Gasoline In 2023: Are The Prices At The Pump Working For Anyone?

By Eric H. Karp, Esq., General Counsel To NCASEF

For the standing room only crowd that attended my report at the 2023 NCASEF Convention, I gave an overview of a number of subjects regarding the state of the 7-Eleven system, necessarily focusing on gasoline sales, which over the last several years have been an increasing percentage of SEI’s revenue and profit. The acquisition of the Sunoco and Speedway chains have accelerated this phenomenon.

A few highlights for those who were unable to attend:

  • SEI now has more than 8,200 stores with gasoline, up from approximately 3,376 stores at the end of 2017.
  • SEI gross profit on gasoline sales rose more than tenfold from 2011, rising from $533 million in that year to more than $5.7 billion in 2023.
  • In 2022, more than 78 percent of SEI’s revenue came from the sale of gasoline.
  • SEI gross margin from the retail sale of gasoline rose from 24.09 cents in 2019 to 34.85 cents in 2020—the year in which the pandemic began—an increase of nearly 45 percent. It rose again to 35.77 cents in 2021 and 42.14 cents in 2022.
  • In the three years before the pandemic (2017-2019), SEI’s gross margin percentage from the sale of gasoline, from the combination of its retail and wholesale businesses, averaged 8.9 percent; in the three years since the onset of the pandemic (2020-2022) its average gross margin rose to 12.4 percent.
  • These numbers have consequences because in 2022 SEI’s total revenue from gasoline was $13.6 billion and it sold 6.2 billion gallons.

In its Brief Summary FY 2022* on April 6 2023, SEI ‘s parent company reported that merchandise gross profit in calendar year 2022 was 34 percent, down from 34.2 percent the year before. In explaining this development to investors, it stated the following: “A decrease in gross profit on merchandise was outweighed by growth in gross profit on fuel, leading to a year-on-year increase in the overall gross profit margin factor.”

Something even more interesting has been happening in 2023 which every franchisee should take note of. The balance of this article contains a lot of numbers, but I think it’s important to walk through them carefully and analytically.

Same store retail sales started off strong in January with a 6.4 percent year-over-year increase, but then fell to 4.5 percent in February, 3.3 percent in March, and 2 percent in April. It continued its downward trend through August (the most recent month for which these figures are available) when the same store sales increase was just 0.2 percent.

Here are year-to-date same store retail sales by month through August 2023 compared to the monthly rates of inflation as calculated by the U.S. Bureau of Labor Statistics. The same store sales increase and the rate of inflation for January 2023 were identical. In the ensuing seven months, the rate of inflation was materially higher than the increase in sales.


2023 Same Store Sales v. Inflation
  Sales Inflation
January 6.4 6.4
February 4.5 6.0
March 3.3 5.0
April 2.0 4.9
May 2.3 4.1
June 1.0 3.0
July 1.4 3.2
August 0.2 3.7


The statistics regarding fuel sales are equally concerning. Again, January of 2023 showed a 2.6 percent year-over-year increase in fuel sales dollars. But every month thereafter through August has shown a year-over-year decrease in fuel sales, with the deepest decreases occurring in May, June and July.


2023 Fuel Sales
January 2.6
February (0.1)
March (15.8)
April (18.8)
May (25.6)
June (30.2)
July (23.4)
August (6.6)


A similar story appears with respect to gasoline gallons sold at retail, which were modestly positive in the first quarter but have been negative from April through August. Notice that the retreat in fuel gallons every month from April through August is substantially less than the reduction in fuel sales year-over-year.


2023 Fuel Gallons
January 1.8
February 2.5
March 2.9
April (4.7)
May (4.6)
June (1.1)
July (.07)
August (2.7)


At the same time the retail price at the pump has been increasing. In the first quarter retail prices averaged $3.467 per gallon, in the second quarter $3.613, and for July and August averaged $3.74 per gallon.


2023 Retail Gas Prices
January 3.46 3.467
February 3.44
March 3.50
April 3.70 3.613
May 3.58
June 3.56
July 3.62 3.740
August 3.86


I will leave it to the reader to interpret these numbers, but notice a few things.

  • From March to April, the average retail price was increased by $0.20, but the number of gallons dropped from an increase of 2.9 percent in March to a decrease of 4.7 percent in April, and fuel sales revenue for the month was 18.8 percent lower than the same month the year before.
  • Similarly, the average retail price increased by $0.24 from July to August, and the number of fuel gallons dropped by 2 percent and sales were down 6.6 percent for the month, year-over-year. Are these correlations or simply coincidences?

Thinking about the story that these numbers tell us, raises a number of questions.

  • What would happen if SEI chose to price its gasoline at the pump at reduced levels that would yield gross profit similar to that which it experienced pre-pandemic?
  • Would that not increase the number of gallons sold resulting in elevated revenue to SEI and higher gasoline commissions paid to franchisees, higher transaction counts, and elevated merchandise sales, resulting in additional gross profit split dollars in favor of franchisees and SEI, not to mention the customer goodwill that it would generate?

How about a good faith and transparent dialogue on these questions?

 (* See