2008 Gas Price Kit

How to Use These Resources
To address consumers' questions about gasoline prices, the National Association of Convenience Stores (NACS) has annually developed an online resource kit about the U.S. petroleum industry.

As the national trade association representing the convenience and petroleum retailing industry, which sells more than 80 percent of all the gasoline purchased in the United States, NACS developed these resources so that the media, legislators and the general public can better understand the petroleum industry, especially at the retail level. These resources also can be used by retailers who are interested in conducting their own outreach in communicating the issues behind today's higher gasoline prices.

For the second straight year, this kit also includes consumer perceptions about gasoline prices, sharing the results of the 2008 NACS Consumer Fuels Report, a nationwide study conducted in late December 2007 and early January 2008.

Convenience store retailers dislike higher gasoline prices as much as their customers do, since margins decrease while costs — particularly credit card fees — increase. When wholesale prices go up, prices at the pump typically lag as retailers absorb some of the wholesale price increases by reducing their margins to remain competitive. Price volatility in 2007 helped lead to gasoline margins that were, on a percentage basis, at their lowest levels ever.

These convenience stores also do not benefit from the strong upstream profits announced by the major oil companies. Very few retail fuel outlets are owned by the major oil companies. In fact, about 2 percent of all convenience stores selling gasoline are owned by one of the major integrated oil companies. To counter slim profit margins for gasoline sales, these stores seek to drive profits by growing their in-store sales, whether coffee, sandwiches, financial services or cold beverages. Virtually any item in the store can carry a healthier profit margin that a fill-up at the pump.

This is the seventh year that NACS has developed an online resource kit addressing gasoline issues. While the circumstances may be different every year, the pattern seen in petroleum markets is eerily similar year to year, and will once again be of concern for consumers and retailers alike in the coming months. The first week of February traditionally marks the beginning of the spring transition to summer-blend fuels for the petroleum industry. Since 2000, gasoline prices have increased, on average, more than 40 cents between the first week in February and the time of the seasonal high price, typically late May. In 2007, gasoline prices jumped more than $1 in that period.

In a sense, the petroleum markets are similar to the Bill Murray movie Groundhog Day in which his character wakes up every day to find that it unfolds, event-by-event, exactly the same as the day he had just experienced. Like the character in Groundhog Day, the petroleum markets experience similar conditions over and over — except on an annual, rather than daily, basis.

It is because of the similarity to the movie Groundhog Day and the traditional start of the spring transition to summer-blend gasoline that NACS has annually launched its online resource kit on February 2, Groundhog Day.

We have tried to incorporate the most current data on the petroleum retailing industry, and some numbers are just days or weeks old. For NACS-specific data, we have used 2006 numbers. (NACS 2007 industry data will not be available until April 2008).

It is difficult, if not impossible, to predict where crude oil or gasoline prices will go. There are simply too many variables that affect the supply and demand of fuel. The goal of this resource kit is to instead look at the underlying conductions and address perceptions and realities in the marketplace.

These resources are designed to provide resources for an open discussion about the issues impacting supply — and prices — during the seasonal transition and, through a better understanding of the petroleum markets, help ease the frustrations consumers often experience when prices increase. And, importantly, to help guide discussions on the issue of higher gasoline prices to solutions that can benefit us all.