The ‘20s have arrived carrying early signals that this decade will begin to bring transformation to the fuels market as convenience store retailers know it. C-store operators are pivoting with the changes, piloting electric vehicle chargers, experimenting with a range of fuel options and evaluating market headwinds and tailwinds.
And they’re not alone.
Fuel disruption also provides new opportunities for competing channels to enter the field with electric vehicle chargers, which makes astute c-store retailers all the more interested in monitoring market conditions and testing new options.
“Given the level of disruption that is likely in the fueling space over the next 10 to 20 years, we think it’s becoming increasingly important to embrace change rather than push back on it,” said Ken Kleemeier, vice president, fuels, with Kum & Go, which operates 400 stores across 11 states. “It all comes back to meeting the needs of our customers — we’ll continue to evolve our offering as their preferences change.”
Far from the “fuel vs. electric” options most of the general public seem to weigh, between those choices exist a myriad of fuel sources, technologies and combinations thereof that’ll emerge in the coming decade and beyond. Countless variables are expected to affect the future of fuels, not only in the U.S., but globally.
The big question for c-store retailers is which forms of fuel will flourish and when? And which will limp off into history?
For now, retailers can breathe easy. Even as changes arrive, fossil fuels aren’t disappearing anytime soon. Experts estimate it could take decades for pure electric vehicles (EVs) to gain significant market share, nevermind replace internal combustion engine (ICE) vehicles.
Until then, passenger cars will be powered by fossil fuels either fully or in combination with another form of technology. Make no mistake — those technologies are developing, in some segments rapidly and on the brink of wide introduction. Savvy c-stores are preparing now so they’re in position to ride the wave of disruption when it hits.
HIGHER OCTANES, IMPROVED FUELS
Companies are moving forward with fuel alternatives, according to Alice Flesher, general manager of Chevron Corp.’s 900 company-owned and operated c-store network in California, Oregon, Washington, Idaho, Nevada and Utah.
“There are promising innovations among a variety of potential solutions, like EVs, increasingly efficient and clean ICEs, hydrogen vehicles, hybrids and low-carbon liquid fuels,” she said.
Earlier this year, Alexandria, Va.-based The Fuels Institute released a pair of studies outlining the effectiveness of higher octanes. At the time, the institute said that a high-octane standard for the U.S. gasoline market “could be the fastest and most cost-effective way to enhance fuel efficiency for vehicles produced in the next few years.”
ExxonMobil continually partners with universities and equipment manufacturers to optimize fuels with the latest technologies. And with good reason.
“Increased on-road efficiency and more electric vehicles will lead to a decline in light-duty vehicle liquid fuel demand,” said ExxonMobil Senior Research Associate Joan Axelrod. “But overall transportation fuel demand growth is driven by increased commercial activity — moving more people and products by bus, rail, plane, truck and marine vessel. Oil will remain the predominant transportation fuel.”
In July, Exxon released Synergy Supreme plus premium gasoline, designed to work with more efficient and cleaner engine technology. The company did the same with Synergy Diesel Efficient with the goal of offering better mileage, cleaner burning and reduced emissions — all part of the future fuels’ equation.
UNPLUG FROM THE HYPE
Electrified transportation is not only coming, it’s here, according to John Eichberger, president of The Fuels Institute. The numerous headlines touting EVs, however, are a mismatch for their relatively tiny market penetration.
While EVs are growing fairly rapidly on a yearly basis, they still represent a small sliver of the overall light-duty vehicle pie and are expected to take a long time to grow into a substantial market segment, Eichberger explained.
He predicted that by the end of the ‘20s, EVs will represent 15% of sales, including both pure battery electric and plugin hybrid.
Still, traditional fossil fuel companies, convenience stores and competing channels are wading into the EVC market now.
“Chevron is currently working with ChargePoint and EVgo to pilot EV charging stations at select company-owned and operated stations in California,” said Flesher.
Kleemeier at Kum & Go said, as it stands now, location is a prime factor when it comes to actual usage of EVCs. At some locations, he said, EV chargers are only touched a few times a day, while others see appreciable usage.
“While not all locations see big demand on day one, we do see usage growing at all of our existing EVC locations and expect that will continue moving forward,” Kleemeier said. “We’re taking the long view when it comes to EV charging.”
It’s hard not to ignore the trend when the c-store heavy hitters like 7-Eleven are moving full steam ahead with EVCs. The Irving, Texas-based c-store chain is not new to the electric charging industry. It installed fast-charging networks in Illinois in 2012 and New York state in 2013.
Most recently, it began a ChargePoint fast-charger trial run in November at a store in Pamona, Calif., in collaboration with Southern California Edison (SCE)’s Charge Ready program.
“Our collaboration with SCE through Charge Ready is a win-win for everyone,” said Ann Scott, 7-Eleven’s senior director of energy, engineering and store planning. “Fast chargers mean added convenience for EV drivers who visit our store and cleaner air for the surrounding community. We look forward to testing and learning during this pilot.”
7-Eleven is far from alone. A plethora of other convenience store chains across the nation are piloting EV chargers as well.
Among them is Stillwater, Okla.-based OnCue, which partnered with OG&E (Oklahoma Gas and Electric) to provide Oklahoma’s first high-speed charging station in 2016, at its Yukon, Okla.-based OnCue location as part of a pilot program. Today, OnCue offers two Level 3 direct current fast charging stations with four more in the permitting process.
“It’s great to expand our alternative fuel offer and accommodate more Oklahomans as they make the switch to electric vehicles,” said Scott Minton, director of business development at OnCue, which operates 75 c-stores.
On the other end of the country, Alltown Fresh, which now operates four stores, opened its debut c-store in Plymouth, Mass., in 2019, and included four Electrify America direct-current (DC) fast chargers to serve customers with EVs, ranging in power from 150kW to 350kW. EVCs that offer 350kW are capable of delivering energy for up to 20 miles of range per minute, which is seven times faster than most of today’s DC chargers, the company pointed out.
But that doesn’t mean every c-store operator needs to jump headlong into installing banks of EVCs — especially if it runs only a handful of stores. As always, it depends on each chain’s unique customer base.
“If you’re in California and Palo Alto, you better have the Tesla superchargers,” Eichberger said. “Otherwise, you’re missing the boat. Biggest customer market in the country. If you are in Des Moines, you’re probably not going to need a charger as quickly as you might need in Los Angeles.”
Entering the EVC arena doesn’t have to be an ordeal, either. Finding the right companies to work with makes a big difference in easing the process for a c-store operator, Kleemeier said. He said Kum & Go had good experiences collaborating with its primary partners in the planning and execution of charger installation projects.
Meanwhile, Savannah, Ga.-based Parker’s views EVCs as an opening to grow its customer base.
“When we’re talking about EVs and EVCs, for us it becomes an opportunity to attract an audience that might not necessarily have a reason to stop at our stores besides what we offer inside the box,” said Jeff Bush, president of Parker’s, which operates 64 stores in Georgia and South Carolina.
In its “Innovating to Compete: Next steps for North American Convenience Stores” report, consulting group Alix Partners recommended that stores with chargers “adjust their store layouts to provide ‘dine-in’ occasions suiting the extended visit of EV owners.”
Which is precisely what Parker’s did.
“We’ve shifted our store layouts to where we have a c-store side and a kitchen side,” said Bush. Parker’s added seating on the kitchen side to give customers — and especially EV customers — a place to wait while eating lunch or breakfast.
Does that mean that Parker’s is shifting its focus to electric vehicle drivers? Not at all, Bush said.
“Because let’s be frank here; ICE vehicles are still the bulk of your customer,” he said. “So, it’s not like we’re shying away from what we know is the core of our business. We’re just continuing to build ancillary offerings as that demand starts to increase as well.”
Competing channels that are traditionally non-fuel outlets are also edging into the EVC arena. Reston, Va.-based Electrify America and others are installing ultra-fast EVCs at retail and restaurant locations, including Target, Walmart, McDonald’s and others.
GROWTH OF BIOFUELS
Meanwhile, the biofuels market and ethanol offering continue to reshape themselves.
Eichberger warned that demand for E85, whose primary customer was the driver of Flex Fuel vehicles, will likely drift away. He added that the tax credit automakers used to receive for making Flex Fuel cars expired. There’s no incentive, he said, to produce a Flex Fuel vehicle.
Currently, there are approximately 2,000 stations carrying E15, according to Eichberger, but he expects that number to increase rapidly now that the Environmental Protection Agency (EPA) freed retailers to sell E15 year-round.
Most c-store chains are bullish on a variety of biofuel options.
“You can find E15, E85 and biodiesel blends offered at many of our store locations,” Kleemeier said of Kum & Go. “Particularly in the markets that we operate, customers like having these fueling options that reduce environmental impact and help strengthen the economies in our agricultural communities.”
LITTLE MOVEMENT IN HYDROGEN
For the majority of U.S. retailers, hydrogen fueling has remained inert in most places, with the exception of the West Coast. Hydrogen triggers electrical power in an onboard battery pack.
Kleemeier said that Kum & Go hasn’t seen significant demand for hydrogen fueling.
Bush, on the other hand, said Parker’s is open to the variety of options still on the table.
As it is now, hydrogen availability and demand are severely limited. The handful of stations offering
hydrogen are located in California. So, for passenger cars, it’s not a large market. Yet.
Germany-based Daimler Trucks & Buses recently said its fleet of new vehicles for Europe, Japan and North America will be completely carbon neutral by 2039. Its first CO2-neutral production plant will open in Europe by 2022 with all plants to follow.
The announcement sets the bar higher for all vehicles and markets. Could automakers be far behind?
THE MORE THINGS CHANGE …
As disruption forces the fuel landscape to evolve, the internal combustion engine is expected to remain constant for the foreseeable future.
“We’re going to be selling liquid fuels for the next 60 years or so,” Eichberger advised. “But the volumes are going to go down because the miles per gallon is going to improve.”
As technology evolves in all areas of fueling, staying ahead of the changes can be an overwhelming task. There are ways, though, to keep it straight: Stay on top of nationwide trends. Be aware of what’s happening in your own markets. Most importantly, pay attention to your customers. After all, they’re the fuel your business runs on.
Perhaps, take a cue from Parker’s Bush on how to handle the changes.
“For us, we’re going to continue to be nimble and agile and react to them,” Bush said. “And what I mean by that is the headwinds for the future of our industry in regards to the changing dynamics of the fuel landscape. We want to make sure that we’re there to present options for our customers, no matter what those options may be.”