Gas Station Owners HURT, not Helped by Record Gas Prices
05-28-2004, 08:43 PM
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Gas Station Owners HURT, not Helped by Record Gas Prices
This is for all of you who think that the gas stations themselves are to blame for rising gas prices (through markup) and that boycotting a station hurts the parent company.
WASHINGTON — Drivers filling up this Memorial Day weekend might think station owners are making a killing from record-high gas prices.
High gas prices at competing stations in Santa Monica, Calif.
By Kevork Djansezian, AP
They're wrong.
Gas stations make just a few cents on gasoline — heavy competition prevents large mark-ups. The majority of a station's profits come from candy bars, sandwiches, beer and other goods sold in the convenience stores connected to the stations. But when gas prices go higher, consumers have less money to spend inside. That means gas station owners' profits drop.
"When gas prices are lower, everyone wins," says Scott Jenkins, vice president of family-run Fas Gas, which runs two stations in Sikeston, Mo.
CURRENT PRICES
State-by-state gasoline price averages from AAA.
Bill Douglass, owner of Sherman, Texas-based Lone Star convenience stores, says he is making about 3 or 4 cents per gallon of gasoline, not including overhead costs. Sales inside his 15 stores are down as much as 18% from the same time a year ago. His best store is breaking even.
"When we take your money at the pump, you may not get into the store," Douglass says. "It's an absolute shock for people to put $40 or $50 on the pump for an SUV."
In-store gross margins in convenience stores in 2003 were 30.8% on average, vs. 8.8% at the pump. That was the lowest gas margin since 1985, the National Association of Convenience Stores says.
Douglass' experience shows how high energy costs can spread pain throughout the economy. Not only is Douglass making less money, he's being forced to cut his employees' hours by 6% to 15%, depending on the station. Those employees then have less money to spend, which hurts other businesses. Nationwide, 10,000 gas station jobs have been cut in 2004, according to government data.
Most drivers will be paying more than $2 a gallon for gasoline this weekend. That is a record, not adjusted for inflation. Adjusted for inflation, prices are the highest since fall 1985, the government says.
Motor club AAA expects a record 30.9 million travelers to take Memorial Day weekend trips of 50 miles or more by car.
"I wish it was under my control," Jenkins says. "I would have brought (prices) down a long time ago."
High gas prices at competing stations in Santa Monica, Calif.
By Kevork Djansezian, AP
They're wrong.
Gas stations make just a few cents on gasoline — heavy competition prevents large mark-ups. The majority of a station's profits come from candy bars, sandwiches, beer and other goods sold in the convenience stores connected to the stations. But when gas prices go higher, consumers have less money to spend inside. That means gas station owners' profits drop.
"When gas prices are lower, everyone wins," says Scott Jenkins, vice president of family-run Fas Gas, which runs two stations in Sikeston, Mo.
CURRENT PRICES
State-by-state gasoline price averages from AAA.
Bill Douglass, owner of Sherman, Texas-based Lone Star convenience stores, says he is making about 3 or 4 cents per gallon of gasoline, not including overhead costs. Sales inside his 15 stores are down as much as 18% from the same time a year ago. His best store is breaking even.
"When we take your money at the pump, you may not get into the store," Douglass says. "It's an absolute shock for people to put $40 or $50 on the pump for an SUV."
In-store gross margins in convenience stores in 2003 were 30.8% on average, vs. 8.8% at the pump. That was the lowest gas margin since 1985, the National Association of Convenience Stores says.
Douglass' experience shows how high energy costs can spread pain throughout the economy. Not only is Douglass making less money, he's being forced to cut his employees' hours by 6% to 15%, depending on the station. Those employees then have less money to spend, which hurts other businesses. Nationwide, 10,000 gas station jobs have been cut in 2004, according to government data.
Most drivers will be paying more than $2 a gallon for gasoline this weekend. That is a record, not adjusted for inflation. Adjusted for inflation, prices are the highest since fall 1985, the government says.
Motor club AAA expects a record 30.9 million travelers to take Memorial Day weekend trips of 50 miles or more by car.
"I wish it was under my control," Jenkins says. "I would have brought (prices) down a long time ago."
05-30-2004, 10:52 AM
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let me clarify.
Of course it's probably "wrong" for us to hate gas station owners who aren't actually at fault, but merely on the low rungs of the petroleum industry. However, they ARE part of it, and they are pissing us off. Just like there were plenty of ***** who were ***** not of their own volition, and maybe they didn't even hate jews, but that doesn't stop 99 percent of the people out there from hating them, does it?
Of course it's probably "wrong" for us to hate gas station owners who aren't actually at fault, but merely on the low rungs of the petroleum industry. However, they ARE part of it, and they are pissing us off. Just like there were plenty of ***** who were ***** not of their own volition, and maybe they didn't even hate jews, but that doesn't stop 99 percent of the people out there from hating them, does it?
06-01-2004, 10:22 AM
#7
I used to work at a gas station. Most gas stations these days are frachised and employee run.
The few that are dealer stations get bent over. You make no money off of gas. This article is dead one. The guy I worked for constantly complained about how the gas companies and state were bending him over. It really sucked for him because he had no candy shack. He had to make his money in the shop. He had very few employees and worked over 100 hours a week most of the time so he wouldn't have to hire anymore. Eventually he had a heart attack...worked himself to death.
The corporations dictate price along with the cost of crude oil. then the local sites way against each other to see what they "can" get. If you're a dealer site you have to fight with them on cost.
Same thing with apartment costs and housing....the measure against each other. it's like a huge consumer trap.
My favorite part of that article and the most overlooked is the employee hour reductions. When you reduce hours or jobs you reduce how many people and how much people can put back into the economy. If there's nobody to spend money there's no money to be made. Eventually the effects get felt everywhere.
It's my biggest beef with this outsourcing and the general view of corporate america. The rich are finding ways to get richer. Big companies to make more money. So they start outsourcing jobs. This bolsters these other companies economies. Like India and the Philippines for instance. Eventually if we keep outsourcing you will see the effects more and more there and more and more here. The more jobs that get cut here the less money there is to get spent. This corporations are taking the money now approach. But what they don't see is in 5-10 years if you keep doing this the effects will get to them. Get to the big companies. Nobody will have $50 a month for high speed internet or $70 cell phone plans or $3 a gallon gas. New cars and new houses. Eventually this rediculous inflation is gonna have to crash and it's gonna hurt and we'll start the process all over again.
The sad thing is...if these people...if people in general weren't so ****ing greedy we wouldn't have these problems.
Our education system wouldn't be in the ****ter because we wouldn't be spending more in one day over seas than we do for one year of public education in any county in america.
The few that are dealer stations get bent over. You make no money off of gas. This article is dead one. The guy I worked for constantly complained about how the gas companies and state were bending him over. It really sucked for him because he had no candy shack. He had to make his money in the shop. He had very few employees and worked over 100 hours a week most of the time so he wouldn't have to hire anymore. Eventually he had a heart attack...worked himself to death.
The corporations dictate price along with the cost of crude oil. then the local sites way against each other to see what they "can" get. If you're a dealer site you have to fight with them on cost.
Same thing with apartment costs and housing....the measure against each other. it's like a huge consumer trap.
My favorite part of that article and the most overlooked is the employee hour reductions. When you reduce hours or jobs you reduce how many people and how much people can put back into the economy. If there's nobody to spend money there's no money to be made. Eventually the effects get felt everywhere.
It's my biggest beef with this outsourcing and the general view of corporate america. The rich are finding ways to get richer. Big companies to make more money. So they start outsourcing jobs. This bolsters these other companies economies. Like India and the Philippines for instance. Eventually if we keep outsourcing you will see the effects more and more there and more and more here. The more jobs that get cut here the less money there is to get spent. This corporations are taking the money now approach. But what they don't see is in 5-10 years if you keep doing this the effects will get to them. Get to the big companies. Nobody will have $50 a month for high speed internet or $70 cell phone plans or $3 a gallon gas. New cars and new houses. Eventually this rediculous inflation is gonna have to crash and it's gonna hurt and we'll start the process all over again.
The sad thing is...if these people...if people in general weren't so ****ing greedy we wouldn't have these problems.
Our education system wouldn't be in the ****ter because we wouldn't be spending more in one day over seas than we do for one year of public education in any county in america.
06-01-2004, 10:50 AM
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one gripe i have... if indeed they make more money via the store, why wouldnt they lower the gas prices so that they bring in more business? (everybody always tries to go to the cheapest station in town)
if they are privately owned they could almost take a loss on gas if they more than compensated through sales of other goods and services at the store
if they are privately owned they could almost take a loss on gas if they more than compensated through sales of other goods and services at the store
06-01-2004, 11:20 AM
#9
dub2w. A big part of that is that the franchise dictates a pretty firm base price according to location. You pay more you have to sell it for more.
and dealer locations are more and more rare and the corporations don't really like them so you're kind of on a short leash. some of the dealers are about as low as they can go and actually stay open. I know on average Al was making about 8 cents a gallon but know at times we were down around 3/4 cents a gallon trying to stay bellow key number. Like stay at say 1.89 instead of the wanted 1.93. You loose some pennies per gallon but you gain because of the psychology involved with braking the next 10 cent barrier.
and dealer locations are more and more rare and the corporations don't really like them so you're kind of on a short leash. some of the dealers are about as low as they can go and actually stay open. I know on average Al was making about 8 cents a gallon but know at times we were down around 3/4 cents a gallon trying to stay bellow key number. Like stay at say 1.89 instead of the wanted 1.93. You loose some pennies per gallon but you gain because of the psychology involved with braking the next 10 cent barrier.
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