Gas station operators forced to raise prices, see little profit
Rick White sells fuel, and since he joined the business in 1971, the Houston retailer says pump prices have always been anxiety-provoking.
“When I started, we were pumping your gas and it was 26 cents a gallon,” he said.
His customers are certainly noticing the price hike.
“Oh man, with this old thing, if gas hits $5, I’ll just leave it and park at home,” said Houston resident Jacob Garcia.
Due to economic downturns or, right now, global instability, White says there’s a reason your local corner station is selling a lot more than gas.
“We’re stuck everywhere up or down,” he said. “Any gas station you go to, they sell gas for you to stop at their store. I make more money on a Coke than gas.”
If White only sold fuel, he wouldn’t be in business for very long because the profit margins on that product alone are very, very slim.
“Let’s normally say I buy it for $3.10 and the next day it sells for $3.25. And if I just sold it for $3.25, I lose money as fast as I can l ‘print,” White continued. “Let’s say I get it for $3 a gallon. I will charge $3.29 and make 10 cents profit on a good day.
So what goes into the price at the pump?
When the normal price was $3.41 in January, according to federal government data, about 14% of the cost of fuel was due to petroleum refining. More than 15% went to gas marketing and distribution. More than 14% of that was federal and state taxes, and the most important factor – the price of crude oil per barrel – at almost 56%. For gas stations to make money, they need to mark up a margin after buying in bulk.
“It’s about the same margin as 1970,” White said.
In his case, he has a modest convenience store, but what brings him the most money is his garage and his mechanics.
“If we weren’t doing car repairs and inspections, we wouldn’t be here,” White continued.
According to the National Association of Convenience Stores, the biggest misconception about gas stations is the profitability of gasoline sales.
In Crystal Beach, Texas, Keith Zahar’s resort is really more of an adornment to the area hardware and grocery store.
“When prices go up, margins get tighter. And it’s not uncommon to see margins of 10 cents, 15 cents, which means that even though gasoline prices are currently at record highs, many retailers probably break even with their gasoline,” Zahar said. noted. “You have to make money on the Cokes. That’s how you do it. You sell other items in the store. That’s what you make your money on. You lure them in for fuel – That’s exactly how it works because you definitely don’t make money on the fuel itself.”
When prices go up, his antipathy is as great as any motorist who fills up.
“When you stand behind the counter, you are the lost baggage service at the airport, especially when the fuel starts to rise,” Zahar continued. “You’re the bad guy, and you have to take the heat. And it’s hard to deflect because people are angry. You just have to take it.”
Fuel costs not only eat into the customer’s wallet, but also the merchant’s budget.
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