Where Analysts See a Mysterious Business Model, Motorists Just See Cheap Gas

Industry analysts see an economic mystery while state regulators see possible violations in a network of Trump-aligned cut-rate gas stations that popped up virtually overnight around Philadelphia and on the Jersey Shore at the end of June. The customers, for the most part, just see cheap gas and are grateful for it.“It’s awesome,” a 29-year-old customer, Edwin Torres, told the Washington Post during a fill-up this week. “It’s to the point where 20 cents does go a long way.”The company, operating under the name Freedom Fuel and featuring an American Eagle on its logo, was incorporated in Delaware on June 25 and opened its first 25 outlets just ahead of the July 4 holiday with pump prices as much as 40 cents a gallon below those at nearby stations.The network, according to its website, is a privately owned and “proudly patriotic” company “that answered President Trump’s call to action to lower prices at the pump” and “make filling up more affordable for hardworking families across the greater Philadelphia area.”The start-up got a boost from Mr. Trump himself, who announced July 1 on Truth Social “that a VERY smart Retailer, located throughout the Northeast, is stepping up” by lowering gas prices at its locations clustered mainly around Philadelphia. Five are in New Jersey at West Berlin, Marlton, Egg Harbor and Little Egg Harbor townships, and four have recently been added in the Philadelphia area.While hard-pressed motorists are just happy to save on a fill-up, some industry analysts are questioning the business model, suggesting the prices being charged leave little room for a profit unless the chain somehow locked in a pre-war price on wholesale gas or is receiving a subsidy.Prices at the stations have edged up to within 20 or 25 cents of nearby competitors in recent weeks. But even so, “the stations can make a profit, barely, at this price,” the founder of the fuel supply chain technology firm FuelTrust, Jonathan Arneault, told the Post after his company prepared a report on the company’s business model for the newspaper.The Post also asked a finance professor at Drexel University’s LeBow College of Business, Eliezer Fich, to look at the FuelTrust findings. “Either the fuel genuinely cost them less than it appeared, or someone else was paying the difference,” he told the paper. “My analysis of the report does not reveal which.”The chain has also attracted the attention of New Jersey’s Office of Weights and Measures, which told News 12 New York it is conducting routine inspections at the stations and will “take appropriate enforcement action if it finds violations, as it would with any company that fails to comply with state law.”The office said its inspectors test for pump accuracy, required certifications, compliance with signage regulations, and octane ratings among other things.Eyebrows are also being raised over the owners of Freedom Fuel, who include a former Baltimore Ravens kicking coach, Randy Brown, who served three terms as mayor of Evesham, New Jersey, but has no known experience in retail gas sales. His partner, Yoni Gontownik, has worked for an energy and commodity group Mercuria, and has reportedly supported the pro-Israel organization NORPAC.The company appears to be leasing the stations, which until recently operated under half a dozen other brands. At least of third of them are reported to be owned by Blue Owl Capital, a New York-based investment firm in which Mr. Trump once owned up to $25 million in stock, according to the Post.The Associated Press reports that 14 of the stations are being operated by companies linked to brothers Shamikh and Syed Kazmi, who have been repeatedly sued by firms they had dealings with, according to legal filings cited by the AP.The news agency says a federal judge in New Jersey in February ordered the Kazmis to pay more than $600,000 to a fuel supplier who had accused the brothers of stealing gas after a contract dispute.Whatever its provenance, if the goal of the network was to bolster support for Mr. Trump at a time when the Iran war and high gas prices are depressing his approval rating, it seems to be working.“I love it. I know [Mr. Trump] is going to bring prices down. I have all the confidence in him to do it,” a retired union carpenter, James Limer, told the New York Times in early July.A similar view was expressed to the Times by a 35-year-old Amtrak worker, Kevin Ogden, who saw the discounted gas as an example of the “great things” Mr. Trump is doing for the economy and the country. “This is my first trip to a Freedom Fuel gas station, and it’s great. I just want this plan to keep on going forever,” he said.

Where Analysts See a Mysterious Business Model, Motorists Just See Cheap Gas

Where Analysts See a Mysterious Business Model, Motorists Just See Cheap Gas

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