Pump prices steady ahead of the Fourth of July weekend, record traffic expected

As Arkansans prepare for the long Fourth of July weekend holiday, pump prices have leveled off as demand for gasoline, crude oil and other petroleum products continue to touch new record highs this summer.

According to the U.S. Energy Information Administration, U.S. gasoline demand rose to an all-time high this week as a strong start to the summer driving season is causing U.S. refineries to ramp up output to keep regional markets supplied.

Those low gas prices are motivating millions of Americans to travel this Independence Day. Despite recent seasonal increases, gasoline prices remain well below recent years. The national average price for a gallon of gasoline is $2.31, which is 48 cents less than one year ago. AAA expects most U.S. drivers will pay the lowest Independence Day gas prices since 2005.

Nationwide, AAA projects nearly 43 million Americans will travel this Independence Day weekend. This represents the highest fourth of July travel volume on record and five million more travelers compared to Memorial Day weekend. The holiday travel period is defined as Thursday, June 30 to Monday, July 4.

“Spurred by the lowest gas prices since 2005, more people than ever are planning to travel this Independence Day weekend,” said Marshall Doney, AAA President and CEO. “Whether they’re traveling by car, plane, train, or cruise ship, it will be exciting to see so many Americans celebrating our nation’s freedom with their friends and family over the long holiday weekend.”

Doney said U.S. drivers have saved about $20 billion on gasoline so far this year compared to the same period in 2015, which has made travel more affordable than in recent years. A more confident consumer and rising economic activity also are offsetting a cooling labor market to help boost holiday travel, he said.

“We are well on our way for 2016 to be a record-breaking year for summertime travel,” continued Doney. “This trend is welcome news for the travel industry and a sign that Americans are taking to our nation’s highways and skies like never before.”

ARKANSAS PUMP PRICES AVERAGE $2.07
The AAA says 84% of holiday travelers – more than 36 million people – will drive to their Independence Day destinations, an increase of 1.2% over last year.

Those traveling in or across Arkansas should expect to see average prices of $2.07 for a gallon of regular unleaded, about 22 cents cheaper than the nation average.

Pump prices in the state’s metropolitan areas range from a low of $1.98 per gallon in the Fort Smith area to an unusual high of nearly $2.15 in Pine Bluff market. Prices in Northwest Arkansas and the Little Rock metro area are $2 and $2.07 per gallon, respectively. Drivers in the Texarkana area on both sides of the state line are seeing prices at $2.10 per gallon, on average.

Drivers choosing to fill up their tanks with a higher-grade of gasoline should expect to pay an average premium of $2.55 a gallon across the state, AAA data shows. Big rig drivers and other diesel fuel users will see pump prices at about $2.20 a gallon, down from $2.66 per gallon from a year ago.

ARKANSAS C-STORE BUSINESS BOOMING
At the same time, the lower gasolines prices are also boosting business for convenience store operators and gasoline retailers. In its State of the Industry report release Wednesday (June 29), the National Association for Convenience Stores said U.S. convenience stores saw record in-store sales of $225.8 billion in 2015, higher than the overall industry sales record in 1998. Overall industry sales for 2015 reached a brisk $574.8 billion, data from the report showed.

In Arkansas, so-called C-store chains like TravelCenters of America, Murphy Oil, Mapco, Kum & Go, Flash Market, E-Z Mart and Casey’s General Stores are all taking part in a high-stakes competition across the state to build the bigger and brighter gas stations with more pumps at prime locations in high-traffic areas.

Delek US Holdings, the publicly-traded owner of Mapco stores that operates an 80,000 barrel per day gasoline refinery in El Dorado, told analysts at the recent J.P. Morgan Energy Conference on June 27 that it is expanding 69 larger format stores in its 355 store network across Arkansas, Tennessee, Mississippi and other southern states.

In recent months, the Tennessee-based gas station operator and refiner has built several large format stores across Central Arkansas to keep up with competitors such as Kum & Go and crosstown El Dorado-based rival Murphy USA. In fact, Murphy USA has made aggressive strides this year toward its goal of moving closer to being a pure-play convenience store operator, selling off refining and pipeline assets and altering its relationship with Walmart Stores in order to have greater flexibility to develop branded gasoline stores independently.

With that shift, the board of directors in May authorized up to $500 million to fund two capital programs through the end of 2017 to pursue new “growth opportunities” not tied to the company’s locating most of its new stores new Walmart parking lots. Murphy USA said it opened one retail location in the first quarter, bringing the quarter end store count to 1,336, consisting of 1,111 Murphy USA sites and 225 Murphy Express sites. A total of 23 stores are under construction along with nine kiosks now being razed and rebuilt to return to operations as 1,200-square-foot stores by mid-summer 2016.

Iowa-based Kum & Go has made inroads into Arkansas with a number of its sparkling red and white-logoed stores going up in key markets across the state, including several locations in the Little Rock area that have touted controversy due to high traffic.

In April 2015, the gasoline retailer opened its first compressed natural gas (CNG) public fueling station in Springdale. Two weeks ago, the convenience store giant opened its newest Arkansas store in Paragould, a 6,200-plus square-foot “marketplace design” that company officials said is a new prototype with a variety of unique offerings for customers that are unlike any other location in Arkansas. The northeast Arkansas store offers complimentary Wi-Fi and cellphone charging stations, a heated inside patio, a “beer” cave and fresh food offerings that are comparable to fast food restaurants.

“This new footprint represents everything that Kum & Go strives to be for our associates and for our customers,” Kum & Go President and CEO Kyle Krause said at the Paragould grand opening. “This is the evolution of our brand promise and business approach.”

There are now 48 Kum & Go locations in Arkansas. Krause said future locations in Arkansas are planned in 2016 with the new marketplace layout. And while not as aggressive as Iowa rival Kum & Go, rural convenience store operator Casey’s General ended the year with record profits because of its expansion program, including new locations in Northwest Arkansas.

The Ankeny, Iowa-based c-store operator said its annual goal in the past fiscal year was to build or acquire 75 to 113 stores, replace 10 existing locations, and complete 100 major remodels. The publicly traded c-store operator completed 51 new store constructions and acquired 5 stores, and also built 11 replacement stores and 102 major remodels.

“We have dedicated more resources to our store development area over the past year. As a result, we currently have a robust pipeline of projects with 21 stores under construction and an additional 75 sites under contract for future new store construction,” said company President and CEO Terry Handley. Casey’s operates dozens of locations across northwest Arkansas, northeast Oklahoma and southeast Missouri, including several rural communities such as Van Buren, Clarksville, Atkins and Mountain Home.

Arkansas’ two largest convenience store chains, privately-held operators West Memphis-based Flash Market and E-Z Mart of Texarkana, also have new stores going up across the state but both privately held operators are close-mouthed about their store metrics.