Gas prices fall a sixth straight week, 15% below May peak, even as states raise fuel taxes

Pump prices fell for a sixth straight week and now sit about 15% below their May peak, and at the same time several states are raising their fuel taxes. For c-store operators that is a margin question and a customer-mood question at once. Falling street prices usually widen retail fuel margins for a few weeks before the rack catches up. The tax bump lands on top of that. Haulers feel it first, because diesel taxes go straight into the per-mile cost, and OOIDA's Land Line is already telling drivers their next fill-up could cost more.

The relief is real on the street. AAA Texas says statewide prices should keep falling into the 4th of July. Connecticut dipped below $4 for the first time since April. Whatcom County, Washington, finally dropped under $5. Cheaper gas going into the holiday weekend means more miles driven and more stops, which is the part c-store owners actually care about.

Crude

The reason prices are sliding is supply, not demand. Saudi Arabia looks set to cut its official selling prices now that the Strait of Hormuz has reopened to normal transit. US drillers added oil and gas rigs as Hormuz traffic resumed. Crude sank further as traders bet on more Iranian barrels reaching the market, and China's crude imports are tracking toward their weakest level since 2016.

Iraq is the wildcard. Baghdad is pushing OPEC for a higher quota on the back of a post-war production rebound, and it floated leaving OPEC entirely before sitting down with the EU for energy talks. A bigger Iraqi quota, or an Iraqi exit, could add barrels to a market that is already long. That points to soft crude for a while, which should keep the rack moving down.

C-stores

Bolla Oil launched its first loyalty program across 160 locations. For a chain that size, loyalty is mostly a defensive move, a way to keep fill-up traffic from drifting to whoever is two cents cheaper. Worth watching whether it leans on fuel discounts or pushes inside-store baskets, since that is where Bolla expects to make its margin.

Refining

The labor and outage news cuts the other way. BP refinery workers picketed the company's Chicago headquarters over a lockout now past 100 days, and a long lockout at a major Midwest refinery is a supply risk for the region's product. Overseas, Russia is importing jet fuel from Belarus at almost four times last year's rate after drone strikes knocked out its main Moscow refinery, and Kazakhstan cut gas output after a drone strike on a Russian processing plant. Russia's fuel crunch is pushing the Kremlin toward Kazakhstan for help.

What to watch

Watch the rack against the street. If crude stays soft on Iranian and Iraqi barrels, retail margins could stay fat into July before they compress. Watch the state tax effective dates, since a tax hike landing the same week prices fall can blunt the relief drivers expected. Watch the BP Chicago lockout for any Midwest product tightness. And keep an eye on the California class action claiming stations used software to set pump prices, because a pricing-software case could reach well beyond California.