By John Eichberger

fuels-logo-pantone (3)As retail fuels marketers consider where to invest their money, understanding changing consumer attitudes is critical. To help you, in January, NACS released the latest of the evaluations of consumer attitudes toward fuel prices and alternative fuel vehicles.

Price Still Matters

One of the deafening findings of the NACS Consumer Fuels Survey, a monthly series of consumer sentiment surveys (conducted in partnership with Penn Schoen Berland), is that fuel prices continue to be a defining factor for consumer behavior. In January, two-thirds of consumers reported that they decide where to purchase fuel primarily on the posted price on the sign at the station.

Further, two-thirds of consumers reported they would be willing to drive five minutes out of their way to save five cents per gallon — ironically negating any real cost savings at the pump. But the response demonstrates that fuel purchasing is more about the emotional lift one feels by “saving” some money rather than making a sensible decision.

Price is also a factor in consumer acceptance of alternative fuels. In a May 2013 survey, NACS found that 69% of consumers who anticipated buying a new vehicle within two years were not inclined to consider a diesel-powered vehicle. Of these consumers, 54% cited the expense of the fuel as the primary influencing factor. This was followed most closely (38%) by the expense of diesel vehicles themselves.

If price will drive consumer behavior, ultimately it must include valuation of the fuel price and the additional cost of the vehicle. At some point, more savvy consumers can calculate the mile per dollar of a vehicle, incorporating both the cost of the vehicle and that of the fuel. New technologies that demonstrate value in this regard may have an advantage in attracting consumer attention.

Interest in Alternative Vehicles Shifts

In January 2014, the number of consumers (54%) who reported they intended to purchase a vehicle in the next three years increased six points over January 2013. During this time frame, those who said they would consider a non-gas vehicle dropped five points to 41%. To what extent did fuel prices affect these results? 

According to the Oil Price Information Service (OPIS), the national average retail price was about the same during our survey in January 2013 ($3.35) as it was during our survey in January 2014 ($3.30). However, the price trends leading into these surveys were a bit different. The annual average retail price in 2012 was $3.61 compared with $3.49 in 2013. Further, for the second half of the year, the retail price in 2013 was lower than in 2012. Both of these factors may have contributed to a lower level of anxiety regarding fuel prices and may have affected consumer sentiment around alternative fuel options.

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Setting aside the potential influence of gasoline prices, when we dive deeper into the results, other interesting facts emerge. For example: interest in diesel fuel.

Over the course of 2013, the percentage of consumers willing to consider diesel fuel increased by 3%. But more interesting is the gender breakdown. Men interested in diesel fuel outnumbered women 34% vs. 20% in 2013. In 2014, however, the numbers turned and more women than men (34% vs. 30%) said they would consider diesel fuel.

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What does this mean? While it’s difficult to say without additional data, it’s possible that the automobile industry, which is beginning to rely more heavily on diesel vehicles to meet fuel economy standards, has begun to influence consumer perceptions about diesel vehicles.

The relationship between price and consumer interest is a valuable metric to evaluate potential demand for alternative fuels and vehicles. Of course, additional data will help determine the full extent that prices will influence the market for alternatives. In the meantime, better understanding which alternatives peak your customers’ interest will be helpful as the market seeks to satisfy long-term consumer demand.

Eichberger_John_150For more information about the Fuels Institute or how you can get involved, contact John Eichberger, executive director, at jeichberger@fuelsinstitute.org or
(703) 518-7971.