Key facts
- A new network of gas stations called Freedom Fuel Network is selling gas at prices below wholesale.
- Shell has stated it is not affiliated with the Freedom Fuel Network, despite one station previously bearing its branding.
- Analysts suggest the low prices are unsustainable and likely short-term promotions.
- The pricing strategy has been compared to past marketing stunts by other corporations.
- Wholesale gas prices remain elevated due to the war in Iran, impacting retailers' ability to lower prices.
A new network of gas stations operating under the name Freedom Fuel Network has begun selling gasoline at prices significantly below wholesale, raising questions about the sustainability and origin of these low prices. One station in Brookhaven, Pennsylvania, which previously operated under the Shell brand, is now part of the Freedom Fuel Network. A Shell spokesperson confirmed the company is not affiliated with the new network and that most Shell-branded stations are independently owned and operated by businesses that license the brand.
Analysts suggest that selling gas at or below wholesale prices, without accounting for labor costs and credit card fees, is not economically viable for long-term operation. Tom Kloza, chief energy adviser for Gulf Oil, stated that such stations would likely have to close or dramatically increase prices. He also noted that some states have laws against selling gas below market rates to protect smaller competitors, though these are rarely enforced for short-term promotions.
Patrick De Haan, head of petroleum analysis at GasBuddy, described the coordinated overnight change in branding and pricing across multiple stations as highly unusual. He drew parallels to a T-Mobile promotion earlier in June, where the mobile carrier offered discounted gas at select stations. However, a T-Mobile spokesperson denied any involvement with the Freedom Fuel Network.
Retailers are currently facing challenges with elevated wholesale fuel prices, partly attributed to the war in Iran. According to Blomgren from the New Jersey Energy Marketers Group, the wholesale price of gas is approximately 80 cents per gallon higher than before the conflict began, even as crude oil prices have stabilized. This situation limits retailers' ability to lower prices, despite potential pressure from consumers.