19 Mar What cars on blockchain will do to fuel retailing
A German automaker has wrapped up some trials integrating blockchain technology with its sports car line. What lessons does this offer the oil and gas industry?
Blockchain comes to your car
Did you catch this news story about Porsche and a blockchain trial? This digital development is important for the oil and gas industry because it signals how customers of fuel are being trained by the car industry, and how cars may interact with fuel infrastructure like gas stations. It also provides some inspiration for other industrial applications.
Porsche is an iconic German car maker, owned by Volkswagen, the largest car maker in the world (or perhaps 2nd largest, a spot it trades with Toyota, from time to time), and designs and builds cars at the leading edge of German automotive engineering.
If there’s a brand to trial some edgy technology, it would have to be Porsche. Its customers are refined and demanding, it sells just a couple hundred thousand cars a year (not a lot by global standards), and it has a heritage as an innovative race car maker that develops and refines new car technology. Its innovations eventually roll out across the rest of the Volkswagen marques, including Audi, Bentley, Bugatti, Lamborghini, SEAT, Skoda and of course Volkswagen.
Porsche has been running a pilot using blockchain technology with the Panamera sedan (a 4 door saloon style car), and was the first car company in the industry to turn a car into a node on an operating blockchain.
If you want a quick refresher on what blockchain (or distributed ledger technology) is, please take a look at my previous articles on this topic.
Put a car on a blockchain, and number of new features for cars suddenly come into view:
Accessing – drivers can use an app to open the car, or give permission via an app to another party to access the car, to retrieve something from the trunk or glovebox, without giving them a key to start the car. Also useful for delivery of fuel to the car, or delivery of a package to the trunk.
Charging – for the next generation hybrids and electric plugin cars, an app to record charging the car across charge points and electricity suppliers.
Servicing – recording vehicle servicing, like fluid change, alignment services, and insurance events. Add in smart contracts, and these services can be automatically paid for on execution by the service company.
Title transfer – with vehicle registration data recorded on a blockchain, the data about the vehicle simply moves to the next owner.
Data sharing – car driving data is valuable as it shows consumer preferences. Capture that data on a blockchain and aggregate to learn about customer behaviour.
Costs – use an app to pay for parking, enabled by a smart contract. Use smart contracts to automatically pay for fuel, make car loan or lease payments, pay for insurance, even fines.
Rentals – use smart contracts on blockchain to rent out rides or space
Sharing – using blockchain technology to enable vehicle sharing. A compound of residential units shares a common fleet of rental cars, using blockchain to record usage and settle accounts.
Learning – recording data about autonomous cars for sharing across multiple vehicle systems and makers, respecting driver privacy.
Rewards – paying drivers using tokens or loyalty points for good driving behaviour (no idling, hard braking, fast starts), based on driving data captured on the blockchain
Toyota is also trialing blockchain, with an eye on enabling a future autonomous vehicle world. I can imagine robocars easily enough but one with the smarts to navigate our human centric automotive world for a couple of decades will need something like blockchain to enable all the interactions that I’ve set out.
Implications for Fuel Retailing
Fuel retailers are eyeing the energy transition that is taking place, and the jockeying for transportation market dominance between the incumbent car companies, the app outfits like Uber and Lyft, and the autonomous vehicle players like Waymo and Tesla.
It’s not clear who will win in this gigantic shift in mobility. But there’s a few key take-aways from the blockchain-car development that impact the various petroleum retailing transformations taking place.
- blockchain will extend to other vehicles. These examples also apply to commercial vehicles that have higher utilisation rates, and therefore bring greater value to fleet owners.
- cars will favor fuel stations that are blockchain enabled. Retail fuel stations will need to incorporate this technology into their payment systems, both inside and outside sales.
- with hundreds of car companies, brands, makes and models, all working towards their own blockchain enabled futures, standards will be highly valuable but slow to appear. Retailers will need to flexibly adapt to whatever the automotive companies throw at them. These early trials in Germany may be just the beginning.
- retailers may need to innovate to continue to attract trade. This could take the form of retail loyalty programs enabled on blockchain that interact with cars in a creative manner. If car companies reward driver behaviour with crypto (or perhaps crypto for journey information), fuel retailers may need to accept crypto for fuel or for inside sales.
- the role of the retail site could expand beyond its current definition to embrace more rental and services. If a car can be a node on a blockchain, so could just about any rental item, such as bikes and scooters. The future fuel retail site could become a big electric bike and scooter plug-in facility, leveraging a solar power panel installed on the canopy over the forecourt.
- domestic fuel retailers may need to join the international vehicle ecosystem to influence the future of transportation, particularly payment systems and services. It’s instructive that these developments are taking place in Europe and not North America.
- car companies like Porsche, and app outfits like Uber, are amassing enormous and valuable data about customer mobility preferences. They will have superior insight into optimal locations for fuel inventory and retail sites. Partnering with them could be strategic.
- other parts of the fuel distribution business may need to react to blockchain as well. For example, there are European trials underway involving the sale and movement of finished products in the supply chain. Fuel distribution businesses like heating oil, the bottle trade and card lock services all feature many of the same elements (assets, contracts, trust, identity, payments) that make them blockchain candidates.
Industrial Internet of Things
A car on blockchain is a rich example of turning an industrial asset into a full participant actor on the Internet, and giving it agency. Cars interact with society in so many ways that blockchain is a particularly useful adaptation for this purpose.
There are many other kinds of assets in oil and gas that could also benefit from being nodes on the internet, becoming participants and gaining agency. These assets are not nearly as rich in the range and number of interactions that cars have, but the volume of interactions is substantial, and the high levels of trust placed on these assets creates a pathway for agency. Here’s a few examples:
Pumps and Motors
A linear extension of the car-on-chain would be pumps and motors. Condition data is probably less valuable than, say, customer journey data, but for some pumps and motors, choosing when to run matters. My condo building has a large fan that cycles when the heat buildup in the atrium reaches a certain level. What if that motor cycled based on the source and price of electricity, delaying when prices were spiking? Using a smart contract structure on blockchain could make the motor much cheaper to run.
The oil and gas industry has a lot of meters – at well heads, on pipelines, in tanks. Anytime product moves through assets, it gets measured, and the measurements are used for title transfer, insurance, contract fulfillment, quality control, pricing, and so on. The measurement devices are tightly controlled, and the meters are regularly calibrated because the data is so valuable. Meters could become nodes on blockchain and record measurement data to blockchain where it could be used in smart contracts.
The industry is adopting drones for subsea inspections, piling monitoring, aerial surveillance, pigging, tankage inspections, and so forth. These robots are no different from the robocars coming to the roads – most are going to be shared assets with the opportunity to apply smart contracts to their usage. For example, an aerial drone that measures progress on a construction site could trigger a smart contract payment to contractors based on visual data about progress.
The industry purchases a huge amount of new equipment for its projects, and some portion is never actually used, resulting in a buildup of asset inventory. In the same way that cars will use blockchain for title transfer, oil and gas could put its purchased assets on blockchain for the eventual sale of those assets.
It’s not immediately obvious, but blockchain on cars holds significant implications for the oil and gas industry in fuel retail and in the industrial internet of things.