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As more and more retailers look to gasoline sales as a way of driving customer traffic and volume, a new study released at this week’s National Association of Convenience Stores (NACS) 2003 Petroleum Marketing Conference suggested that there may be some inherent problems with the strategy.

NACS Online reports that the study, Restoring Fungibility: Finding a Solution to the Boutique Fuels Problem, suggests that while demand is expected to increase 2.3 percent per year through 2007, capacity is anticipated to increase by only 1 percent each year.

“Consumers are extremely price sensitive, and market volatility only exacerbates this sensitivity,” said John Eichberger, NACS’ director of motor fuels. “Environmental regulations have led to the creation of boutique fuels, which have combined with decreased production capacity and increased consumer demand to destroy the efficiencies in the system. Retailers are then forced to deal with supply shortages and price spikes. Congress and the administration are very interested in solving this problem, but until now, nobody has concluded a definitive study to guide the solution. NACS has decided to take the lead to inject some common sense into the nation's energy policy."

The NACS study, "Motor Fuels Supply Fungibility and Market Volatility," is designed to provide policymakers with the data necessary to develop and enact a sensible solution and will be available in the coming weeks, in time for delivery to Congressional conferees on energy-policy legislation, NACS Online reports.
KC's View:
The year 2007 isn’t that far away, and we think that consumers and businesses ought to be thinking very hard about the issue of gasoline consumption and its long-term implications.

We were fascinated when we took our kids to the Auto Show in Manhattan last weekend to see several of the gasoline-and-electricity powered vehicles, which seemed to be getting a lot of attention.