Death and Times of the American Gas Station

The number of gas stations has been in steady decline for decades. The number is expected to drop as more people move into the electric market. The recent roller coaster of gas prices is not the best scenario.

From WSJ – “Stations tend to hold back price increases to hold onto customers,” says Jeff Lenard of NACS, the trade association for convenience stores. As the Wall Street Journal explains, when the gas station refills its own tanks, it buys weeks’ worth of fuel — sometimes months’ worth, in the case of diesel — at a single high price. If prices then start to fall, the gas station is forced to sell at below its own cost, since the station’s real profits come from enticing shoppers into the store.

Making things worse, President Biden is attacking gas station owners, accusing them of profiteering from high oil prices. New gas stations have also been banned in four California cities.

The question becomes whether gas station owners can continue to absorb losses on gas while using convenience stores to boost profits. Some sell more prepared food these days, which has higher margins and can help cushion any blow from gas price jumps.