Drivers are becoming younger, but it doesn’t mean they’re driving more.
By David Bennett, Senior Editor
One of the forwarding looking topics at this year’s M-PACT show in Indianapolis is how new technology is driving U.S. fuel sales.
In some cases, however, technology is combining with other factors to slow fuel sales, including younger Americans’ propensity to drive less, explained John Eichberger, vice president of government relations for the National Association of Convenience Stores (NACS) and the executive director of the Fuels Institute. In a presentation March 25 to an audience consisting mainly of convenience store retailers and fuel suppliers, Eichberger presented some evolving trends, including:
- Alternative Fuel Vehicles (AFVs) are gaining interest with American consumers, but there’s a slow rate of adoption.
- AFVs are still expensive to produce.
- Overall, the country is producing vehicles with better gas mileage. And because Americans are driving less, less fuel is being sold at the pump.
- Tomorrow’s vehicles will offer even more technology, but add less to the actual driving experience.
AFVs are vehicles that run solely on alternative fuel and do not run on regular gasoline. This includes vehicles that operate using battery electricity, propane, natural gas or hydrogen.
In addition, ethanol fuels are gaining more traction as far as retail offerings—with E85 leading the way—but still are only offered in about 3,000 stations.
While alternative fuel technology may be becoming a larger part of the conversation, it’s one of the contributing factors to lower fuel sales in the U.S. Others contributors are the production of more fuel-efficient automobiles and a shift in driver demographics. This includes a significant segment of Millennials who are driving less based on changing cultural needs, as well as a growing demographic of cash-poor Americans.
“Drivers today are very different from the driver of 30 and 40 years ago,” Eichberger said. “How many teenagers today are focused on cars? The culture is changing. We’re seeing them move back to the cities. There’s mass transit. They’re not driving as much. They’re living on their phones.”
Eichberger said that retailers who sell fuel—both gasoline and alternative offerings—will have to watch the rapidly changing dynamics to determine the right course for them when it comes to fuel sales.
Industry experts say that store operators want to see more demand for alternative fuels before taking an expensive leap in terms of investment. A tax credit expiring in 2019 that gives automakers incentive to produce the vehicles gives sellers a limited amount of time to build up consumer demand.
