Speedway is being acquired by 7-Eleven for $21 billion. As far as how that acquisition will affect gas prices and the rest of the market, GasBuddy says “it’s tough to know.”
Japanese retail giant Seven & i Holdings (SVNDF) — which owns 7-Eleven and other outlets, including supermarket chain Ito-Yokado and the Sogo and Seibu department stores — says it is the largest in the company’s history. By acquiring Speedway, the Japanese retailer would pick up 4,000 stores and give its operations in North America “a boost.”
Patrick DeHaan, GasBuddy’s Head of Petroleum Analysis, calls the move a “gamechanger.” The effect on the market, however, remains to be seen.
“We’re talking about thousands of stations operated by Speedway, plenty of them across Indianapolis and the Great Lakes. Will they stick to their existing strategy? Will they rebrand Speedway stores? At this point, it’s looking very likely that we will see the Speedway brand die-off in exchange for the 7-Eleven brand. This is a major acquisition,” says DeHaan.
DeHaan says it is going to be a big role for 7-Eleven to fill.
The coronavirus has caused gas stations in Indiana and around the country to take a substantial financial loss, which means you could be seeing them try to recover some of that lost money in the form of a brief increase at the pump.
Last week, some stations in Indiana increased from prices from the low $2 per gallon range to as high as $2.29. That only lasted for a short time.
“If you flinched, you probably missed it. The price in Indiana has fallen 20 cents per gallon in the last month, so stations are kind of itching to restore prices. Their profit margins are very low. Last week, you saw prices try to get some organization, but nobody went along with it. That’s why a few stations went up, but when nobody else did, they brought prices back down,” says DeHaan.
DeHaan says that could be a warning sign.
“Stations may get a little more organized this week and try another price cycle where prices may jump up to $2.25 or $2.29,” says DeHaan.
In Indiana, price cycling means frequent, dramatic price swings that often have nothing to do with the traditional pricing factors that impact the price of gasoline.
Because of the coronavirus, summer gas prices are the lowest they’ve been since 2004.
“For now, heading into the last few weeks of summer, I don’t think we’ll see the national average eclipse $2.25 per gallon, so if you’re making plans for Labor Day, that will mean just about everyone is in the $2 per gallon range, with the exception of California and Hawaii. It won’t be a bad time if you’re choosing to hit the road, as over a dozen states still have average gas prices under $2 per gallon,” says DeHaan.