U.S. gas prices are rapidly increasing, reaching levels not seen since 2022, largely due to instability in oil markets. Drivers are facing the challenge of fluctuating prices, varying from day to day and station to station, as they seek the best deals.

Factors Beyond the Gas Station

Despite perceptions, experts emphasize that individual gas retailers have limited influence over pricing. Most stations don't significantly profit from price increases, and the uncertainty at the pump stems from larger, more volatile factors.

Wholesale Costs and Market Dynamics

Lonnie McQuirter, director of operations at 36 Lyn Refuel Station in Minneapolis, notes that margins have become tighter. His station currently offers regular gas at $3.399 a gallon, 18 cents below the metro average, according to AAA. McQuirter attributes price increases to fluctuating wholesale fuel costs, alongside rising credit card fees and pump maintenance expenses.

He stated, “We price based on what we’re able to buy fuel at, and how well we can operate.” He added, “We’re in our stores every day looking our customers in the eye… It really takes a toll when people are having to cut back on certain things in order to afford to live.”

Crude Oil and Refining Costs

According to the U.S. Energy Information Administration, roughly half the price at the pump is determined by the cost of crude oil. Approximately 20% covers refining costs, transforming crude oil into gasoline. Retailers account for nearly 20% of the price, covering transportation, labor, and other expenses.

Retailers’ average markup has been around 38 cents per gallon over the past five years, with stations potentially keeping around 15 cents per gallon after expenses, according to data from NACS and OPIS.

Price Takers, Not Makers

Patrick De Haan, head of petroleum analysis at GasBuddy, draws a parallel to the housing market. “If I was selling a house today, I’d be beholden to whatever the housing market is,” he explained. “That’s the same for gas station owners. Whatever the price of oil and gasoline are, they are a price taker, not maker.”

Regional and Tax Variations

Gas prices vary significantly by state, city, and even station. California’s gas taxes and fees totaled about 71 cents per gallon in 2025, compared to roughly 9 cents in Alaska. Distance from refineries, retailer type, sales volume, and the availability of alternative fuel options also contribute to price differences.

Competitive Pricing Strategies

Gas stations near competitors often use competitive pricing on large outdoor signs to attract customers, hoping they will purchase higher-margin items inside the store, according to Neal Walters, a partner at Kearney. “It’s one of the only retail locations where you don’t have to go into the store to find out what you’re paying,” Walters said.

Limited Gains for Retailers

Despite rising prices, retailers typically don't see substantial gains. Margins shrink as it becomes harder to pass on increased costs quickly. When oil prices fall, retailers may recover some losses, but prices tend to decrease more slowly than they increase.

Garrett Golding, assistant vice president for energy programs at the Federal Reserve Bank of Dallas, notes that higher gas prices can also reduce in-store sales. Ultimately, most profits in the oil and gas supply chain are generated upstream, by companies involved in extraction and refining.