Interested in learning more?

Complete the form to continue reading and discover more PDI resources and solutions to help manage your business.

All fields are required unless otherwise indicated.*

If you’re a fuel retailer, you’re no stranger to the volatility of the industry. Not only do you have to manage upstream and downstream impacts, but you’re also tasked with understanding consumer behavior and fuel buying habits. That might not be difficult to manage during normal day-to-day operations, but what if there’s a sudden disruption to fuel supply? Or an ongoing crisis impacting demand like what we experienced during the COVID-19 pandemic? Although you can’t predict catastrophes—or their outcomes—you can analyze potential disruptions based on decreased supply or demand to understand how best to react. Revisiting previous crisis situations can offer some guidance in how you can manage future challenges. Key Factors in Decreased Supply Fuel supply can run low due to a variety of reasons beyond your control. Events like the Colonial Pipeline shutdown, Hurricane Harvey hitting a refinery and slowing down production, and recent truck driver shortages have caused fuel retailers to scramble in reaction. When supply is low, you need to ask yourself: Will there be a large spike in the cost of fuel? Will supply be deeply impacted? If it is, how will you adjust your price? And how will your customers react? In this case, you’ll probably see your costs rising—leading to tighter margins and panic buying from people trying to wrangle some supply. When you consider the finely interwoven fuel supply ecosystem, it’s easy to see why a disruption at any point of the supply chain could lead to price swings: Crude oil is produced from Earth’s natural resources. That raw material is then transported via a pipeline or supertankers to refineries. Once at the refinery, that crude oil is turned into gasoline and other fuel products. Those finished products are then transported by truck, rail, barge, or pipeline to terminal storage facilities. A transport truck picks it up for delivery to local gas stations. The fuel needs to arrive in time to meet consumer demand. Key Factors in Decreased Demand We’ve seen low demand most recently due to the pandemic, where mandated lockdowns led to a significant decrease in miles driven and therefore less of a need for fuel. But we can look back to other instances of dwindling demand like the Great Recession of 2008 and post-9/11 to know that this type of situation should remain top of mind. Typically, the fuel retail business is marked by high volumes and low margins….