US Gas Prices Don’t Tell You Gas Station Profits

Picture two gas stations across an intersection, their prices a few cents apart. You can see the number. You cannot see the bill behind it.

A US pump price is best read as what you get when replacement cost, local competition and the economics of a whole store push on each other. It is not the world oil price plus whatever the owner wants to earn. To judge what an owner makes, first sort out who has the power to set the price, and which costs the spread still has to pay.

The sign is a result, so split it into three layers

EIA breaks the retail price of gasoline into crude oil, taxes, refining costs and profits, and distribution and marketing. It lists a station’s own operating costs within distribution and marketing: labor, equipment, rent, insurance and other overhead. That slice cannot be treated as the owner’s net profit.

The table is my own framework for reading these layers. It is not a settlement formula from any contract.

So when someone says what a station makes per gallon, ask two things. Which layer is that gap? Were expenses taken out?

The cost of the next load also affects pricing

NACS defines replacement cost as the cost of the next batch of fuel, and says retailers must price fuel on the estimated cost of the next delivery. Cash pressures are especially acute for smaller businesses. The NACS explanation does not mean every station uses the same formula.

A separate puzzle is why the sign does not drop the moment upstream gets cheaper. EIA’s Short-Term Energy Outlook, published October 6, 2026, says lower wholesale crack spreads will not immediately translate into lower retail prices. This is about the wholesale spread, not what the station owner earns. EIA says retail and distribution margins had been squeezed so far in 2026 by surging wholesale prices.

A brand is not an owner, and the next station is not the same cost

The name on the sign does not tell you who runs the station or who decides the price. In the supply chain EIA describes, independent retailers buy from refiners or marketers and resell, and some refiners operate their own stations. A June 2026 NACS article estimates that around 55% of fuel-selling stores are single-store operators. That share is of stores that sell fuel, not of gasoline volume and not of all US convenience stores.

An FTC article from September 2021 said franchised stations often have no control over the retail price at their pumps. That was an enforcement article of its year, not a survey of who sets prices across the country today. A station that can set its own price has to trade replacement cost against the neighbor’s sign. For a station that cannot, that trade-off is not in the owner’s hands.

A price gap on one stretch of road is not proof of anyone’s bad behavior. EIA writes about regional gaps. It says that beyond taxes, distance from supply, refinery or pipeline outages, retail competition and operating costs all matter, and that prices are often highest where there are fewer stations. At one intersection, read that as a list of possibilities: two neighboring stations may have different traffic, rent and supply sources. It cannot prove the reason for any two stations’ gap.

What if nearby stations raise prices at the same time? The FTC says matching, same-time price moves can come from price fixing, but can also be each station reacting on its own to the same market conditions, such as higher wholesale costs. Public signs let rivals compare prices quickly, but following a price independently is not the same as agreeing on one.

How much of US convenience-store sales and margin comes from gasoline?

Judging a convenience store’s profitability takes more than its gasoline sales. NACS, citing its own industry report on 2025 data, says gasoline made up 65% of US convenience-store industry sales and 39% of gross margin dollars. These are industry figures, not the ratios of any one store.

Gasoline is most of the sales and much less of the margin. Using its sales share as its gross-margin share overstates gasoline’s contribution to total gross margin. The rest of the margin comes from things other than gasoline. NACS figures do not show that in-store items subsidize gasoline.

Gross margin is not net profit. A February 2025 NACS article lists distribution, card fees, store operations and equipment amortization among the items that eat into the retail markup. Neither the 65% nor the 39% is a net profit margin.

How to read a pump price

• When comparing, compare the price actually paid for the same fuel grade under the same payment terms. If a station posts separate cash, card or member prices, do not mix them.
• When you hear that a station makes tens of cents a gallon, check whether that is before or after expenses, and for which year and which group of stores.
• When upstream gets cheaper, do not expect the sign to fall by the same amount the same day.
• When nearby stations raise prices together, do not treat that alone as a verdict.

The number on the sign is the price the customer pays. What the owner keeps depends on replacement cost, who holds pricing power, what the neighbor charges, and the books of the whole store.

Frequently asked questions

Does each US gas station set its own price?

Not always. EIA says independent retailers buy from refiners or marketers and resell, and some refiners run their own stations. An FTC article from September 2021 said franchised stations often have no control over the retail price at their pumps. It is not a survey of who sets prices today. The answer depends on each station’s ownership and contract.

Is the gap between the pump price and the purchase price the owner’s profit?

No. Expenses come out of that gap first. NACS lists distribution, card fees, store operations and equipment amortization among the items that eat into the retail markup. EIA lists labor, equipment, rent and insurance as station operating costs. Without the books of one station, its net profit cannot be calculated.

Why doesn’t the pump price always fall right after upstream costs fall?

EIA’s October 2026 Short-Term Energy Outlook says lower wholesale crack spreads, the gap between crude oil and wholesale gasoline, will not immediately translate into lower retail prices. EIA says retail and distribution margins had been squeezed so far in 2026 by surging wholesale prices.

Does a price increase at nearby stations at the same time mean collusion?

Not by itself. The FTC says matching, same-time price moves can come from price fixing, but they can also be each station reacting on its own to the same market conditions, such as higher wholesale costs. Establishing a pricing agreement or coordination requires more evidence. This article does not judge any station.

Sources

Data as of October 15, 2026 (Taipei time). This article covers the US retail gasoline market only and draws no conclusion about Taiwan’s fuel pricing. NACS is an industry association.

• EIA: Factors affecting gasoline prices
• EIA: Regional gasoline price differences
• EIA: Short-Term Energy Outlook: U.S. Petroleum products (published October 6, 2026)
• NACS: Key Facts About Fueling (2025 industry figures)
• NACS: Convenience Stores Sell the Most Gas (June 19, 2026)
• NACS: Who Makes Money Selling Gas? (February 4, 2025)
• FTC: Price Fixing
• FTC: Protecting Americans at the gas pump through aggressive antitrust enforcement (September 2021, historical article)