Industry revenue will increase along with global crude oil prices
New York, NY (PRWEB) May 19, 2014
The Gasoline and Petroleum Wholesaling industry grew strongly in the five years to 2014, though this growth is mostly attributed to recovered losses since the recession. The global recession and consequent declines in sales volume, along with heavily reduced prices, hurt revenue over that period. Overall, consumption and improvements in vehicle fuel efficiency have stagnated over the past five years. Crude oil price growth has also moderated following two years of strong growth after the recession. Rising domestic oil production and slowing demand from emerging economies have contributed to poor price growth. The world price of crude oil declined in 2013 and is anticipated to fall in 2014. As a result, industry revenue is expected to fall in 2014. Nevertheless, IBISWorld expects revenue to grow at an average annual rate in the five years to 2014, thanks to the recovery from recession lows.
In terms of industry operations, industry players generate profit from purchasing crude oil and selling it to retail outlets. Therefore, the prices of retail gasoline and crude oil strongly influence profit. Retail gasoline prices are a function of domestic demand for fuel, which may differ from the global supply and demand for fuel. According to IBISWorld Analyst David Yang, “there is typically a lag between crude oil prices and retail gasoline prices, which has led to falling profit margins over the past five years.” Profit increased in 2009 because oil prices sharply declined, “even though retail petroleum prices remained comparatively more stable,” says Yang. Since then, retail prices have matched crude oil price trends, cutting into profit margins for the industry.
The Gasoline and Petroleum Wholesaling industry has a low level of market share concentration, given the overall scale of the petroleum sector. Looking ahead, petroleum product prices are projected to increase over the next five years, as the global economy gains steam and demand for fuel expands worldwide. Despite a slowdown in volume demand from US gasoline stations, as consumers switch to more fuel-efficient vehicles and prices stay elevated, revenue will increase at a projected average rate in the five years to 2019. Nevertheless, negative long-term trends will continue to plague the industry as players slowly exit due to thin profit margins. Gaps between changes in crude oil prices and US retail fuel demand are expected to limit profit and drive companies out of the industry.
For more information, visit IBISWorld’s Gasoline & Petroleum Wholesaling in the US industry report page.
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IBISWorld industry Report Key Topics
The US Gasoline and Petroleum Wholesaling industry distributes most of the same products as the Gasoline and Petroleum Bulk Stations industry (IBISWorld report 42271) but on a smaller scale. Operators in this industry purchase petroleum products directly from bulk stations and sell them to retailers, including gas stations, car parts retailers, warehouses, superstores and supermarkets, manufacturers and natural gas retail distributors.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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