Fuels Market News and the Fuels Institute explored what’s behind disappearing gallons at the NACS Show.
By Keith Reid
The NACS Show educational session Disappearing Gallons: Cause and Effect, sponsored by Fuels Market News, explored the decarbonization factors that will increasingly drive down the consumption of traditional gasoline and diesel fuels. As global leaders work toward realizing the carbon reduction demands of the Paris Agreement, there will be an inevitable loss in the number of gallons dispensed by fuel retailers. Further, some leaders, international and domestic, have announced future bans on internal combustion engines in favor of electrification.
John Eichberger, director of the Fuels Institute, and Keith Reid, editorial director of Fuels Market News, conducted an open, interactive and casual discussion on the factors driving these initiatives, the timeframe (or likelihood) of moving completely to a single solution such as electrification and the considerations that a fuel retailer marketer need to begin making to ensure their operations serve their customers in a profitable manner.
The electrification discussion provided the central focus as it currently dominates the news cycle. Eichberger noted that politicians are facing tremendous pressure from environmental special interests and environmentally-focused constituencies to do something, and electrification seems like the simple answer to a very complex problem. While EV technology has certainly advanced in leaps and bounds, there are so many variables at work in modes of travel and energy use cycles that a one-size-fits-all solution likely would not be practical. Nor does it have to be the case.
“There is a relatively minor difference between a hybrid electric vehicle and a battery electric vehicle,” Eichberger said. “If the fuel used in the hybrid electric vehicle was lower in carbon than traditional fuels, you could potentially see a hybrid vehicle become less carbon intensive than a battery electric vehicle in many markets.”
Similarly, there are applications related to medium- and heavy-duty vehicles where electrification would not be practical, and a solution such as hydrogen might make more sense. And, when automotive fleet turnover rates are considered, internal combustion engines still will be dominant for decades to come.
Reid highlighted feedback he received from a range of traditional and alternative fuel representatives who are confident that their solutions can be worked to achieve the most stringent carbon goals if given the chance. He further noted that consumers, by and large, have not had to face neither the negatives nor the cultural adjustments that will be required to meet the most optimistic carbon goals of the Paris Agreement. Eventually, consumers will have a say on the matter, and that might be different from the solutions being pushed from their leaders.
Regardless, there will be increased adoption of EVs as the technology has matured to the point where they are a not only a carbon reduction tool but also a preferred option for many consumers. CAFE fuel standards will only get tighter for new ICE vehicles entering the market, driving even greater fuel efficiency. Gallons will continue to decrease, and retailers will need to focus on maximizing their range or profit centers and operations to make up revenue shortfalls. Further, finding a way to serve EV early adopters will become important, though likely on a site-by-site basis or providing the appropriate infrastructure such as prepositioning three-inch electrical conduit for future use with new construction and rebuilds.
Register now for FUELS2021, hosted by the Fuels Institute, Dec. 14-16 in Dallas, at the Westin Dallas Downtown. Early bird registration is now open. This year’s event will focus on the Path to Decarbonizing Transportation, bringing together stakeholders from across the energy landscape, from liquid fuels to EVs.
Keith Reid is editorial director of Fuels Market News and editor-in-chief of Fuels Market News Magazine. Reach him at firstname.lastname@example.org.