer, carbonated beverages, confectionery, and salty snacks. Lottery sales are also important as traffic-builders, but are not themselves strong contributors to store profits. Prepaid telecommunications services are the industry's most dynamic growth area. Popular service offerings at US gasoline stations include branded food service and automated car washes.

Below are some of the major industry trends for gasoline stations.

Consolidation, and development of large scale sites

Operators place greater focus on larger, newer, more profitable sites. As part of the same trend towards larger, more profitable sites, operators have been adding convenience stores to their gasoline stations. Thus the number of sites with convenience stores has been growing, even while the total station population is in decline. By 2002, approximately 60 percent of US gasoline stations offered a convenience store.

Forecourt technology: robotic fuel dispensing arm is an expensive fantasy

A robotic arm that automatically fills up cars with petrol has been unveiled in the Netherlands.

A robotic arm that refuels cars in service stations has been launched in the Netherlands. However, the product is unlikely to become a widespread success given that because most European markets have unmanned pumps, the new technology equates to an extra cost that is likely to make it prohibitive for many fuel retailers.

A group of Dutch inventors has unveiled the 'TankPitstop', a robot that automatically refuels a car when it arrives at the forecourt. The E75,000 (GBP56,000) machine works by reading a car's number plate and matching it to a database of fuel cap designs and fuel types.

The robotic arm, which is attached a normal petrol pump, has a number of sensors that enable it to undertake all of the tasks that the driver would usually carry out, such as unscrewing the petrol cap and placing the nozzle into the tank opening. The inventors behind the product hope to roll it out to a number of petrol stations in the Netherlands by the end of 2008.

However, notwithstanding the innovative nature of the robotic arm, the product is unlikely to be universally successful across Europe. Firstly, as the technology only works on cars with tanks that can be opened without a key, it will not work on the majority of modern cars. Secondly, if the robot is installed at unmanned pumps, which most European markets now use, it is not replacing a cost, but is just an added convenience for drivers.

Furthermore, even in markets where pumps are unmanned, forecourt retailers would have to see a significant increase in customer throughput to make the arm financially viable. For example, for each robotic arm purchased, the fuel retailer would have to sell the equivalent of an extra 2.1 million liters of petrol, or an extra 42,000 motorists filling up their tanks.

Essentially, the robotic arm faces a number of obstacles. From a practical point of view, it is limited due to the fact that it only works on cars with tanks that can be opened without a key. Furthermore, the arm is only relevant to those markets where pumps are unmanned, which limits the potential for it to be rolled out across Europe. Finally, given the high costs involved, it is unlikely that fuel retailers will consider it to be a wise investment.

[edit] Sources

• Bureau of Labor Statistics
• U.S. Census Bureau
• U.S. Dept. of Commerce Economic Census
• Wikipedia
• Factiva
• Datamonitor

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