High gas prices are hurting everyone's checkbooks, but one of the hardest-hit businesses in your community may be the last place you'd expect...the gas station. In fact, the business of selling gas is so unprofitable that big oil is getting out of it.
The Arizona Republic reports, "Fast-rising wholesale prices and fees as well as an ailing economy are putting tremendous pressure on gas retailers at a time when most people would assume their profits are quite high. ... With wholesale costs jumping so fast, the pennies per gallon that stations make on gas are erased because retailers are unable to fully pass on costs to consumers out of fear of losing business to competitors." In fact, stations typically make little money on sales of gasoline, and far more money on sales of coffee, snack foods and other convenience items that customers also buy when they stop for gas. But in the face of high pump prices, fewer of us are making those impulse purchases.
In fact, it's so hard to make money running a gas station that Exxon has given up trying. Reuters reports, "Out of the roughly 12,000 Exxon Mobil branded stations in the United States, Exxon, the world's largest publicly-traded oil company, owns about 2,220." The rest are independently-owned stores that license the brand's name. "Exxon plans to sell those service stations over several years," having concluded that they can't make money operating gas stations.
Stations are also squeezed by credit card fees. The Charlotte Observer reports that credit card processing fees, "run about 3 percent or 12 cents a gallon when a customer uses plastic," which adds up to "$200- to $500-a-day in fees" for gas station owners. But with fill-ups routinely costing between $60 and $100 now, more customers are turning to plastic. In order to fight the trend, some gas stations have begun offering discounts for those who pay with cash. The Observer found that about half of the gas stations in part of its distribution area were offering separate prices for credit and cash buyers, with cash often five cents per gallon cheaper.
Station owners face another unexpected cost as well: new signs. Wyoming's Gillette News-Record reports that many stations are moving to electronic price display boards. "The upgraded display signs...come equipped with remote controls, so workers can change the price without leaving the cozy confines of their convenience shop. That's probably not what long-suffering motorists wanted to hear, but at least the switch is making someone's life easier."
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