I regularly hear people assert that gas stations are taking it in by the fistfull as gas prices enter a period of steady price increases.
But the opposite is true. Retailer margins are razor thin in a time of rising prices. Consumer price sensitivity becomes heightened, as illustrated by local radio stations broadcasting live from the place with the cheapest gas in the city. Competitors trim margins to a few pennies on the gallon (which, at $3 a gallon, comes to a penny or so on the dollar).
When prices ebb, retailers are able to relax. As the price of refined gasoline drops, retail prices drop as well, but usually not as fast. Consumers are happy to see they’re paying a dime less a gallon this week than they were the week before, not knowing (or seriously caring) that they might actually be paying twelve cents less than seven days ago, if only retailers would continue to cut margins to nothing.
And money spent on ultra-thin margin gas isn’t spent on high margin stuff like fountain drinks and coffee.