What is Rack to Retail Spread?

By: Matt Reese / January 25, 2018

What a crack spread is to refiners, the rack to retail spread is to fleet card merchants. The Rack to Retail spread is the price difference between the local posted rack average and the average retail price in that area. Retail margins are specifically influenced by this spread and they move their street prices accordingly. Stronger retail margins provide for better savings when using a fleet card priced using cost plus pricing. Typically the spread between rack to retail is thin in the first quarter and widens as warmer weather arrives. Global conflict, natural disasters, local market conditions and refinery utilizations are other factors that play a role in the widening or narrowing of the spread.

Here is a visual representation of the National Rack to Retail Spread in 2017. Please note the varying swings throughout the year:

 

 

IMAGE1

 

In Q1 margins started low and although had peaks and valleys, margins rose over $.05 to $.189 cents per gallon.

 

CHART2

 

The second quarter started with a sharp decline from Q1 but rebounded significantly to end Q2.

 

CHART3

 

The third quarter declined from the end of Q2 but finished strong.

 

CHART4

 

It is interesting to note that Q1 and Q4 ended with the spread valued at $.189

As we move forward in 2018, it will be interesting to see how the rack to retail spreads reacts to current market conditions.

 


Categories: Industry Update


Matt Reese

Written by

Matt Reese

With a combined 10 years of customer service and sales experience, I am a detailed and efficient person who provides integrity and exemplary customer service to every business relationship. Consulting, cultivating and caring are qualities that my customers appreciate most.


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