How much does the typical gas staion make on a gallon of gas?
A few cents here in Mississippi. Most gasoline is sold at quick stops which take the fuel on consignment and get paid a per gallon commission for handling the money. The bulk oil distributors and refiners make the greatest profits.
As I understand, the gas station profit of a gallon of gasoline is two or three cents per gallon. Most gas station owners see fuel as a loss leader, and only really make money on the items you buy in the store.
It’s called 'Pool Margin"…They TRY to make $.10-$.15 cents a gallon… “Regular” has the lowest margin, Premium the highest. At the end of the day, you average your profit according to how many gallons of each grade you sold…Today, the “Super Pumpers”, the stations with 10 pumps or more and a C-store, most of those are owned buy the oil company or a big distributor who acts as an agent of the oil company…They may use a name like “Fast Gas” but it’s still Exxon or one of the other majors behind it…
The BIG money is made between the well-head and the refinery…There can be a lot of gravy in $100/barrel oil…After that, the mark-ups only amount to pennies…
I used to me the manager of a Mobil satation. We worked on a 5-7 cent WAM (Weighted average margin)… We made more on Dsl about 10-15 cent WAM… That was about 15 years ago, but not much has changed. The truth is the money at a gas station is made in the C-store (the mark on on Coffee, and Soda is insane). Gas should pay the bills (break even), the store should make the money. This is why most gas stations now do not have service bays, it was just not as profitable as a Cstore
A lot of oil companies are getting out of the retail end for that reason; too much hassle and too little profit. Over half of all gasoline sold in France is sold by grocery chains and other department stores.
A major US oil company is selling all its gasoline outlets in Europe.
The most profit is made by selling “stuff” in the store.
Not nearly enough, because gas station operators are stupid. Back when gas was about a buck a gallon, the average pool margin was (or should have been) about 8 cents/gallon. So, in essence, for every dollar the station operator invested he would have a return, or gross profit, of about 8 cents. Using that same formula, now that gas is about $4/gallon, the station operator should have a return of 32 cents/gallon, right? But no, right now an average margin is about 14 cents/gallon. Now, the station operator invests a dollar and only gets 3-4 cents gross profit.
Fuel retailers have a captive audience, they have a product almost everyone needs and yet they continually try to undercut each other to the point that nobody makes a decent profit selling fuel.
At one time, I operated two service stations (three bays each) that did automotive repairs…I realized that any business that depended on a huge price sign with quick change numbers for its survival was never going to make a lot of money…There is ALWAYS someone who is willing to work (sell gasoline) cheaper than you…It’s a dog eat dog business…When that tankwagon driver putts his hoses away and comes into the office, he wants a check for $32,000 and it BETTER not bounce…
@asemaster Its the same in most auto related business… I work retail auto sales, and trust me the other local same make dealers are, pardon the term “wh*res”… They sell a car at zero or close to zero profit in hopes of making money in F&I or getting a trade… Now people will spend a little more to stay local, but the tipping point is about $500… Gas is the same way, offer it cheap so people spend money in the C-Store. Infact we have a gas station by us that is a chain, they now offer there own debit card (attached to your checking account), if you use this card they discount the gas .07-.10 cents a gallon !!! They claim they can do it because they are not paying credit card fees on the transaction, but the real reason is they are buying loyalty and hoping you buy something from the C-Store while you are there. I know I go out of my way to use there stations.
Gross or net?
Before interest & taxes?
Anyone that thinks private station owners are hauling in the dough needs to get out more.
My uncle owned a Sunoco distributorship and my dad owned a Sunoco station back in the 60’s. The profit on gas was about 5 cents a gallon. We made more on kerosene than we did on gas. Vehicle repairs and new tires is where the profit came from. The gas was like a “loss-leader” of sorts.
That’s the point I was trying to make. That 5 cents went to
mortgage on the station,
pump equipment maintenance,
required periodic inspections,
And in the end, the owner might be able to buy food for the wife & kids.
@gsragtop, dont underestimate the impact of credit card fees. That’s the main reason behind the “link to your checking account” cards. The transaction fee is far less. The public doesn’t seem to understand the cost of using credit cards. Sure using your United Airlines Visa gets you miles, but the transaction fee to the merchant can be over 2%. At $4/gallon, that’s 8 cents for every gallon. The station operator loses half the profit or more before anything else happens.
I’ve heard it said years ago when there was such a thing as “full service stations” that there was as much/more profit in a quart of oil as there was in most fill ups. I agree the profit is in what they can sell you inside the store, the gas pumps are just to get more people to stop. Most c-stores are selling coffee/soft drinks at $1-$2 each. You can make a whole pot of coffee on 10 cents worth of ground coffee.