"Who" actually determines price at the gasoline pump? CEO *x**n-*o*il, or individual station owner/manager?

Question

Who is/are the actual person(s) responsible for raising/lowering the price of a gallon of gasoline, at your neighborhood service station?

I personally don't believe it's a sole function of supply and demand.

What I believe - and I am unable to substantiate my claim - is that the local owner/manager has nothing to do with determing the price; this comes down from an authority, much higher up in the administrative chain of command of a given oil company.

Does anyone really know what the exact process is, for determining the price of a gallon of gas at the pump?

Alberich

Answer 1

americanfreeman has the right info:

The final price at the pump is set my the station owner/proprietor. Those are the final pennies that he determines are needed for profit either as a larger amount on small quantity sales, or a smaller margin and hoping to make the larger profit in quantity sales.

Factors that go into the price are:

1. The refinery/distributor is going to charge the operator a specified price.

2. Cost of oil on the world market (~40% of our oil comes from OPEC, some comes from domestic sources, much of it comes from Canada and Mexico. OPEC (Oil Producing and Exporting Countries/Cartel) does limit supply to increase demand which raises the price of crude on the open market.

3. Contributing factors to the price include the Federal and State taxes (that's something like $0.18 and $0.37 respectively around here (if I recall the placard correctly)

4. There are refining, storage, and transportation costs involved as well ... (Which I never understood, we are fairly close to some refineries and our prices are significantly higher than those farther inland.)

... along with what are the three other stations kitty-corner to this one and the one up the street charging, (mini-price war)

Answer 2

the actual price is determined by the owner of the station

His cost is based on what the oil companies charge him plus all the taxes and fees on the gas.

The oil companies base their price on what OPEC charges them for oil plus the cost of refinering and transportation.

OPEC bases its price on who will pay the most in a bid situation.

Answer 3

Once oil is pumped from the ground, it can be sold on the spot market, a last-minute trading arena where oil companies and distributors buy and sell to each other, or straight to refiners. After it's brewed into gasoline, the product can again be sold on the spot market, or directly to wholesalers, who in turn can supply their own stations or sell it to other retailers.

Each step of the way, buyers and sellers negotiate a price until, finally, drivers pay the ultimate tab at the pump.

But it's not only about the price of oil. Other costs are a factor -- though they've remained relatively stable.

For example, federal and state taxes added 40 cents to a gallon of gas in the first three months of this year, roughly the same amount as they added four years ago.

Marketing and distribution costs -- the tab for delivering gasoline from refiner to retailer -- were 27 cents to start the year, only 6 cents above the cost four years ago.

Stations pay tens of thousands of dollars for each gas shipment before they see a cent in the register. Eventually, many make only a few cents on a gallon of gasoline.

The profit margin per gallon sold is from about 3 to for cents.