The CEO of the Ankeny-based Casey’s convenience store chain talked today about gas prices during the quarterly conference call for investors.
Darren Rebelez says it is constantly changing. “This is an extremely volatile environment right now. When I was in the military, we would call this a VUCA environment, which is an acronym for volatile, uncertain, complex and ambiguous,” Rebelez says. “I think all of those words describe what we’re experiencing in fuel right now.”
The company reported that the number of gallons of gas sold in the fourth quarter was up 1.5% and the margin was 36.2 cents a gallon despite the volatility of the gas pricing. Rebelez was asked if we might see gas prices at or above six dollars a gallon.
“You know, it’s really hard to put predict where we’re going to see those prices ultimately peak out. And I would say it’s very geography specific — we have a pretty wide range from the most expensive areas in our geography to the least expensive,” he says. He says their stores in the Greater Chicago suburbs have prices well north of five dollars a gallon, while at the other end of the spectrum there are some that are just slightly above four dollars a gallon. AAA Iowa reports the average cost of a gallon of gas here is $4.68 a gallon.
Rebelez says people are backing off on purchases in the areas where the gas price is the highest. “We are starting to see some erosion in volume in the low single digits. In the middle two quartiles, we’re kind of flatish to maybe slightly down. And then in the bottom quartile, we’re still seeing gallon growth,” according to Rebellez. He says overall customers haven’t cut back on their visits.
“The average fill up is down about a gallon versus where it was the same time last year. So people are purchasing just a little bit less fuel than they had historically per visit,” he says. “But they’ll end up having to make more visits to the store over time, which we believe gives us a better opportunity to get people inside the store to buy more stuff.”
He says customers are also shifting over to higher blends of ethanol. “The ethanol economics are actually working out pretty favorably right now from a consumer perspective. So they’ll shift over to an E-15 type of product versus what most of the fuel is blended at E-ten,” Rebellez says. Rebelez says $6 a gallon is uncharted water for everybody and he imagines people might cut back on their purchases at that point.
The overall financial report for the quarter showed the company generated a record $340 million in net income and gross profits were up 14%.