How a Fuel Price Surge Changes Feasibility for Gas Stations, Car Washes, RV Parks, RV Storage and Hotels
Diesel is above $6 a gallon for the first time, gasoline is back near $4.50, and the Federal Reserve has just raised rates because of it. For the asset classes that live off the American road trip, the pump price turns out to be the least important of the three ways this shock reaches a loan.
On 11 September 2026 the national average price of diesel crossed $6.00 a gallon for the first time in the AAA record (1). Eight days later regular gasoline stood at $4.48, roughly $1.15 above where it was a year earlier and $1.50 above the last week of February (1)(2). In between, on 16 September, the Federal Open Market Committee raised its target range by a quarter point, its first increase since July 2023, and the large banks moved Prime to 7.00% the following morning (3).
Most of what has been written about this for roadside real estate stops at one question: will people drive less? That is a fair question and we answer it below, with numbers. It is also the wrong place to stop, because a lender does not underwrite traffic. A lender underwrites debt service coverage, and a fuel shock reaches that ratio by three separate routes. It changes what the property earns. It changes what the project costs to build. And, through inflation and the Federal Reserve, it changes the rate on the loan.
When we trace all three routes across the asset classes we study most often for SBA 7(a), SBA 504, USDA Business and Industry and conventional lenders, the ranking that comes out is not the one most people carry in their heads. The gas station, which everyone assumes is the casualty, tends to earn its best unit margins on the back half of a price spike. The interstate motel is hurt less by the pump than by the recession a fuel shock can bring. And the asset with no engine anywhere in its business model, an open paved RV storage yard, can lose more coverage than any of them, because its budget is mostly asphalt and its loan usually floats on Prime.
This article sets out the evidence. It is long because the argument has several moving parts, and because we would rather show the arithmetic than ask a credit officer to take it on trust.
Five findings, stated plainly:
The 2026 shock should be underwritten as a plateau that runs through 2027, not as a spike that is already fading. Diesel is the longer leg.
Driving falls by single digits in a fuel shock, not by double digits. The miles that disappear are rural, discretionary and long-haul, which is precisely the customer base of several of these assets.
For fuel retailers the shock is a cash and volume problem before it is a margin problem. Unit margins narrow while prices climb and widen when they fall.
For RV parks and hotels the label on the asset tells you little. The stay mix and the distance to the feeder market tell you nearly everything.
On a ground-up, paving-heavy project financed with floating-rate debt, the cost and rate channels can take more out of debt service coverage than the demand channel does. In our worked example they take a 1.25x project to 1.11x with no change in revenue at all.
The 2026 shock in numbers
Start with gasoline. The AAA national average was $2.98 on 26 February, before the conflict with Iran shut most traffic through the Strait of Hormuz. It passed $4.00 on 2 April, the first time since August 2022, and peaked at $4.56 on 21 May (1). A ceasefire in April took some pressure off, and by early July the average had slid back to about $3.81. Then the fighting resumed around the Gulf and the Red Sea. On 11 September a drone attack shut the Saudi East-West pipeline, the main route for crude around Hormuz. Brent went back above $100 and the pump followed within days: $4.27 on 10 September, $4.48 on the 19th (1)(4)(5).
Diesel is the sharper story. Before the war it sold for about $3.70. The weekly on-highway average published by the Energy Information Administration ran $5.599 on 31 August, $5.967 on 7 September and $6.285 on 14 September, the highest reading since the series began in 1994 and well past the previous record of $5.81 set in June 2022 (2). Against a year earlier, diesel is up by roughly 63% (1)(4). Crude explains only part of that. The rest is a shortage of refined product: refineries running close to full utilization, Russian export bans and damaged Russian plants, and U.S. distillate inventories about 13% below their five-year average (6)(4).
Two features separate this episode from 2022. The first is speed. In 2022 gasoline took sixteen weeks to rise 42%, from $3.53 to $5.01 (7). In 2026 it rose by roughly half in under three months. The second is that this is a diesel-led shock. That matters for our purposes because diesel is the fuel of freight, of construction equipment, of the large motorhome and of the pickup that tows a fifth wheel. A gasoline shock lands on commuters. A diesel shock lands on truck stops, on site contractors and on the top end of the RV market.
Spike or plateau: duration is the underwriting variable
A 25-year note does not care about one bad month at the pump. It cares about how long the bad months last. History offers three shapes.
The 2008 episode was a spike. Regular gasoline reached $4.11 in July and was under $1.70 by December, because the financial crisis destroyed demand faster than any supply response could have (8)(9). The 2022 episode was also a spike, if a slower one: $5.01 in mid June, $3.09 by the end of the year (7).
The years 2011 to 2014 were something else. The national average sat between roughly $3.50 and $3.70 for three years. Nobody remembers a single dramatic week, which is why the period is underrated. In real terms 2012 remains the most expensive year on record for American motorists: an annual average of $3.62 then is about $5.07 in today's money (10). That plateau ended only when shale output and a Saudi price war broke the crude market in the second half of 2014 (8).
Measured the same way, 2026 gasoline is still below both the 2008 and 2012 peaks. Diesel is at a nominal record, though our CPI adjustment of the EIA series puts the 2008 diesel peak near $7.20 in today's money, so even diesel has been here before in real terms. This is a serious shock. It is not an unprecedented one.
Which shape is it? The cause points toward a plateau. A demand-driven spike corrects itself, because high prices are the cure for high prices. A supply shock waits for the supply to come back, and this one involves a closed strait, a damaged bypass pipeline and refineries that cannot run any harder. The EIA's September outlook, published on the 9th, has gasoline averaging $3.84 in 2026 and $3.35 in 2027, diesel averaging $5.07 and $4.40, and Brent falling from $91 to $74 (6).
Two details in that forecast deserve more attention than they have had. The agency raised its 2027 diesel number by 33 cents in a single month, because it now expects distillate inventories to sit below the five-year low through much of 2027. And it froze its model inputs on 3 September, eight days before the pipeline attack (6). The official view, in other words, is easing without reversal, with diesel elevated for another year, and that view predates the latest escalation.
Even if the forecast is exactly right, $3.35 gasoline in 2027 is 8% above the 2025 average of $3.10, and $4.40 diesel is 20% above the 2025 average of $3.66. We therefore treat elevated fuel as a base case through 2027 in current studies, and we treat diesel as the longer leg of the two.
How much driving actually falls
Less than intuition suggests. The standard reference is a meta-analysis by Brons, Nijkamp, Pels and Rietveld, which puts the mean short-run price elasticity of gasoline demand at -0.34 and the long-run figure at -0.84 (11). Later work on U.S. data found the short-run response had become much weaker: Hughes, Knittel and Sperling estimated it at between -0.034 and -0.077 for 2001 to 2006, against -0.21 to -0.34 in the late 1970s (12). A defensible working range is -0.1 to -0.3. In plain terms, a 50% jump in price cuts gasoline use by somewhere between 5% and 15% in the first year. People still have to get to work.
The record agrees. In 2008, the cleanest experiment we have, vehicle miles traveled fell 3.5% through October, about 90 billion miles, and gasoline consumption fell 3.3% for the year. Rural travel fell by more than urban travel (9).
That last point is where the national averages stop being useful. The burden of a fuel shock is steeply regressive. In 2022 the lowest income quintile spent about 10.9% of pre-tax income on gasoline, against 1.9% for the highest (13). Rural households drive roughly 24,465 miles a year, about half again as much as urban households, and put around 20% of their budget into transportation against 13% in cities (14). One caution: the Bureau of Transportation Statistics has found that, within a given income group, the rural and urban difference in income share is not statistically significant, even though the difference in miles clearly is (15). Both statements are true and a careful study should carry both.
Why does this matter for real estate? Because the customer of a rural convenience store, a highway RV park or an economy motel at an interchange is disproportionately this household. A national elasticity of -0.2 understates what happens to the long discretionary trip taken by a family that already spends a tenth of its income on fuel. The commute survives. The 600-mile weekend does not.
Three channels, not one
Here is the frame we use for the rest of the article.
Channel one is operations. Fuel prices change demand, unit margins and operating costs. This is the channel everyone talks about. It moves the numerator of the coverage ratio.
Channel two is project cost. Liquid asphalt, diesel for earthmoving and hauling, PVC pipe and roofing membranes are all petroleum products or petroleum-dependent. When crude rises, a site-heavy project costs more to build, and the loan gets bigger.
Channel three is debt cost. An energy shock feeds headline inflation. Headline inflation moves the Federal Reserve. The Fed moves Prime, and Prime is the base rate on most SBA 7(a) loans. The rate on the loan goes up.
Channels two and three both work on the denominator, and they compound: a larger loan, at a higher rate on every part of it. An existing, stabilized property with fixed-rate debt faces only the first channel. A ground-up project with a floating-rate loan faces all three at once. Most of the feasibility work that SBA and USDA lenders commission is for ground-up construction or for acquisitions with new debt, which is why we think the single-channel conversation misses most of the risk.
The next six sections take the asset classes one at a time through the first channel. The capital channels, which are common to all of them, follow.
Gas stations and convenience stores: a liquidity problem before a margin problem
The instinct is that a station suffers when fuel is expensive. The filings say something more interesting.
Retail fuel margins run against the price cycle. When wholesale costs jump, operators cannot raise the street price as fast, because the sign on the corner is the most visible price in American retail and the customer is suddenly paying attention. When wholesale costs fall, the street price follows slowly and the margin opens up. The Federal Reserve Bank of Dallas described exactly this in May 2022, noting that stations on the way down were recovering margin they had given up on the way up (16). The Bureau of Labor Statistics measured it in the fourth quarter of 2014: crude fell 36.4%, retail gasoline fell 24.5%, and the producer price margin index for fuel retailing rose 41.0% (17).
The 2022 episode shows the sequence in one company's quarterly reports. Murphy USA earned a retail fuel margin of 23.3 cents per gallon in the first quarter, as prices climbed after the invasion of Ukraine. It earned 26.5 cents in the second, when prices peaked. In the third quarter, with the pump price falling, it earned 39.3 cents (18). The year as a whole, record prices and all, produced an all-in margin of 34.3 cents that the company itself called exceptionally strong.
The pattern has repeated this year. Murphy's retail margin was 25.4 cents in the first quarter of 2026, while prices rose, and 35.1 cents in the second, after the May peak. Its all-in contribution, which includes a supply business that benefits from rising prices, was 35.0 and 40.6 cents (19). Casey's reported 47.8 cents for the quarter that ended on 31 July, with same-store gallons down only 0.3% (20). Arko lost 5.7% of its gallons in the second quarter and still raised its full-year retail margin outlook to between 45.5 and 47.5 cents, telling investors that margin would more than cover the lost volume (21).
So where is the problem? It is in timing and in cash.
During the climb, the margin really does vanish. In September 2026 the National Association of Convenience Stores said retail gross margins had narrowed by about 15 cents a gallon, which is roughly what a typical operator nets in a normal year (22). A large chain can wait a quarter for the down-leg. A single-site borrower has to make a loan payment in the meantime.
Card fees scale with the price. The industry paid $21 billion in swipe fees in 2024, more than 80% above the 2020 figure, and card fees averaged 8.4 cents a gallon in 2023 (23). Interchange is mostly a percentage of the sale. At an average credit rate near 2.36%, the fee on a gallon is about 7 cents at $3.00 gasoline and nearly 11 cents at $4.48. That is three to four cents of margin gone on every credit gallon, with no change in anything the operator controls. Murphy attributed about two-thirds of the growth in its second quarter operating expenses to payment fees for this reason (19).
Inventory absorbs cash. The same gallons in the ground cost about 50% more at $4.50 than at $3.00. A chain funds that on a revolver. An independent funds it out of the operating account, often while the jobber is shortening terms.
The store softens. This is the part that gets the least attention and deserves the most. In the NACS figures for 2024, fuel was 65.0% of convenience store sales and only 38.8% of gross profit. Foodservice was 28.5% of inside sales and 38.9% of inside gross profit (23). The pumps bring the customer in. The kitchen and the cooler pay the mortgage. When a fill-up costs $70, the customer buys less inside. Murphy said in the first quarter that spending in discretionary categories was restrained and slightly below the prior year (19), and transactions per store across the industry were already down 2.7% in 2025 before this shock began (23).
What this means for a gas station feasibility study is that format decides the outcome. A discount, high-volume site that earns under 30 cents a gallon and sells little food has nowhere to hide while prices rise. A food-led site earning more than 40 cents with a real kitchen can absorb the same shock. We underwrite the fuel margin at a through-cycle figure, never at the fat quarter that follows a peak. We size a working capital line against inventory at the stress price. We compute card fees at the pump price in the projection year. And we take inside sales down by mid single digits in the shock year. One structural point cuts the other way and should be stated: NACS data show industry fuel margins above 35 cents since mid 2019, against break-even pool margins under 20 cents in 2009 (23). The swing now happens around a higher base than it did in the last plateau.
Travel centers: the diesel half of the shock
Everything said above about gasoline applies to a travel center, with two differences that make it the most exposed asset in this group on the operating side.
The first is that diesel margins are thin to begin with and most of the volume is sold at a discount. TravelCenters of America, in its last year as a public company, reported fuel gross margins of 22.7 cents a gallon in the third quarter of 2022 and 29.8 cents in the fourth, against a break-even that analysts placed near 16 cents. Fuel was about $8.7 billion of its $10.8 billion in revenue and a much smaller share of its gross profit (24). The bulk of those gallons moved through fleet card and rebate programs, which carry their own fees. For a sense of scale, Berkshire Hathaway's 2025 report shows Pilot earning $190 million before tax on $42.2 billion of revenue and roughly 10.9 billion gallons. That is less than two cents a gallon. It needs a caveat: Pilot's 2025 weakness came from falling prices and lower wholesale volumes, the opposite of today's conditions, and the 2026 shock is not yet in any of its disclosures (25). The point is only that the business has very little margin to give.
The second difference is freight. A travel center sells to trucks, and trucks move when there is freight. The American Trucking Associations' tonnage index reached 117.0 in March 2026, up 3.0% on the year, then contracted 4.1% across April and May and stood at 113.1 in June, fractionally below the year before (26). Large contract carriers pass diesel through in surcharges. Small spot-market carriers cannot, and they are the ones that park trucks. A diesel shock therefore hits a travel center's pro forma twice, through the margin and through the gallons, in a way that it does not hit a gasoline-focused convenience store.
In a travel center study we stress both at the same time: diesel margin near break-even and gallons down by mid single digits, because in a diesel shock those two things arrive together. We also ask whether the restaurant, the store, the showers and the service bays can cover fixed costs on their own for a year. If fuel is more than about 80% of projected revenue and the non-fuel offer is thin, the project is fragile at $6 diesel however good the interchange is.
Car washes: the membership base does the work
A car wash looks like it should be fuel-sensitive. It serves drivers, it is discretionary, and it often sits next to a pump. The evidence says it is mostly insulated, and the reason is the subscription.
Mister Car Wash ended 2025 with nearly 2.3 million members, up 7% in the fourth quarter, and subscriptions accounted for 77% of wash sales (27). The International Carwash Association's survey for the second quarter of 2026 found that 91% of unlimited members intended to renew, and close to two-thirds of operators reported rising membership sales, the first rebound since early 2025 (28). A member pays the same $30 a month whether gasoline is $3 or $5.
The weakness is in the drive-up customer. Mister's management has described retail wash comparisons falling at a low double-digit rate, concentrated in lower-income locations (27). That is the same household we met in the Consumer Expenditure data. On the cost side, water and power run from 5% to 20% of operating expense depending on the format, so an energy shock adds a little to the expense line.
Our view is that fuel is not a first-order variable for an express wash. Saturation is. A site underwritten on membership at two-thirds or more of volume is largely protected. A site that depends on drive-up capture in a lower-income trade area is exposed, to the consumer and to the competitor down the road. The larger effect of this shock on a new car wash comes through the capital channels discussed below, because the stacking lanes, vacuum aprons and drives are far larger than the tunnel building, and all of it is paving.
RV parks: the stay mix decides the exposure
We have the advantage of a recent natural experiment here. Kampgrounds of America surveyed campers every month through the 2022 spike. In April of that year, 71% said fuel costs would affect their camping decisions. The most common responses were to camp closer to home (32%), to take fewer trips with longer stays (25%) and to take fewer trips altogether (24%). By November, at least 74% had changed their plans in some way. But three in ten had camped more, not less, and 39% of those had canceled some other kind of trip in order to go camping (29).
That is the central behavioral fact for this asset class. Camping is what people trade down to. When flights and hotels get expensive, some of that spending moves into a campsite within a tank of gas of home. The 2026 data point the same way. KOA counts more than 52 million households camping in 2025. Campspot reports an average trip distance of 378 miles and a median stay of three nights on its platform, and describes travelers this season choosing a similar destination inside a four-hour radius when their first choice is out of reach (30)(31). The same KOA report carries a warning, though: RV camping fell to 47% of trips, the lowest share it has recorded, and the number of households that went RVing is 14% below 2019 (30).
The public REITs show where the pressure lands. At Equity LifeStyle Properties, first quarter 2026 seasonal rent fell 14.8% and transient rent fell 6.9%, while annual RV rent rose 4.2%. In the second quarter seasonal fell 11.2%, transient fell 8.9% and annual rose 5.4%, and the company cut its full-year growth guidance for RV and marina base rent from 2.4% to 1.6% (32). Sun Communities saw transient RV revenue fall by about 9% in 2025 and guides to a decline of 1.5% in 2026, while annual RV revenue grew 8.1% in the third quarter of 2025 (33). Management at both companies attributes much of the weakness to weather, to Canadian wildfire smoke and, at Sun, to the deliberate removal of transient sites. We accept that. Fuel is compounding a normalization that began after 2021. It is not the only cause. For an underwriter the conclusion is the same either way: the transient line is the volatile one and the annual line keeps growing.
From that, three archetypes, in descending order of exposure.
The overnight highway park. Its revenue is one-night stays by people covering distance. Those are the trips that get shortened or dropped. This is the most exposed park type, and it is often the one proposed next to a new travel center.
The destination resort. Guests drive a long way to reach it, which hurts, but they stay longer, which spreads the fuel across more nights. The diesel split matters here. A large diesel motorhome or a pickup towing a fifth wheel might manage ten miles to the gallon. On a 1,000-mile round trip that is 100 gallons: about $630 at today's diesel price against about $370 a year ago. A guest in a gas Class C feels perhaps half of that increase. Resorts that depend on big rigs from 500 miles away are more exposed than resorts that draw small rigs from 200.
The seasonal and annual park. One long trip a year, amortized over months. The decision looks more like housing than travel, and the fuel price barely enters it.
On the supply side, the manufacturers have already reacted. RV wholesale shipments were 342,200 in 2025. The industry association's summer 2026 forecast cut the year to a median of 314,000 units, down 8.2%, with shipments off 13.5% through April and 18.7% in May alone (34). We would not pin that on fuel alone. Financing costs and leftover dealer inventory are doing at least as much of the work. Meanwhile the owned fleet, which is what fills sites, is large and slow to change: 8.1 million households under the 2025 Go RVing methodology, with median use rising to 30 days a year (35).
In an RV park feasibility study written this year, we take transient revenue down by high single digits to low teens in the shock year, in line with what ELS and Sun have actually reported. We give credit for a seasonal and annual share above 50%, and we note that Sun has recorded revenue per site rising 40% to 60% in the first full year after converting a transient site to an annual lease (33). We also split the demand analysis by distance, modeling the feeder market inside 250 miles separately from the one beyond 500.
RV storage: rent follows the fleet, not the odometer
RV storage is the cleanest illustration of why the three channels have to be kept apart, because on the first channel it is almost untouched and on the other two it is the most exposed asset in this article.
Demand for storage is a function of how many RVs and boats people own, and where they are allowed to park them. It has very little to do with how many miles they drive. A motorhome that stays home because diesel is $6 still needs a space. KOA's own chief executive has observed that owners are using their rigs less (30). They have not stopped paying to store them.
The parking rules are getting tighter, not looser. In 2024, 65.7% of new single-family homes were built in community associations, according to the home builders' analysis of Census data, and most of those associations restrict RV parking on the lot (36). Yardi Matrix reported RV and boat parking rents up 4.4% year over year in September 2025, the strongest reading since it began tracking the segment, at a time when RV registrations were falling and conventional self-storage rents were flat to negative. It counted 1,937 dedicated facilities in mid 2025, with the construction pipeline shrinking from 3.3% of inventory to 2.3% over a year (37). Industry underwriting benchmarks put stabilized occupancy between 85% and 92%, break-even between 40% and 50%, and lease-up at 18 to 36 months. Those are advisory benchmarks. No one publishes a national occupancy series for this segment, and a study should say so (38).
We would describe RV storage as defensive. We would not describe it as counter-cyclical, and the distinction matters. Conventional self-storage has an engine that runs harder in bad times: death, divorce, downsizing and dislocation all create tenants. Recreational storage has no such engine. In a deep downturn some owners sell, lenders repossess, and a sold unit vacates its space. One in ten RV owners told KOA in April 2022 that they would consider selling if fuel stayed high (29). The tail risk for a storage project is a recession that shrinks the fleet, and the indicators worth watching are RV loan delinquencies and the owner count. The pump price is not one of them.
So much for the revenue side. The reason RV storage still ends up near the top of our exposure ranking is that an open storage yard is, physically, a parking lot with a fence. Almost its entire hard cost is grading, drainage, paving and lighting. We come back to that after hotels.
Hotels and short-term rentals: one flag, two different hotels
The academic starting point is a Cornell study by Canina, Walsh and Enz, which found that across U.S. branded hotels from 1988 to 2000 a 1% rise in gasoline prices went with a 1.74% fall in rooms sold (39). That number is quoted often and should be handled with care. It rests on twelve annual observations. And the authors' own breakdown shows the effect sitting almost entirely in economy and midscale hotels in highway, suburban and resort locations. Urban and upper-upscale hotels showed no meaningful response (39)(40). A later Cornell paper by Corgel and Lane ran oil price scenarios through a forecasting model and found that at $150 oil, RevPAR growth at suburban and interstate hotels was cut roughly in half, against about a quarter at resorts. Their rule of thumb was that travel demand holds up as long as oil stays under about $125 a barrel and gasoline under about $4.50 (41). Gasoline is sitting on that second threshold now.
Practitioners are more skeptical than the academics. STR's analysts have said for years that they cannot find a dependable link between gasoline and hotel demand, even at interstate locations. Their March 2022 work put the correlation between real gas prices and room demand since 1990 at 0.54, and the correlation with real RevPAR at 0.16 (42)(43). Then 2022 made the point for them. Gasoline hit a record and U.S. hotels posted an average rate of $148.83 and RevPAR of $93.27, both the highest on record at the time. The one segment that softened was economy, where occupancy began falling in April (42). The collapse that everyone remembers, 2009, when RevPAR fell 16.7% to $53.53, was a recession, and luxury fell hardest in it (42).
We draw two conclusions. First, the direct effect of the pump price on hotel demand is small and sits in one corner of the market. Second, that corner is exactly where SBA hotel lending is concentrated: limited-service, economy to upper-midscale, at interchanges and in small towns. And the real danger in a fuel shock is the recession it can trigger, which is a different and much larger stress.
There is a force working the other way. When oil rises, airfares rise faster than the cost of driving. The average domestic round trip reached about $623 in April 2026, and autumn fares have been running 39% above last year (44). Road travel is inelastic to fuel and air travel is not (40). People do not stay home. They switch from a flight to a drive, and from far to near. AAA forecast a record 72.2 million travelers over the Fourth of July this year, 61.4 million of them by car (45).
That is why we say the same flag can hang on two different hotels. One is the pass-through property at a rural interchange, selling a bed to someone in the middle of a 900-mile drive. Every additional tank is a direct cost of that trip, and the trip is the first to be shortened. The other is the regional drive-to property within about 300 miles, or three to four hours, of a large metro. For that hotel, expensive airfare is a source of demand. A hotel feasibility study that treats both as "limited-service, interstate" has missed the variable that matters.
Short-term rentals sit further toward the protected end. Stays run a little over four nights, about twice a hotel's, which spreads the cost of getting there (46). In 2022 the fastest demand growth in AirDNA's data was in drive-to coastal markets in the Northeast, with Long Island and Cape Cod at the top, while Florida lagged. AirDNA put part of that down to seasonal closures, so it is suggestive, not proof (46). Fly-to rental markets carry the airfare problem in full.
The cost side needs a line of its own. CBRE recorded hotel utility costs rising 21.4% per available room in 2022, the sharpest increase in its series. In 2024 the average was $2,478 per available room. Limited-service hotels spent the least in absolute terms, about $1,446, and the most as a share of revenue, around 4.0%, against 2.9% at resorts (47). A property with RevPAR in the $50s has very little room for a 20% increase in its energy bill, and the 2026 forecast already has economy rates flat to negative in a year when industry RevPAR is expected to grow 0.6% (48).
The capital channels: what the shock does before opening day
Everything so far concerns a property that already exists. A project that has yet to be built meets the shock earlier, in its budget and in its term sheet.
Project cost. Liquid asphalt binder is what is left at the bottom of the barrel after refining, and its price follows crude closely. State transportation departments publish monthly indexes because their paving contracts adjust to them. Louisiana's index for PG 64-22 binder went from $562 a ton in February 2026 to $706 in September, a rise of 25.6%, after peaking at $717 in June and July (49). Oregon's Portland index rose from $458 to $613 between February and August, up 33.8%, and its Boise index rose 27.6% (50).
A word of caution, because this is where loose analysis goes wrong. Binder is a small part of hot mix by weight and a much larger part of its cost, but it is not the whole cost. The national producer price index for finished asphalt paving mixtures rose 5.0% between April and August 2026, not 30% (51). Add diesel for the pavers, rollers and haul trucks at a 63% premium to last year, and an installed paving scope that is 8% to 12% dearer than the January estimate is a reasonable planning figure. Contractors are quoting with shorter validity periods for the same reason.
How much that moves a budget depends on how much of the budget is pavement. For an office building or a four-story hotel it is a rounding error. For the assets in this article it is not. Industry guidance puts an open, paved RV storage yard with drainage and fencing at roughly $400,000 to $500,000 an acre before land, and nearly all of that is sitework (38). Developing an RV site, with its share of roads, pad and utilities, runs from $15,000 to $50,000. In our own cost build-ups, hard construction is about 52% of a gas station budget, with the forecourt, the drives and a tank system that alone costs $200,000 to $350,000 before installation, and sitework is one of the largest lines in a tunnel car wash, where the stacking lanes and vacuum apron cover several times the footprint of the building (52).
Debt cost. On 16 September the FOMC voted 12 to 0 to raise the federal funds target range to 3.75% to 4.00%. Its statement said inflation remains elevated and cited geopolitical developments. Sixteen of eighteen participants now expect at least one more increase this year. In March, the same committee had been projecting cuts (3). The banks took Prime from 6.75% to 7.00% effective 17 September (53). The link to fuel is direct. August consumer prices were up 3.4% on the year, with the energy index up 16.3% and gasoline up 27.4%, and gasoline alone accounted for more than a third of the monthly increase (54).
Most SBA 7(a) loans float, and most of them reset quarterly against Prime. The maximum rate on a variable 7(a) loan above $350,000 is the base rate plus 3.0 percentage points, which is 10.00% today, with higher spreads allowed on smaller loans, up to Prime plus 6.5 points at $50,000 and under (55). Strong borrowers price inside the cap. They all price off the same base.
Here is what a rate does to a 25-year loan of $2.0 million. Annual debt service is about $185,000 at 8.0%, $201,000 at 9.0% and $218,000 at 10.0%. Two points of rate is $33,000 a year, or 18% more debt service. A project with coverage of 1.25x at 8.0% has coverage of 1.06x at 10.0% on the same income.
The two together. Consider an open RV storage project that a sponsor budgeted in January at $3.0 million, including $1.1 million of paving and sitework, to be financed at 80% of cost. In January, with the Fed projecting cuts, a rate of 8.50% was a fair assumption. Projected net operating income is $290,000, which gives coverage of 1.25x. Now reprice it. Paving and sitework come in 10% higher, adding $110,000 to the budget and $88,000 to the loan. Prime is 75 basis points above where the sponsor expected it to be, with one more increase likely, so the rate is 9.50%.
Case | Loan | Rate | Annual debt service | DSCR on $290,000 NOI |
January budget | $2,400,000 | 8.50% | $231,900 | 1.25x |
Cost increase only | $2,488,000 | 8.50% | $240,400 | 1.21x |
Rate increase only | $2,400,000 | 9.50% | $251,600 | 1.15x |
Both | $2,488,000 | 9.50% | $260,900 | 1.11x |
Revenue has not moved in any of these cases. The tenants are the same, the rents are the same, occupancy is the same. The project has gone from a comfortable approval to the wrong side of most lenders' minimum, and to get back to 1.25x it would need 12% more net operating income than the market study supports. About two-thirds of the damage comes from the rate and a third from the pavement. This is what we mean when we say the capital channels can outweigh the demand channel. For RV storage, where the demand channel is close to zero, they are the whole story.
The structural answer. The SBA 504 program funds 40% of a project with a debenture that is fixed for its full term and priced off Treasuries, not Prime. The effective rate on the 25-year debenture was 6.54% in September 2026 (56). That is higher than the 5.85% available in January, because the 10-year Treasury went through 5% on 14 September for the first time since 2007 (56)(57). But a borrower who closes on it is finished with the third channel for that portion of the capital stack. In a year when the central bank has swung from projecting cuts to delivering increases in the space of six months, that certainty is worth more than it usually is. For the real estate-heavy, paving-heavy projects in this article, we expect to see the 504 structure recommended more often, and we think feasibility studies should model it as an alternative case when the 7(a) coverage is thin.
The ranking: exposure by asset class
The debt cost channel is the same for every borrower with a floating-rate loan, so the table below leaves it out and ranks the two channels that differ by asset.
Asset | Operations channel | Project cost channel | What decides the outcome |
Travel center | High | High | Diesel margin and freight volume at the same time; depth of non-fuel revenue |
RV park, overnight highway | High | High | Share of one-night transient stays |
Gas station and convenience store | Moderate | High | Food and inside sales; liquidity through the price climb |
Interstate economy hotel | Moderate | Low | Pass-through or drive-to destination; utility share of revenue |
RV park, destination resort | Moderate | High | Distance to feeder markets; big-rig dependence |
Express car wash | Low | Moderate to high | Membership share of volume; local saturation |
RV storage, open paved | Low | High | Paving budget and loan structure |
RV park, seasonal and annual | Low | High | Conversion of transient sites to annual leases |
Regional drive-to hotel or short-term rental | Low, possibly positive | Low | Within about 300 miles of a major metro |
Read across the rows and the asset most associated with fuel is in the middle of the list. The ones at the top are those whose customers burn diesel to reach them.
What a feasibility study should do differently this year
None of this calls for a new kind of study. It calls for an existing study to be pointed at the right variables. In our own work that has meant seven changes.
Treat fuel as a scenario, not a footnote. We carry a base case with elevated fuel through 2027 and a downside in which diesel stays above $6 through the next paving and travel season.
Stress the variable that actually moves. For a gas station that is the timing of margin and the cash needed to get through the climb, not the annual margin. For a travel center it is margin and gallons together. For an RV park it is the transient line. For a hotel it is the long-haul share of demand and the utility line.
Reprice the budget on the date of the study. A sitework estimate from the first quarter of 2026 is out of date. We ask for a current paving quote, check it against the state binder index, and carry a contingency that reflects the quote's validity period.
Run coverage at the rate the borrower will actually pay. That means today's Prime plus the expected spread, and a sensitivity at one further increase, since sixteen of eighteen FOMC participants expect one.
Model the 504 alternative where the 7(a) case falls below 1.25x.
Split demand by distance. Inside 250 miles, 250 to 500, and beyond 500, for every lodging and outdoor hospitality asset.
Say what would change the conclusion. A study that gives a lender the trigger points is more useful than one that gives a single number.
The sensitivity and probabilistic coverage methods we have written about elsewhere are the natural tools for this. A fuel shock is a textbook case for them, because several inputs move together and in the same direction.
What would change this view
We would move toward the spike reading, and relax these stresses, if traffic through Hormuz and the East-West pipeline is fully restored and holds; if the EIA's October and November outlooks take 2027 diesel back below about $4.40; or if the FOMC's December projections swing back toward cuts.
We would harden the view if gasoline holds above $4.50 or diesel above $6.50 into the fourth quarter; if vehicle miles traveled fall by more than 4% to 5% on the year, which would be outside the historical range; if state binder indexes rise another 10% before the spring paving season; or if employment weakens. That last one matters most. In 2008 and 2009 it was not the pump price that emptied hotels and RV parks. It was the recession that came with it.
Frequently asked questions
Does a fuel price surge make a gas station a bad investment? Not by itself. Retail fuel margins usually narrow while prices are rising and widen when they fall, and over the full 2022 cycle the large public operators reported some of their best margins. The risk for a single-site owner is cash: higher card fees, more money tied up in inventory and weaker inside sales during the months when the margin is thin. Stations with a strong food offer come through better than discount fuel formats.
Which RV parks are most exposed to high fuel prices? Parks that live on one-night transient stays along a highway. Seasonal and annual sites are largely insulated, because the guest makes one trip and stays for months. At the two public REITs in this sector, transient and seasonal rent fell between 7% and 15% in the first half of 2026 while annual rent grew by 4% to 5%.
Is RV storage recession-proof? No. It is defensive against a fuel shock, because a parked RV still needs a space, and rents for RV and boat parking have kept rising while RV sales fell. But it lacks the life-event demand that supports conventional self-storage in a downturn. A recession deep enough to make owners sell their units would reduce demand.
Do high gas prices reduce hotel demand? Only modestly, and mainly at economy and midscale hotels in highway locations. Urban and upscale hotels show almost no response. In 2022, with gasoline at a record, U.S. hotels set records for rate and RevPAR. Hotels within a three to four hour drive of a large metro can benefit, because travelers replace flights with road trips when airfares rise.
Why would a fuel shock affect a project that sells no fuel? Through its construction budget and its loan. Asphalt binder is up 26% to 34% since February in the state indexes we track, diesel for site equipment is at a record, and the inflation caused by energy prices led the Federal Reserve to raise rates in September 2026. A paving-heavy project financed with a Prime-based loan is hit on both.
What is the maximum SBA 7(a) interest rate now? With Prime at 7.00% from 17 September 2026, the maximum variable rate on a 7(a) loan above $350,000 is 10.00%. Smaller loans may carry higher spreads, up to Prime plus 6.5 points on loans of $50,000 or less.
Should a borrower choose SBA 504 over 7(a) in this environment? That depends on the project and is a decision for the borrower and lender. What a feasibility study can show is the difference in coverage. The 504 debenture is fixed for its term, 6.54% on the 25-year in September 2026, and removes Prime exposure on 40% of project cost. Where 7(a) coverage is thin, the comparison is worth modeling.
How should a feasibility study handle fuel prices for an SBA or USDA loan? As a named scenario with its own stresses on revenue, operating cost, construction cost and interest rate, carried through to debt service coverage. USDA Business and Industry projects deserve particular care, because they are located in the rural markets where households drive the most and spend the largest share of income on fuel.
Request a Feasibility Study https://calendar.app.google/EJzWEz3GCqLY2jU86
Michal Mohelsky, J.D. | Principal | mmcginvest.com
Contact: michal@mmcginvest.com
Phone: (628) 225-1125
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