The Iran war has caused U.S. gas prices to skyrocket, creating enormous uncertainty for fuel companies and convenience retailers.
Prices last week jumped by 27 cents to $3.25 per gallon, the largest spike in the national average since the start of the Russia-Ukraine war in 2022, according to the American Automobile Association. A catalyst for the spike is ship traffic halting in the Strait of Hormuz, through which about 20% of the world’s oil travels.
In an interview with Reuters last week, President Donald Trump said he wasn’t concerned about rising gas prices driven by the war, saying that “they’ll drop very rapidly when this is over, and if they rise, they rise.” Meanwhile, in an interview on CNN’s State of the Union on Sunday, Energy Secretary Chris Wright said the price spike is likely only to be a short-term issue.
“You never know exactly the time frame of this, but in the worst case, this is a weeks, not a months, thing,” Wright said.
For now, convenience and fuel retailers in the U.S. probably don’t need to worry about the volatility, which, in the short term, should enable “the street to catch up with the [wholesale] rack,” which benefits fuel marketers, said Tom Kloza, senior energy advisor for Gulf Oil. He added that U.S. convenience retailers have been expecting prices to rise even before the war began, since operators are moving onto spring and summer gasoline blends that are more expensive.
“High gas prices in particular can be regarded by tens of millions of consumers as the ‘Great Satan’ of the U.S. economy.”
Tom Kloza
Senior energy advisor, Gulf Oil
However, in the coming months, the spikes in gasoline — as well as diesel, heating oil and jet and marine fuel — will likely raise inflation, he noted.
“The notion of American sacrifice for getting rid of a global terrorist regime sounds splendid, but American citizens are not exactly altruistic these days,” Kloza said in a statement to C-Store Dive. “High gas prices in particular can be regarded by tens of millions of consumers as the ‘Great Satan’ of the U.S. economy.”
During a press conference last week, petroleum analyst Patrick De Haan offered a similar sentiment, saying he doesn’t think the situation warrants “any sort of high-level disruptions” yet. When asked specifically how convenience retailers should react to the uncertainty, De Haan emphasized the need to keep tabs on every development.
“The price fluctuates on a per-gallon basis throughout the day, so staying on top of these changes is really critical,” De Haan said.
De Haan noted that retailers using modern fuel pricing approaches, such as LED sign boards that integrate directly with other systems to enable faster price changes, will be better suited to adapt to the volatility and “manage what’s happening in such a quick-pace environment.” Other fuel-related technologies becoming popular in the industry include live fuel pricing feeds and demand forecasting tools.
“Speeding up and not delaying decisions, making those decisions in an automated fashion, certainly can be some great tools when you see a lot of uncertainty like we are now,” he said.
