“Fueled for Thought” By Joe O’Brien, Source North America Corporation

 

Tesla Motors founder Elon Musk’s vision for future transportation calls for all cars to run on electricity, sending traditional gas stations the way of the Fotomat. Could a change this radical happen in the next 10 years? For fuel marketers and c-store operators, that long-range question is influencing immediate investment decisions. As such, having a realistic idea about both the pace and scope of the changes permeating the fuel industry is imperative to their short-term and long-term success. Looking at the past, present and future of fueling offers valuable insight into the probabilities.

 

Velocity of Change

While a shift in the fueling industry appears to be on the horizon, it may only be a mirage at this point. Although there are many potential “disruptors” (such as electric-powered vehicles) jockeying to be the sustainable transportation and fueling solution for the future, the fuel industry changes slowly. For most motorists the experience of getting gas at a convenience store is much the same today as it was in 2006: pull up to a self-serve pump, authorize a credit card at the dispenser, pump the fuel and daydream about how the purchase of a soda or a snack from the c-store might improve the rest of their day. Currently, over 25% of motorists will follow-through on that impulse. These purchases enhance both revenue and overall profit margins and, as such, have become an integral part of the formula for c-store success.

A deeper look into the history books shows a pretty stable pattern. The American automotive fueling experience hasn’t changed much in the past 45 years or so: stop at a gas station, fuel the car at a dispenser, shop for incidental items and pay the bill.

While the order and specific execution of those operations has changed (fuels change, payment methods change and consumers’ service expectations shift), the basic operations themselves have not. For proponents of the theory that past performance is a reliable indicator of future outcomes, the relatively limited change within the fuel industry over the past five decades would suggest that fueling at your local convenience store would be pretty much the same in 2026 as it is today.

 

Scope of Change

If and when the demand for petroleum-based fuels abates, it is not likely to be an all or nothing proposition. With the average age of vehicles increasing to 11 ½ years old, there will be a transition time in which fuel centers host both traditional fuels along with alternative fueling solutions, which will grow more mainstream as the vehicle fleet turns over. In addition, the model of success — and the source of profit — for the convenience store are likely to remain basically the same. There are many items that are desired by the American public that benefit from being sold in an environment of convenience, accessibility and, sometimes, anonymity. (For instance, the proliferation of c-stores makes it easy to pick up consumables that shoppers might prefer to not purchase in view of the prying eyes of their hometown). People will still seek out these items even if they don’t need to refuel.

With that in mind, for your consideration — and possibly entertainment — here are some future fueling concepts in which c-stores and fueling stations could remain a fixture for the foreseeable future.

Stop and Swap: The movement to “go electric” has been challenged by the electric car’s inability to go long distances on a charge, the lack of charging stations and the time it takes to re-charge the car. Perhaps we’re taking the wrong approach altogether here. What if, instead of creating charging stations, the fuel centers of 2026 invited drivers to swap a plug-in electrical battery unit – similar to how we exchange empty propane canisters today?

Robot Reboot:A few years ago, Husky and Fuelmatics debuted a fueling system in which a robotic nozzle-dispenser combination pumped fuel into a vehicle without the driver having to leave the comfort of his car. The robotic prototype provided fueling service that was fast, safe and clean. Imagine pairing this concept with that of a drone distribution system, where small C-store items are ordered (perhaps in advance by an app on your phone or inside your car) and those items are transported right to your car.

Tunnel Vision: Maybe the future of fueling won’t be as much “drive up” as it will be “drive through,” resembling more of a traditional car wash experience. Pull up to a bay, queue your car on a track system, exit the car, authorize payment through a thumbprint at a kiosk and walk over to the adjacent store to purchase lottery tickets and coffee. While you shop for your convenience goods (which is charged to the same tab started by your thumbprint) your car is fed through an automated re-fueling or wireless recharging system. Pick up your refueled car at one of the station’s holding spaces when you’ve completed your C-store shopping.

Trash Talkin’: In “Back to the Future II,” Doc Brown’s time-traveling DeLorean is powered by a “Mr. Fusion,” a fusion reactor that converts garbage into energy. Although automotive-sized reactors are still more science fiction than reality at this point, large-scale facilities that convert biogas produced by decomposing trash into hydrogen could create a whole new fuel network. Perhaps one day we’ll be dropping off garbage at refueling stations and receive a credit for our trashy contributions to fuel up with a biomass fuel at a pump on the forecourt.

 

Planning For Tomorrow, Today

In 1955 a vacuum cleaner company president predicted that vacuum cleaners would be nuclear-powered within 10 years. The nuclear-powered vacuum cleaner – like so many other technology predictions – failed to take off. Although it’s fun to imagine what futuristic fueling might entail, it is in fact, just that – imagining.

Will fuel stations and c-stores be extinct by 2026? Probably not. Every good entrepreneur recognizes the potential of the “loss leader.” With fuel purchases the driving force behind most convenience store sales, the c-store industry is unlikely to voluntarily relinquish its hold as the pre-eminent location for a weekly visit from drivers. That notwithstanding, two factors — a shift in energy policies and a growing emphasis on consumer convenience — are driving innovation within the fuel industry at an accelerated pace. These innovations, which include alternative fuels, environmentally-responsible infrastructure and convenient mobile payment technologies, represent an opportunity for fuel marketers to separate themselves from their competitors and attract new customers. A trusted and experienced fuel equipment supplier can help you identify and implement those technologies in a timeframe and budget that works for your fuel site.

Although many potential fueling technology disruptors have emerged, none have yet risen to the level of status quo, nor have they seriously threatened to obsolete traditional gas stations. Personally, I expect that in ten years I will be driving the car I just bought in 2016 to my local C-store and buying 12 gallons of gasoline, most likely at a very high-octane level. And I’ll look inside the c-store, wondering if I should treat myself to a dark chocolate candy bar. But I’ll also be looking with amazement at all the other fueling choices and wondering what my son’s experience will be like in another 10 years. Maybe, just maybe, he’ll be driving his newly purchased nuclear-powered vacuum cleaner home in his car powered by a Mr. Fusion.

 

Joe O’Brien is Vice President of Marketing at Source North America Corporation. He has more than 20 years experience in the petroleum equipment fueling industry. Contact him at jobrien@sourcena.com