The gasoline distribution system in the
By refiners as it leaves the refinery:
so-called "refinery gate" prices.
By refiners or by resellers as it leaves a
distribution terminal: so-called "rack" prices, named after the
super-structure of pipes, hoses,
and manifolds that delivers the product into a tank truck or tank wagon.
By refiners or resellers to retailers at the
gasoline service station: so-called "dealer tank wagon" prices.
Both refinery gate prices and rack prices are influenced primarily by
spot and/or futures prices. At a minimum, rack prices will conceptually
exceed refinery gate prices by the transportation cost to move the gasoline from
the refinery to the terminal, usually by pipeline or by barge.
Dealer tank wagon prices represent the cost of the product to the
gasoline retailer. In addition to reflecting overall market conditions,
dealer tank wagon prices include payments for additional services that a
supplier may provide to a retailer, especially a "branded" retailer -- a
gasoline station that sells gasoline under the name of a large oil company.
These services may include trademark, credit cards, and advertising, as well as
security of supply. Gasoline retail marketing follows a variety of
structures and contractual arrangements. Some gasoline stations, for
instance, are owned by a refiner, but most are leased by the refining company to
an independent dealer. The cost structure also varies, as may the
companies' marketing stance and, hence, its margin.
Pre-tax gasoline retail prices are set by retailers. (The price
on the pump reflects this price plus taxes). Pre-tax prices reflect both
the retailer's purchase cost for the product and the other costs of operating
the retail outlet. They also reflect local market conditions and
factors such as the desirability of the location and the marketing stance of the
owner.