Aug 09 2018
Gasoline and petroleum bulk stations in the US have struggled over the past five years with revenue fluctuating drastically but are forecast to rebound as oil prices stabilize.
“The gasoline and petroleum bulk stations industry is expected to return to stronger growth over the five years to 2023. This growth is supported by domestic demand for crude oil and petroleum products, which is forecast to continue to grow at a slow, steady rate as domestic economic activity expands,” says IBISWorld analyst Rachel Hyland.
Given that the industry serves as a conduit between petroleum refiners and markets further downstream, its performance is intimately linked to the supply of and demand for petroleum products. At the end of 2014, collapsing oil prices driven by strong North American production and weak global demand caused a subsequent sharp drop in the prices of gasoline and petroleum bulk station products.
Bulk stations play an important role in the crude oil and petroleum products supply chain. Companies in this industry operate bulk crude oil, gasoline and other petroleum products storage facilities for the resale of these products to smaller petroleum distributors, gasoline stations and other downstream markets.
The industry is estimated to earn 21.2% of its revenue from sales to gasoline stations, petroleum refiners and other fuel dealers.
“Despite the rise in oil prices, demand from gas stations will be limited by increased competition from electric car retailers,” says Hyland. “Once alternative technologies take off, gasoline stations will begin to struggle which will, in turn, lead to less demand from the gasoline and petroleum bulk stations industry, limiting industry revenue growth.”
The Gasoline and Petroleum Bulk Stations industry has a low level of market share concentration, with the industry’s four largest companies (BP, Valero, Exxon, Marathon Petroleum) expected to generate 20.9% of overall industry revenue in 2018. The industry’s largest companies are major, vertically integrated oil companies and are among the largest companies in the world. Over the past five years, industry concentration has increased as these companies have increasingly sought to control all levels of the oil business to increase profit margins and reduce revenue volatility as a result of swings in crude oil prices. In April, Marathon Petroleum announced it was acquiring fellow oil refiner Andeavor in a $23.0 billion deal.
While growth in oil prices is forecast to help expand industry revenue over the next five years, this will also cause industry purchase costs to rise. To maintain profit margins, gas and petroleum bulk stations are expected to try to cut costs in addition to raising prices.
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