So do station owners
NEW YORK — So you think you are finally getting one over on the gas stations as you pay well under $3 a gallon for the first time in four years? Guess again.
Gas stations love low prices too — and not just because customers are nicer when they are paying less.
“We’re in the same shoes as the consumer, the cost of fuel is less for us,” says Kevin Beyer, who owns Performance Fuels, a filling station and convenience store in Smithtown, N.Y.
That means profits for the nation’s 127,000 filling stations are rising.
Before they sell gas to you, station owners buy gas on the wholesale market. When the wholesale price of gasoline falls quickly the difference between the cost of wholesale gasoline (including taxes) and the price at the pump gets wider, boosting profits for stations. The steeper the drop, the better.
“It’s completely antithetical to what people believe,” says Tom Kloza, chief oil analyst at the Oil Price Information Service.
On a percentage basis, station profitability is at its highest since 2005.
Yes, that means you could be paying even less for gasoline than you are.
But before you cry foul, you should know that gas stations don’t make much money selling gas. After credit card fees and other operating costs, net profit for gasoline sales averages 3 cents a gallon, according the National Association of Convenience Stores.
When gas prices soar, and drivers think they’re being gouged, stations are barely scraping by or even losing money. When the wholesale price is soaring, like it did in 2008, 2011 and 2012, station owners can’t increase the price at the pump as fast as their costs are going up or they risk losing customers.
When the wholesale price is going down, like now, there isn’t the same pressure to lower prices.
Drivers are so happy to see lower prices they don’t search all over town for the lowest one. And then when they put gas in the tank, they fill `er up instead of just putting in a few dollars’ worth.
And drivers have some money left over to spend on what’s really profitable for station owners: The drinks and snacks inside.
