Gulf Advisor Predicts Gas Prices Will Drop in Next 30 Days as Refiners, Not Retailers, Capture Profits

BRAINTREE, Massachusetts — Consumers bracing at the pump may soon see financial relief, as industry experts predict that gas prices are set to drop significantly over the next 30 days. While recent political rhetoric has heavily targeted retail station owners over gas profit margins, energy analysts clarify that the financial realities of the supply chain tell a different story, pointing to refiners as the true beneficiaries of current market conditions.

According to Tom Kloza, Gulf senior energy advisor, the recent political pressure regarding fuel costs is acting as a strategic message to the market. Kloza noted that the administration has been highly successful in “talking down” the price of crude oil. He explained that in previous eras, such as 2008 or 2011, heavy financial speculation could have driven crude to $130 or $140 a barrel. By leveraging public pressure, the administration aims to lower pump prices and subsequently claim credit for the decline, which Kloza asserts is a clear and achievable outcome within the next month.

The Reality of Gas Profit Margins

Despite the political focus on retail gas stations, Kloza highlighted the “rockets and feathers” pricing dynamic—a phenomenon where prices shoot up rapidly but fall slowly. When crude oil hit $100 a barrel in 2007, the typical margin for selling gasoline at the pump was about 15 cents. Over the current decade, that figure has risen to roughly 40 cents per gallon. For a consumer buying 10 gallons, this translates to a $4 gross profit for the station manager.

Kloza argued that this margin is relatively modest compared to other consumer expenses like healthcare or cable. He pointed out that many single-site operators are simply trying to sustain their businesses, while large big-box retailers like Costco sell fuel at discounted rates.

Refiners Capture the Bulk of the Profits

The most robust profits in the current market are actually being made by refiners, not retailers. Kloza clarified a common misconception regarding industry ownership: major oil companies largely exited the retail real estate business years ago to focus on exploration and production, such as finding oil in Guyana. Today, only about 5% of retail gas stations in the U.S. are owned by refiners, such as Valero.

While retailers average a 40-cent profit per gallon, Kloza pointed out that refiners are making well over $1 per gallon. This windfall is largely driven by global refining shortages and the loss of refining capacity in regions like the Persian Gulf, Russia, and Venezuela. With the exception of some companies like Occidental, major oil companies are not breaking laws, but they are capitalizing on a privileged position in the U.S. market due to these international refining deficits.

Consumer Demand and Savings Strategies

Despite the sticker shock at the pump, the American driver remains in a solid financial position. Kloza agreed that there has been no significant “demand destruction” regarding gasoline usage, meaning consumers are still filling up their tanks.

He contextualized current prices by comparing them to the $4.10 per gallon seen in 2008 and the $4.75 peak in 2022. Furthermore, Kloza advised that consumers can leverage technology to mitigate costs at the pump. He noted that applications like GasBuddy allow drivers to find fuel priced 30% to 50% below the local average, providing immediate relief while the broader market adjusts and pump prices continue their projected downward trend.