Gas Stations Gain When Oil Prices Start to Drop

As tankers start sailing again through the Strait of Hormuz, oil prices have fallen nearly to their level before fighting blocked off the Persian Gulf four months ago.As usual for a so-called supply shock, prices at the pump aren’t falling as quickly, as gasoline retailers take the opportunity to recoup some of the profits they lost as prices rose.President Trump isn’t having it.“The retailers must quickly react to this statement, and do what they know is right — DROP YOUR PRICE FOR OUR GREAT AMERICAN PEOPLE!” he wrote in a social media post last week.

He said he wouldn’t stand for price gouging, “which is totally illegal.”It’s not the first time a president has warned against price gouging when the politically sensitive price of gas soured public sentiment.President Joseph R.

Biden Jr.sounded very similar in 2022, when Russia’s invasion of Ukraine sent energy prices soaring.So, do they have a point?In some ways, yes.

The difference between what retailers pay for wholesale gasoline and what they charge drivers has been widening over the past decade, from around 20 cents a gallon to about 40 cents, according to data collected by Dow Jones’s Oil Price Information Service.Although much of that can be chalked up to their own rising costs, industry experts say there is likely a component of extra profit.“It’s inflation, but it’s also opportunity,” said Tom Kloza, chief energy adviser for Gulf Oil.

That is especially true for high-volume, fast-growing chains like Wawa and Buc-ee’s, which can buy fuel in bulk for less than the independent store owners who make up more than half the industry.“The economies of scale just work wonderfully for them,” Mr.Kloza said....