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In the 2000s, major oil companies largely exited the direct retail fuel business. Fast-forward 20 years, and there are indications that Big Oil is again pursuing direct ownership in the United States.
Through an acquisition of Brewer Oil Company’s retail division, Shell will acquire 45 fuel and convenience sites in New Mexico. The acquisition, which will also include cardlocks for fleets, joins Shell’s directly owned footprint of almost 200 retail sites. BP acquired Thorntons and TravelCenters of America Inc. Chevron and BP are expanding their portfolios to include commercial cardlock sites.
So, what gives? Why are major oil companies getting back into direct retail fuel? Here are a few potential reasons.
1. Conditions are favorable for the majors to buy property.
Unlike buyers with less cash holdings, high interest rates aren’t much of a deterrent for major oil companies. This affords the big guys a wider assortment of properties with fewer competitive buyers.
2. Lucrative sales inside the C-stores are now bolstered by attractive profit margins for fuel.
Fuel retailers typically see fuel profits increase when fuel prices fall. The majors see an opportunity.
3. Either necessity is the mother of reinvention, what’s old is new again, or both.
Amid the shift toward new forms of transportation energy, major oil companies are seeking ways to diversify. Additionally, the cyclical nature of management goals has an uncanny way of finding “new” objectives in pursuit of bottom-line growth. Downstream control may be the latest area of focus.
Although the environment may be suitable for more direct ownership of sites by major oils in the near future, the major oils have ceded this area for many years. It will take at least as long as that for them to reach the level of prominence they once enjoyed.
