As of this writing, retail gasoline prices have jumped 20 cents per gallon over the past two days, according to AAA. And depending upon how the conflict plays out, more increases could be on the way, according to many energy analysts.
And none of this is good news to fuel retailers. When gas prices climb, stations tend to hold back profit margins to remain as price competitive as possible, fuel-buying customers don’t have as much money to spend inside the store, and drivers are generally in a poor mood, which also negatively affects sales.
Margins Tighten
Gas prices are greatly affected by oil prices. The biggest factor in the cost of a gallon of gas in 2025 was the cost of crude oil (52%), according to U.S. Energy Information Administration. And when oil prices rise, gas prices follow. There are 42 gallons in a barrel of oil, which means that a $1 increase in the price of oil is the equivalent of about 2.4 cents per gallon. A $10 jump in the price of oil equates to about 24 cents at the pump, but that doesn’t mean that an increase will happen at the same pace.
Gas prices have increased, they haven’t increased as fast as the price of oil—or the price of gasoline futures (known as RBOB), which have surged 50 cents a gallon over the past week.
While it seems that stations are reacting to the news, they are instead pricing their fuel based on replacement cost. In other words, the cost to pay for the next shipment of fuel, which is about 8,000 gallons. However, a specific station may receive less if the truck delivers fuel to multiple locations. The typical convenience store sells more than 5,000 gallons of fuel per day, so it’s not unusual to receive daily deliveries, with larger-volume stores seeing multiple deliveries per day. These deliveries during times of rapidly increasing wholesale prices tend to cost more, and retailers have to consider how the impact of any price changes their customer traffic.
The gas price is the top reason a driver selects a specific retail fueling location to fill up. Overall, 72% of all drivers say price is the most important factor, compared to 16% who cite location and 12% who cite brand, according to a 2025 NACS Consumer Fuels Survey. The same survey found that 69% of drivers said they would drive 5 minutes out of their way to save 5 cents a gallon.
Because of consumer price sensitivity, when wholesale prices are rising, retailers may hold back the full price increase. It’s often like a game of “chicken” to see who blinks first and raises their gas price to pass along the increased wholesale costs. In this scenario, the first retailer to fully adjust prices higher could lose customers to the competition, so most retailers will opt to cut margin and absorb some of the price increase.
Retail fuel gross margins (before expenses) have averaged about 38 cents per gallon over the past five years. After expenses, which are typically over 20 cents per gallon, a retailer may see pre-tax profit of 15 or so cents per gallon. When margins constrict in times of rapidly increasing wholesale prices, retailers make far less.
The Seasonal Transition Is Underway
Oil prices—and wholesale gas prices—change all the time. They are commodities and are traded on the exchanges just like stocks, with prices changing by the minute. Usually they changes are not very large. It’s worth noting that most people don’t notice that retail gas prices often remain unchanged during the first few days of an oil price increase. When retail prices move, consumers become attuned to what’s going on at the pump. After that point, if oil prices and retail gas prices increase, most drivers assume the relationship between the two is immediate.
There is one more complication right now. The fuels industry is undergoing the spring transition to government-mandated summer-blend fuels. Since 2000, gas prices have risen by an average of 50 cents from the seasonal low at the beginning of February to the seasonal high, usually in mid-May.
We can’t predict where oil prices will go, especially during a time of global uncertainty. We also can’t say where gasoline prices will go. But we do know that retailers want lower gas prices just as much as their customers. When prices are low, consumers have more disposable income to make in-store purchases. They’re also happier, which is also good for business.
Retailers also get a break from credit card swipe fees—which go up when the price of gas increases. As usual, the credit card companies are one of the winners when prices are high.