Big Oil taps into on-demand economy with fuel delivery
Roll into your company’s parking lot in the morning, press a button on a mobile phone app and, voilá, a tanker truck of gasoline appears to fill up your car. Or, if home convenience is preferred, download another app and have your gas tank topped off in the driveway.
These services sound like work of the latest band of Silicon Valley disruptors aiming to upend a long-established industry, but they are, in fact, offered or backed by two of the largest oil companies in the world, Royal Dutch Shell and Exxon Mobil. Shell, which introduced its app-based fueling service last year in the Netherlands, soon will introduce it in Houston, while Exxon Mobil, in addition to providing the fuel, has invested some $4 million in the gas-up-without-leavinghome company Yoshi.
Big Oil is moving into the on-demand economy at a time when energy compa-
nies are fighting to hold onto market share as gasoline demand plateaus with the spread of hybrid, electric and other fuel-efficient vehicles. With high real estate costs and razor-thin profit margins forcing 25 percent on the nation’s gas stations out of business over the past 25 years, oil majors are seeking new models for selling their product while looking to stay ahead of the type of technological changes that have refashioned retail, taxi, hotel and other industries.
Analysts said that oil companies have little choice but to experiment with new products and business models as growing concerns about climate change and increasing pressure to shift away from fossil fuels create what are perhaps the most uncertain times in the industry’s history. It makes sense for Shell, Exxon Mobil and other oil majors to at least try out various technologies and not ignore trends that have the potential to reshape how companies and their customers do business, said Claudio Galimberti, head of demand and refining for S&P Global Platts Analytics in Houston.
“You need to hedge your bets,” Galimberti said, “and you need to start early to avoid missing the train entirely.” Ripe for disruption
Fill-ups on demand seemed only a matter of time when consumers could get food from favorite restaurants delivered, chores around the house done and grocery shopping completed with the touch of a mobile phone. The concept of bringing the gasoline to the car, instead of vice versa, surfaced about four years ago and has slowly gained traction.
Yoshi was founded in 2015 in San Francisco. It expanded into Houston in August and now operates in more than 20 cities across the country, including Austin, Dallas and Fort Worth. Exxon Mobil, along with General Motors, bought stakes in the company this year.
Yoshi charges a membership fee of $20 a month, plus the price of gasoline. Bryan Frist, co-founder and president of the company, said he and his partners decided that on-demand fueling offered opportunity because the gas station model has been largely unchanged for more than a century, making it ripe for disruption.
“We were looking at industries that had not been touched by technology,” Frist said. “It’s a time suck for people and usually at the most inopportune times.”
Rather than invest in another company, Shell started its own program called Shell TapUp near its corporate headquarters in the Netherlands. Now, Shell is ready to roll out a pilot program of TapUp in Houston, starting with Shell employees in December and expanding to other companies early next year.
Shell will fill up the vehicles of participating employees in companies’ parking lots or garages and eventually expand to serve other customers while they’re shopping at the grocery or dining at a restaurant. Even though Shell has more than 14,000 U.S. gas stations in 50 states, people still like having options and convenience, said Istvan Kapitany, Shell’s executive vice president of global retail.
“We are here to offer choices to our customers,” Kapitany said. “You just don’t know what will happen, so we take small steps to learn.”
In Houston, the field is already attracting more players. Earlier this year the Houston startup GasMob lauched on-site refueling services at several Houston office buildings and apartment complexes, including the Greenway Plaza, which has close to 5 million square feet of office space and parking for some 15,000 cars. ‘Evolving and changing’
GasMob, which also operates in Miami, partners with landlords of office and apartment complexes, which see the service as an amenity for their tenants. GasMob estimates people fill up an average of twice a week, spending 15 minutes or so each trip, and its app-based service will save people the time equivalent of a day over a year.
GasMob, which doesn’t have membership fees, charges prices similar to those at gas stations. Adam Cooper, GasMob’s co-founder, said he’s not worried about competing with some of the biggest companies in the world.
“I see the oil companies investing in this market as a positive thing,” Cooper said. “They see the industry evolving and changing.”
Silicon Valley companies such as Filld, which operates on West Coast and in Washington, D.C., and Booster, which began its service fueling corporate fleets and clients in Fort Worth, are also confident they can more than hold their own against much larger competitors.
“Big Oil won’t be able to innovate as quickly as the smaller players,” Filld CEO Michael Buhr said, adding the on-site fueling is just part of the broader energy transition toward cleaner energy and greater convenience. “It’s fuelcharging today, but EV-charging tomorrow.”
Shell, however, already has plans to add electric vehicle charging to its refueling service. And, as Shell and Exxon show, major oil companies are unlikely to cede their business to Silicon Valley interlopers easily, said Denton Cinquegrana, chief oil analyst for the OPIS by IHS Markit energy consulting firm.
“Fuel on demand could be the wave of the future,” Cinquegrana said “At the end of the day, no one likes going to a gas station.”