The average driver does not consider how fuel retailers buy gasoline. Customers pay attention to whether the retailer has the gas and makes it available to the public. The livelihood of a retailer or wholesaler depends on how they purchase or sell gasoline and the cost of doing so. The process depends on a number of variables such as the type of fuel retailer and the total cost of the product.
Three types of fuel retailers
In the United States, there are three kinds of fuel retailers: those owned by major oil companies, branded independent retailers, and unbranded independent retailers.
Major oil companies have all but removed themselves entirely from the retail side of the industry. Less than 5% of fuel retailers are owned by major oil companies. These retailers receive their products directly from the company’s refineries and their profit and loss is part of the corporation.
A branded independent fuel retailer is operated by owners who have signed contracts to exclusively carry a major oil brand’s gasoline. The fuel retailers gain access to the prestige of the name brand for a slight premium on the gasoline prices. Branded retailers are given priority when gasoline supplies run low and can get gasoline from wholesale suppliers. These retailers must adhere to certain requirements on appearance and operation dictated by the oil company.
An unbranded independent fuel retailer does not sell gasoline using the name of a brand owned by a major oil company. Independent retailers buy gasoline off the unbranded wholesale fuel market. These retailers do not pay the surcharge that branded retailers do. In exchange, these businesses take a lower priority when gasoline supplies are running low. Unbranded retailers are not dependent on one supplier, so they can shop multiple wholesale fuel suppliers for the best prices.
The total cost of fuel
Retail pricing is based on wholesale fuel prices. However, there are several factors that determine the final retail pricing.
Taxes add a significant cost on top of the wholesale price. Federal, state, and local taxes can add almost 50 cents per gallon of gasoline. Transportation costs can add a few cents to each gallon as well. Credit card transactions can add up to 2.5% to each purchase and retailer overhead and net profit add the final portion of the cost.
If you would like more information about wholesale fuel, contact the experienced staff at Kendrick Oil today. We are committed to providing high-quality, bulk fuel throughout the Texas, New Mexico, Oklahoma, Kansas, Colorado, and Louisiana regions. You can call us at (800) 299-3991 or Contact Us by email for more information about our products and services.
