What goes into the pump price
- The product cost, usually tied to the wholesale rack price at a nearby terminal.
- Freight to deliver the fuel from the terminal to the station.
- Taxes: the federal excise tax on diesel is 24.4 cents a gallon, and each state adds its own.
- The retailer's margin, which covers the station's costs and profit.
Retail-minus
A retail-minus discount takes a fixed amount off the posted pump price. If the pump reads $3.89 and the discount is 20 cents, you pay $3.69. It is simple to read, and the price you pay still moves with the posted price.
Cost-plus
A cost-plus price starts from the station's cost and adds an agreed margin. As an example, a rack price of $2.60, plus freight, plus federal and state taxes, plus a fixed margin, gives the price you pay. It follows wholesale prices closely, so it does not depend on how high the posted price is set that day.
Which saves more
When retail margins are wide, cost-plus usually comes out lower, because the posted price sits far above cost. When margins are thin, a large retail-minus discount can win. The fair comparison is the net price per gallon you would have paid on the same days at the same stops.
Watching regional prices
Diesel prices differ by region and move week to week. The U.S. Energy Information Administration publishes weekly average retail diesel prices by region, which helps put a local price in context.
Source: EIA weekly retail diesel prices
