Why most gas stations don’t make money from selling gas (but Brandon wants them to lower prices anyway)

The Hustle ^ | April 15, 2022 | Zachary Crockett

[DoodleBob]

...It’s easy to look at the gas pump right now and think that station owners are taking you for a ride.

But the business model of gas stations is a bit counterintuitive.

Most gas stations barely turn a profit on their core product — and when the price of oil goes up they may even take a loss on it.

Battling small margins, cutthroat competition, and the looming threat of electric vehicles, many gas stations are more reliant than ever on secondary revenue streams.

...

The profit pipeline

Gasoline begins its journey as crude oil, largely sourced on home soil in states like Texas and North Dakota.

Once extracted from oil fields, this raw liquid is:

1. Sent to refineries to be processed into gasoline
2. Funneled via pipeline into bulk storage containers, and
3. Transported via freight trucks to gas stations, where it’s kept in 20k-gallon underground drums

By the time gas reaches the pump, the profit potential is pretty dismal.

Let’s say you buy one gallon of gas at your local station for $4.09 (the national average, as of April 13, 2022).

Here’s a rough breakdown of where that money goes:

Gas stations typically only receive a fraction of the price listed on the sign. And after factoring in overhead — labor, utilities, insurance, credit card transaction fees — the average profit is winnowed down to ~$0.03 to $0.07 per gallon.

Now, there is a lot of variance here: Some owners The Hustle spoke to claim to make $0.30+/gallon; others, as little as $0.01.

But assuming daily sales of 4k gallons at $0.05/gallon, your typical station might only bring home $200-300/day from gas.

[kaktuskid]

The largest sellers of gas are the convenience chains, big boxes like Costco, and the grocery chain fuel centers, like Kroger-Not the big oil companies.

[Thunder90]

Wawa and Kwik trip also come to mind.