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For those who think gas station owners make huge profits . . .

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ET Awful Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Sep-28-05 09:43 AM
Original message
For those who think gas station owners make huge profits . . .
http://www.washingtonpost.com/wp-dyn/content/article/20...

But Levitan opened his books to me to show that surges in gas prices generally hurt the guys at your local station. The big winners are the oil companies (you knew that already) and the big credit card companies. At least oil companies have excuses and expenses; it's their platforms, pipelines and refineries that took the hit from Katrina. But for Visa and MasterCard, the misfortune along the Gulf coast adds mightily to what Levitan calculates as an almost threefold increase in fees from each purchase of gas over the past few years.

Every time you slip your card into a gas pump, the station owner pays 3 percent of the purchase to the credit card company. A station that sold 130,000 gallons per month back when gas cost $1.29 -- when about 70 percent of buyers used cards -- sent $3,546 to Visa and MasterCard.

At that same station today, gas costs $3, and probably 80 percent of customers use cards because who carries $50 to fill up? This station now sells about 10 percent less gas because drivers are cutting back, but still the credit card companies get $8,277 a month.

So the station owner, who in the best of times works with a profit margin of 8 cents per gallon, now sees his credit card fees shoot up from 2 cents to 7 cents.

(more)
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mccoyn Donating Member (512 posts) Send PM | Profile | Ignore Wed Sep-28-05 09:48 AM
Response to Original message
1. They save money sending $0.03 to credit card companies.
It's cheaper than spending minimum wage to keep an extra clerk on duty to handle every gas purchase.
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Skink Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Sep-28-05 09:51 AM
Response to Reply #1
2. Don't the oil companies also own the pumps..
they make money wholesale and retail.
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ET Awful Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Sep-28-05 10:08 AM
Response to Reply #2
5. Not in all cases. It depends on the individual agreement with
the individual station.
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ET Awful Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Sep-28-05 10:07 AM
Response to Reply #1
4. Not really.
They wouldn't necessarily need an extra clerk to process the charges inside. They aren't saving anything.

Why do you begrudge a small business owner making 4 or 5 cents a gallon? When you take into account his overhead, he makes no more than an average middle-income individual really.

Your typical service station owner is NOT an enormously wealthy individual.
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AllegroRondo Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Sep-28-05 10:12 AM
Response to Reply #1
8. Its cheaper than handling cash or checks also
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tk2kewl Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Sep-28-05 10:00 AM
Response to Original message
3. I keep trying to drill this point home to my neighbors
they see brown faces running the gas station and just want to hate them.

Most of these guys are franchisees and their agreements generally limit the amount per gallon they can charge over what they pay for the gas.
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Sick_of_Rethuggery Donating Member (853 posts) Send PM | Profile | Ignore Wed Sep-28-05 10:09 AM
Response to Original message
6. I know this from my very dear friend.
He has a gas station and they get only a fixed amount per gallon (typically between 8 and 10 c) no matter the cost at the pump. He is getting squeezed; has owned it for 18 months now and has been hamorrhaging money like crazy -- he is trying to sell it desperately but the gas company will not let him...
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borlis Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Sep-28-05 10:25 AM
Response to Reply #6
14. My brother in law owns a station in So. California
Edited on Wed Sep-28-05 10:25 AM by borlis
which he has been trying to sell for years with no luck. He is doing ok financially, but is not rich by any means. He is a bachelor and I'll bet that if he was married with a family to support, he'd be struggling.
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DemocratSinceBirth Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Sep-28-05 10:10 AM
Response to Original message
7. I Think They Make The Big Bucks When You Come In The Store And Buy
Edited on Wed Sep-28-05 10:12 AM by DemocratSinceBirth
Things...
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ET Awful Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Sep-28-05 10:12 AM
Response to Reply #7
9. That's their only real profit, that's why they're typically expensive
for candy bars, sodas, etc. (where else can you spend $5.00 for a small tin of Bayer aspirin?)

But most customers don't buy anything other than gas (and maybe lottery tickets).
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mduffy31 Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Sep-28-05 10:24 AM
Response to Reply #9
13. Exactly
I knew a guy that owned a gas/service station. He ended up discontinuing the gas sales and just stuck with the auto repair. He talked about what a headache it was to do both. This was a guy also who was reasonable on his prices for auto repair. He would talk about that he would sometimes lose money on the fuel, and he really only made money on the things that they sold inside. Things like soda and candy. He would also say when gas makes a big spike, he would pay for the fuel at the wholesale price that the refinery would sell it at, but when it would go down, sometimes he was actually selling gas at a loss. Now this is was a "mom and pop" gas station, not a oil company owned shop. That is the kind of place that I frequent around here, just because I feel that I am helping this guy rather than big oil.
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Bluerthanblue Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Sep-28-05 10:26 AM
Response to Reply #7
15. not exactly 'big bucks' but it IS where
they make the 'bread and butter' of the business. I have a friend who owns our local gas station/convenience store, and he's had a hell of a time lately. Our town has only 1,000 year round residents, and no grocery store any longer.
He is from India, and runs the store 7 days a week, 16 hrs. per day- ONE 'drive off' costs him 1,000 gals. of gas to simply break-even. He's a really gentle, friendly, caring man, and doesn't want to do anything other than make a life for himself and his family. While running in for a loaf of bread, or a gallon of milk may cost almost twice what we can get it for at the big stores in the closest town to us, the cost of gas getting there isn't really worth it anymore.
Beer, chips, and smokes keep him going.- Unless you have an actual 'service station' where you make your money repairing vehicles, and doing inspections etc, there is no living to be made on pumping gas- at least not here in northern new england.

And tourism is KEY to making it, or going under- swim, and ski leaf peepers, and hunters fuel this sad economy.- All of which are effected by 'fuel costs' such as what we are experiencing now.

It's no easy life for him-
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ET Awful Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Sep-28-05 10:28 AM
Response to Reply #15
16. Now that's an interesting ratio I hadn't thought of . . .
How much it takes to compensate for one drive-off.

Can you do me a favor and point that out in this thread? http://www.democraticunderground.com/discuss/duboard.ph...
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Bluerthanblue Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Sep-28-05 10:53 AM
Response to Reply #16
19. done-
it's amazing how little is earned for so much effort sometimes. Our town PD spends alot of time chasing down drive offs lately- its lose-lose all the way around.

Funny how thing seem so easy from the 'outside'- but in reality often are a million hassles.
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Sick_of_Rethuggery Donating Member (853 posts) Send PM | Profile | Ignore Wed Sep-28-05 11:18 AM
Response to Reply #7
21. In expensive locations,
they pay lease on the land that gobbles up all of those profits and more. I have looked at their accounts and I can tell you that they are pumping 10 to 20k into that stupid gas station every month and they see no way out of the thing. The previous owner and the gas company all falsified accounts and presented a totally rosy scenario to him before purchase...

It is all pretty scary -- since we are all come from a non-business oriented background and have neither connections nor savvy to pull this off. If I could, I would actually pray for him...
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seabeyond Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Sep-28-05 10:15 AM
Response to Original message
10. small business owners are never the ones getting rich
they are merely earning a living in a challenging and a lot of hard work job.

job... like all others

they are the ones being fucked by taxes
fucked by health insurance
fucked by big govt
fucked by so many

yup

kinda like the middle class
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ET Awful Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Sep-28-05 10:22 AM
Response to Reply #10
12. Exactly, service station owners are no different than
independent grocers or small electronics shops or any other entrepreneurial situation.
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DelawareValleyDem Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Sep-28-05 10:20 AM
Response to Original message
11. I've known a few station owners
and all led pretty typical middle class lifestyles. The ones that had services bays and/or convenience stores in addition to pumps seemed to do a little better but certainly weren't wealthy. Retailing gasoline is no way to make a fortune.
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sinkingfeeling Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Sep-28-05 10:34 AM
Response to Original message
17. There was an excellent graphic in Sunday's WP of who gets what
on the cost of gasoline. It compared Sept. 5, 2005 and Sept. of 2004 and gave the % of increase all the way from the ground to your car.

It goes like this: 9/05 9/04 %

Crude Oil Producer 1.456 1.003 46
Refiner .985 .277 255
Distributors/retailers .178 .170 5
Taxes .44 .42
Your cost/gal 3.069 1.870 64
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ET Awful Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Sep-28-05 10:47 AM
Response to Reply #17
18. I wish it had broken up the distributor/retailer category into each
individually.
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sandnsea Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Sep-28-05 10:58 AM
Response to Original message
20. Our station owners are rich
Two percenters, at least, in my little town. They may have fallen down into the $100,000 category instead of $200,000 recently, but they're all doing quite well. The Fred Meyer put a gas station in a year ago, Safeway is putting a gas station in on adjacent property. I don't think they're all selling gas out of the goodness of their hearts.

More of this sorry US capitalist delusion that if people aren't making a million a year, they're the same as struggling Walmart workers.
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Skink Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Sep-28-05 01:15 PM
Response to Reply #20
22. The only supermarket in texas HEB seems to rise faster at this point..
Edited on Wed Sep-28-05 01:15 PM by Skink
Already 2.85 for reg while everyone else is around 2.60.
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