Competition caused some operators to compete on price, hindering profitability.
New York, NY (PRWEB) April 13, 2015
Over the past five years, the Gas Stations industry has experienced revenue volatility as crude oil prices declined. Due to the nondiscretionary nature of vehicle fuel, demand does not significantly decline when prices rise. However, as lower crude oil prices caused operators to lower the retail price of gasoline, revenue was negatively affected. Even as the trucking sector recovered and demand for diesel rose, a double-digit decrease in crude oil has contributed to an overall decline in revenue for the industry. Consequently, industry revenue is expected to decrease in the five years to 2015.
Several additional developments placed downward pressure on demand for fuel sold at gas stations. “As the price of gasoline continued to climb, more consumers purchased fuel-efficient vehicles to save on fuel costs; these cars require less fuel than conventional vehicles, curbing demand for gasoline,” IBISWorld Economic Analyst Andrew Alvarez says in the updated report. In addition, operators faced intense competition from gas stations that operate alongside convenience stores. Consumers increasingly turned to retailers that offer vehicle fuel along with food, beverages and other sundries due to the convenience of these locations. Greater competition led some operators to compete on price, causing industry profitability to slightly decline during this period.
In the next five years, the industry's performance is expected to remain tepid, as competition grows. Moreover, while the world price of crude oil is expected to rebound strongly, steady prices coupled with lower demand will cause the industry's performance to stagnate over the latter half of the forecast period. “Another factor that will place downward pressure on demand for fuel is the accelerating adoption of fuel-efficient cars,” Alvarez says in the updated report. Government-funded rebate programs, the development of charging infrastructure and the introduction of a variety of electric and hybrid vehicles will support the adoption of fuel-efficient cars. However, growing demand from the trucking sector will offset lower demand from consumers in the latter half of this period, allowing industry revenue to grow in the five years to 2020.
For more information, visit IBISWorld’s Gas Stations in Canada industry report page.
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IBISWorld industry Report Key Topics
This industry comprises establishments primarily engaged in retailing gasoline, diesel fuel and automotive oils. More specifically, this industry excludes gasoline stations that operated in conjunction with a restaurant or other type of operation, such as convenience stores. Establishments that operate such establishments on behalf of their owners are also included.
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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