Tougher Fuel Standards To Drive Big Oil's Exodus From Retail Biz

(MoneyWatch)  President Obama's soon-to-be-announced plan to establish tougher fuel-economy and emissions standards for cars and trucks already has folks busy tabulating the potential affect on the environment, auto industry and consumers.

The stricter regulations -- expected to curb tailpipe emissions 30 percent by 2016, as BNET Auto points out -- also will speed up changes within the retail fuel business, forever changing who we buy our gas from.

U.S. consumers have a pretty wide variety of retail fuel outlets to choose from these days. They can buy gas from refiners like Valero. Or they can stick to oil producers including BP, Chevron, ConocoPhillips, Exxon and Shell.

And then there are convenience store operators -- companies like 7-Eleven and Canadian Alimentation Couche-Tarde, who own the Circle K brand.

A number of Big Oil companies -- led by Exxon -- have begun the exodus from the retail fuel industry. Profit margins are tight and as BNET discussed last month, at least one oil company -- that's Exxon, again -- believes consumption of gasoline has peaked and demand in the U.S. will fall.

In its annual report on energy, Exxon points to an increase in fuel-efficient cars and trucks as one of the primary drivers of decreasing gasoline consumption in the U.S. Rather than stick around to find out if they're right, Exxon is selling off its the retail locations. It recently sold 450 of its On the Run franchise convenience stores and 43 corporate-owned and operated sites in Phoenix to Couche-Tarde.

Exxon's not the only Big Oil company getting out of retail fuel operations. In 2008, Conoco sold or closed 166 stores and as a result dropped a spot in the Top 100 Convenience Stores list, produced each year by Convenience Store News. The Pantry,which has 1,664 stores, took Conoco's No. 10 ranking.

Seven of the top 10 convenience store companies are Big Oil firms including Speedway SuperAmerica, which is owned by Marathon Oil. 7-Eleven, Couche-Tarde and The Pantry round out of the top 10 list.

Now, with a new national tailpipe emissions standard on the horizon, Big Oil's divestiture of its retail fuel locations will go into overdrive. Exxon is already convinced that fuel-efficiency will drive down gasoline consumption in developed countries. The rest of Big Oil will be close behind.

As a result, the number of franchises will rise; discounters Sam's Club and Costco will add to its retail gas inventory; and the Big Three convenience store operators will take advantage of the coming glut and buy locations at a bargain.

Image by Flickr user Muffet, CC 2.0