High prices at the fuel pump don’t mean hefty profits for gasoline station owners — they mean the opposite, and economic uncertainty is making things worse, John Eichberger, vice president of government relations and director of motor fuels at the National Association of Convenience Stores, told CNBC.
Most of the money gasoline stations owners take in comes from purchases made in retail areas of operations such as food, drinks, snacks and other items.
Rising crude prices force gas station owners to pay more for gasoline from their suppliers, and they in turn, pass those costs on to consumers.
Editor's Note: The ‘Unthinkable’ Could Happen — Wall Street Journal. Prepare for Meltdown
Consumers then balk and buy less fuel, which cuts into retailers’ profit margins, but today, economic uncertainty is further dampening business at the nation’s gasoline convenience stores.
In short, everyone suffers, said Eichberger.
“It’s the combination of the economy and leading into a presidential election that is very uncertain,” Eichberger told CNBC.
“What we’re seeing is across the country from the retailers I have spoken with, in-store sales are down compared to last year and earlier this year, and when you combine that with high prices and lower retail margins, retailers are feeling the pinch and consumers not definitely having a great time.”
Middle East saber rattling has pressured oil prices up this year, and building tensions between Israel and Iran over the latter’s nuclear ambitions could send prices even higher should fears of military strikes build.
The national average for a gallon of regular unleaded gasoline is hovering around $3.86, well below $3.60 this time a year ago thanks to Middle East tensions and lingering effects from Hurricane Isaac, which forced refineries to close temporarily.
Prices should come down, however, as refineries switch to cheaper winter-weather inputs, experts say.
“This is the fireworks finale for the season, the next four or five days,” said Tom Kloza, OPIS chief oil analyst, according to The Associated Press.
By the end of this week, prices “will start to move lower.”
Editor's Note: The ‘Unthinkable’ Could Happen — Wall Street Journal. Prepare for Meltdown
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