Fuel Prices Near $5 Won’t Dent Store Traffic, Couche-Tard CEO Insists Amid Hormuz Shock Waves

$5 Gasoline Fails to Dent Store Visits, Data Show

• Couche-Tard CEO Alex Miller says $5 pump prices have not cut in-store traffic or merchandise sales.
• WTI crude holds at $95.69/bbl as Strait of Hormuz risk migrates from outright price to record refinery margins.
• Nomura warns China’s refined-product export freeze could remove 2.8% of global crude demand while jet-fuel halt tightens aviation supply.
• Couche-Tard shares slide 3.6% to C$79.97 despite resilient convenience-store performance.

Why pump pain is not yet curbing consumer behaviour—and where the real supply-chain shock is landing next.

STRAIT OF HORMUZ—Gasoline flirting with $5 a gallon has long been the textbook trigger for demand destruction. Yet inside Alimentation Couche-Tard’s 14,000-plus outlets across North America and Europe, cash-register data tell a different story. CEO Alex Miller told analysts that even as fuel approached the psychologically painful threshold, shoppers kept buying potato chips, coffee and car washes. “Our in-store and our merch is performing quite well,” Miller said, a counter-intuitive signal that carries implications from Washington’s inflation debate to OPEC’s pricing power.

The disconnect underscores a deeper shift: after decades when $4 fuel reliably throttled miles driven, post-pandemic commuting patterns and non-discretionary travel are insulating volumes. Meanwhile, the market’s latest supply shock—the de-facto closure of the Strait of Hormuz—has stopped rippling through crude futures and is now amplifying refinery margins, product cracks and regional dislocations, according to Saxo Bank’s Ole Hansen.

Compounding the squeeze, Beijing quietly suspended refined-oil exports, a pre-emptive move Nomura economists interpret as China’s attempt to hoard barrels and stretch strategic reserves to 109 days of import cover. The twin developments leave traders weighing a paradox: resilient demand at the retail level against mounting downstream tightness that could yet translate into record pump prices—and political backlash—this summer.

When $5 Gasoline Stops Scaring Drivers: Lessons from Couche-Tard’s Checkout Data

Alimentation Couche-Tard’s quarterly analyst call delivered a jolt to conventional energy wisdom: higher prices are not synonymous with lower visits. CEO Alex Miller, 46, who steers the Quebec-based retailer with 14,251 stores, said customers “still need to get to work, take kids to school or drive trucks for commerce,” bluntly adding that “thus far during this event, our in-store and our merch is performing quite well.” The statement is anchored in real-time same-store sales that rose low-single digits even as U.S. retail gasoline averaged $4.96 a gallon last month, according to OPIS data cited on the call.

Energy economists have long modelled a -0.3 short-run elasticity of demand, meaning a 10% price jump should theoretically erase 3% of consumption. Yet post-COVID hybrid work has scrambled that formula; commuting is no longer the dominant share of household mileage. “We are seeing structural inelasticity because remote work has removed the easiest discretionary miles—people still drive for healthcare, groceries and child care,” said Mark Finley, fellow at Rice University’s Baker Institute. Couche-Tard’s experience aligns with Federal Highway Administration figures showing vehicle-miles travelled down only 0.8% year-to-date despite a 25% jump in pump prices.

Margin math: why retailers secretly like pricey fuel

There is also a financial twist. Couche-Tard earns cents-per-gallon gross margin, not a percentage markup, so $4 fuel yields roughly twice the dollar margin of $2 fuel. That cash helps subsidize promotions inside the store where gross margins exceed 30%. Miller highlighted beverage bundles and private-label snacks as categories outpacing fuel gallons, suggesting consumers respond by trimming fill-up volume—down 1.4% per transaction—but not basket size. Shares still slid 3.6% to C$79.97 on profit-taking, yet RBC Capital analyst Sabahat Khan calls the traffic data “a bullish signal for c-store earnings resilience.”

The takeaway: policymakers counting on demand destruction to tame inflation may be disappointed. If $5 no longer curbs behaviour, the Federal Reserve may have to lean more aggressively on core services, while OPEC ministers gain room to keep barrels off the market. The next chapter of this story will be written not in Vienna but in Beijing, where export policy is quietly tightening the screws on global product supply.

Why the Strait of Hormuz Shock Is Now Hiding in Refinery Margins, Not Crude Futures

West Texas Intermediate has barely budged—settling Friday at $95.69/bbl—but that calm masks a tectonic shift downstream. “Instead of being fully reflected in outright crude prices, it is now visible in elevated refinery margins,” Saxo Bank’s head of commodity strategy Ole Hansen wrote to clients. The crack spread on 321 barrels, a proxy for refinery profitability, has surged to $42/bbl, the highest since Hurricane Katrina in 2005, according to Bloomberg Fair Value data.

How did the bottleneck migrate? Roughly 20% of seaborne liquefied petroleum gas and 18% of global jet fuel normally transit the Strait. With the chokepoint effectively closed, European plants can’t source Iranian ultra-light condensate, while Asian buyers scramble for U.S. Gulf Coast naphtha. The result is regional dislocation: Northwest Europe naphtha cracks have flipped from -$5/bbl to +$18/bbl in three weeks, a swing traders describe as “epochal” for chemical feedstock economics.

Forward curve steepens as storage fills elsewhere

A steep contango typically signals ample supply; today’s violent backwardation in Brent’s front-month versus six-month spread—now $9/bbl—does the opposite, indicating prompt barrels are dear. “The curve is screaming that product tanks, not crude tanks, are empty,” said Michael Tran, global energy strategist at RBC Capital Markets. Shipping brokers Gibson report clean-tanker rates from the U.S. to Japan jumping 40% since mid-month as traders race to cover distillate shortfalls before summer driving peaks.

The upshot: consumers will feel the sting at the pump even if crude stays flat. Every $1/bbl gain in gasoline crack adds roughly 2.5 cents to retail prices, according to the Energy Information Administration. With cracks up $17/bbl since late May, another 35–40 cents/gallon hike is already baked in—enough to push the national average toward $5.30 by July 4, a level that historically triggers White House SPR release chatter. Yet the lesson from Couche-Tard is that demand may not buckle, leaving Washington with fewer political options and refiners enjoying windfall profits.

China’s Quiet Export Freeze: How a 2.8% Crude Import Cut Could Swing Global Balances

Beijing rarely telegraphs energy policy, so when customs data showed zero jet-fuel export quotas for June, traders assumed a clerical glitch. A research note from Nomura economists Harrington Zhang and Ting Lu corrected that view: China is “suspending refined oil product exports” as a hedge against a prolonged Strait of Hormuz disruption. Under their extreme scenario—an outright ban and no resumption until Q4—China could trim crude imports by 2.8% without impairing domestic supply, while topping strategic petroleum reserves to 109 days of forward import cover from the current 100.

The arithmetic is brutal for markets. China exported 3.5 million tonnes of diesel and 1.3 million tonnes of jet fuel in May; removing those barrels tightens middle-distillate cracks already trading at record levels. Nomura bases the 2.8% figure on refinery run cuts of 600 thousand b/d, equivalent to roughly 0.6% of global crude demand. The bank assumes Russia would keep feeding China ESPO barrels at discounted prices, insulating bilateral flows from geopolitical noise.

Jet-fuel shortage could ground Asia-Pacific air recovery

Jet fuel is the most vulnerable link. China is the region’s largest exporter, and the International Air Transport Association projects Asia-Pacific air traffic reaching 95% of 2019 levels this summer. If Chinese barrels vanish, Singapore jet prices could spike above $150/bbl, a cost airlines would pass through via higher ticket prices, potentially capping passenger growth. “We’ve already seen spot differentials jump to $5/bbl over Singapore quotes, double the seasonal norm,” said Emma Li, senior oil products analyst at Vortexa.

Strategically, Beijing’s move underscores a pivot from revenue to energy security. Days of import cover at 109 would edge China closer to the 90-day threshold recommended by the International Energy Agency, though membership adherence is voluntary. The policy also tightens the screws on OPEC: lower Chinese import demand could mask some of the 1 mb/d pledged cuts, but simultaneous product scarcity keeps crude draws intact. For traders, the headline number—2.8%—may appear modest, yet in a market priced on marginal barrels it is enough to shift balances from slight surplus to deficit, reinforcing the upward trajectory in global cracks and, ultimately, the price motorists pay at Couche-Tard pumps.

What Happens If Refining Windfalls Outlast Consumer Patience?

History offers a cautionary tale: the last time crack spreads exceeded $35/bbl, in 2005, U.S. lawmakers grilled refinery executives on “price gouging” and the House passed the Gasoline Price Gouging Bill within six months. Today’s margin surge is even steeper, yet politicians are oddly quiet. One reason is inventory transparency: Energy Information Administration weekly data show total gasoline stocks at 219 million barrels, only 3% below the five-year average, muting emergency-release arguments.

But public tolerance has limits. Retail prices have risen 55 consecutive days, the longest streak since 2011, and AAA polling finds 71% of voters support a federal excess-profit tax if gasoline tops $5/gallon. “Refiners are making more money per barrel than drillers,” said Tyson Slocum, energy director at Public Citizen. “That inversion invites scrutiny.” Already, California’s legislature is advancing a bill to cap refiner margins at 30 cents/gallon, a move trade group Western States Petroleum Association calls “a recipe for shortages.”

Stranded crude, stranded voters: the political equation

Meanwhile, producers are caught between two narratives. ExxonMobil’s Beaumont refinery just finished a 250 thousand b/d expansion timed perfectly for the margin bonanza, while Chevron’s CEO Mike Wirth told investors “we can’t control product prices, we can only invest in reliability.” Both firms’ shares have outperformed the S&P 500 by 18% this quarter, but campaign strategists predict that if average gasoline crosses $5.50, the White House will revive talk of banning fuel exports—an anathema to Gulf Coast refiners who rely on Latin American demand.

The balancing act is delicate: encourage investment without inviting punitive taxes. One compromise circulating on Capitol Hill is a variable windfall levy triggered only when the 3-2-1 crack exceeds $40/bbl for 30 consecutive days, paired with permitting reform for refinery upgrades. Whether such nuance survives election-year populism is uncertain. What is clear is that the same price resilience benefiting Couche-Tard’s in-store sales today could morph into a political liability for the entire sector tomorrow, especially if Beijing’s export clampdown keeps product markets tight through the peak summer driving season.

Could $6 Gasoline Finally Break Demand Elasticity?

Every energy economist has a breaking-point guess: $5.50, $6, maybe $7 in high-income states. Yet Couche-Tard’s evidence suggests the threshold keeps rising. “We’ve had $5 gasoline in Chicago and San Francisco for weeks, and traffic counts are off maybe 1%,” said Patrick DeHaan, head of petroleum analysis at GasBuddy. His firm’s app data show Friday fill-ups down just 0.7% year-over-year in California despite an average $6.05/gal. The reason is pandemic-era relocation: workers who moved to exurbs during COVID now face 40-mile commutes with no mass-transit alternative, entrenching demand.

Macro hedge funds are betting the inflection lies higher. CFTC commitment-of-traders data reveal speculative short positions in RBOB gasoline futures at a five-year high, wagering that demand destruction finally emerges. Yet if China keeps product offline and the Strait remains impaired, those shorts risk a squeeze. A sustained $6 average would translate into an extra $90/month for two-car families, enough to shave 0.3 percentage points off real disposable income growth, according to Oxford Economics.

Electric vehicles as pressure valve—still too small

EV adoption offers longer-term relief, but the fleet turnover is glacial. Electric cars made up 7.3% of U.S. new-vehicle sales last year; at current growth rates they won’t dent gasoline demand materially before 2028. “The elasticity debate won’t be settled by EVs this cycle,” said Claudio Galimberti, senior vice-president at Rystad Energy. Instead, behavioural shifts—carpooling, off-peak fill-ups, credit-card rewards maximization—will determine whether $6 is the new ceiling or just another milestone on the road to $7.

The forward curve is already flirting with that reality: December 2024 RBOB futures recently traded at $3.75/gal, equivalent to roughly $5.80 retail after taxes and margins. If realized, Couche-Tard’s assertion that “merch is performing quite well” will face its sternest test. Investors, consumers and politicians alike are about to discover whether the post-COVID driving economy is truly inelastic—or merely waiting for one last price shock to break the habit.