Big Seasonal Changes Ahead for Retail Gasoline Profit Margins
This chart shows the historical pattern of U.S. refinery outages. The green oval in Q4 reflects the return of refineries from Fall seasonal maintenance. Increasing supply at the terminal tends to tamp down wholesale price and usually leads to better profit margins for retailers.
But retail gasoline marketers have a seasonal problem. The robust profit margins they often enjoy in the late autumn and winter can deteriorate as spring arrives. This is highlighted by the red oval indicating the Spring maintenance season kicking in.
Tighter supplies at the terminal in Spring tend to move prices higher just as demand is set to increase. When this happens, retailers’ gross revenues get squeezed. Either they lose margin or they lose volume.
What can you do about it?
The gasoline retailer can establish hedge positions to offset this expected margin squeeze. POWERHOUSE works with clients across the country to develop customized strategies to protect margins.
Each company operates in unique conditions so call us to discuss how we can help your business protect your margins and grow your business. Contact POWERHOUSE and learn new ways you can use these important tools.
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David Thompson, CMT
Executive Vice President
ICE IM: dthompson17