Betting on fuel retail would be a mistake even before the coronavirus.
Betting on fuel retail would be a mistake even before the coronavirus.
Everything you need. And some things you don’t have.
Everything you need. And some things you don’t have.
You might think that 2020 was the year everyone abandoned oil-based transportation. Royal Dutch Shell Plc CEO Ben van Beurden expressed doubts about the return of oil demand to pre-Covid levels. The world’s largest automaker, Volkswagen AG, is committed to more than a fifth of its cars running on batteries by 2025.
The International Energy Agency is pushing for 30% of vehicle sales to be electric by 2030 and expects gas demand to peak until the end of this decade, including existing policies. Large oil refineries are turning to the manufacture of raw plastics and jet fuel fabrics, in the hope that consumption in their main road transport propulsion market is declining.
Seven: (i Holdings Co. has another perspective. It’s to see that the $21 billion owner of 7-Eleven is offering to buy the Speedway convenience outlets from Marathon Petroleum Corp. as more than just a long-term bet on its main promotion product: gasoline.
As we’ve written, this prediction looks like a mistake. Even under a Trump administration that worked hard to break fuel economy rules, fuel demand remained stable for four years. Despite evidence that urban traffic has recovered near pre-pandemic densities and that long car journeys exceed previous points in 12 months, fuel consumption has lately been at its lowest point since the early 2000s.
The expanding power of traditional cars is enough for the amount that car owners spend to fill the tank and the amount of trips they make to fuel stations, a dynamic that will damage both the company’s fuel and non-fuel.
Add the effect of electric cars and the effect will be aggravated. Currently, there are only 1.5 million on U.S. roads; until the end of the decade, General Motors Co. expects to see at least double that number sold each year, equivalent to about 20% of annual sales. While fuel stations can install chargers to suit this market, battery-powered cars at home or in the office won’t have to make regular visits to the pump and workshop that even hybrid cars need.
The threat to Seven and me is that he will be deliberately blind to those who are going through close changes. The percentage of battery-powered cars in U.S. vehicle sales will increase by just 5% by 2030 and 11% by 2050, as presented. This is significantly lower than automakers and oil corporations expect (BloombergNEF sets the percentage at around 25% in 2030 and above 60% in 2040).
Surprisingly, Seven and I raise as one of the “reasons for acquisition” how the acquisition of Marathon’s store network will contribute to the achievement of environmental, social and governance objectives, such as the installation of energy-efficient lighting, the shift from retail outlets to renewable energy. and reduce the use of plastic packaging.
This lacks forest for trees. The vast majority of a fuel station’s emissions are Scope 1 and Scope 2 generated on site from the acquisition of electricity, however, the Alcance 3 car bond generated when the fuel it sells is burned in car engines.
Unlike the ESG projects that Seven and I boast about, this is not just an attractive detail to stay in the Corporate Responsibility Report. The replacement that the automotive and oil industries expect to see on road vehicle power trains over the next decade is a challenge to the core of the retail fuel model. With this agreement, 7-Eleven will move from the fuel dependency of 20% of its gross margin to 30%. He’s heading in the direction of a one-way street.
Although the 7-Eleven logo is used worldwide, we use “7-Eleven” in this article to refer to the North American unit owned by the Japanese parent company, Seven and i.
This column necessarily reflects the perspectives of the editorial board or Bloomberg LP and its owners.
To play this story: David Fickling in [email protected]
To play the editor of this story: Rachel Rosenthal in [email protected]