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Kasanova

Gas Promblems Anyone?

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Recently I have been seeing the below signs posted inside the mini marts at gas stations. Can you believe how bad gas has gotten, that the gas stations are “turning” on the hand that feeds them? Never thought that a gas station would be revealing the truth on where the money goes; even though we all know where it goes. It’s crazy, how the stations only get about $1 if we fill up with $50+ on credit and $2 if we pay cash. That means in order for them to receive that $1/$2, some one has to at least put 12.5 gallons of gas in their car, assuming you are putting regular at $4. I just can’t believe this is happening. Once the days are continuously warm/hot I will be riding my bike to work like last year. Sounds crazy, but I save a lot. Forget a Hybrid, I have a mountain bike. This is a real eye opener!!!

 

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By kasanova26 at 2012-04-18

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This pie chart is skewed and mis-leading. The $1.00 that goes to the Station is to make-up for the amount of money it costs them to handle a credit card transaction, nothing more. Thus the discount for cash.

 

The Station still gets some of the biggest pie "Oil Company" as profit, or they would all close due to losing money on every sale.

 

I suggest that you speak with a Station owner and ask him/her what they make on a gallon of gas. They will gladly tell you, and set you straight.

 

Next time, don't believe everything you read.

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This pie chart is skewed and mis-leading. The $1.00 that goes to the Station is to make-up for the amount of money it costs them to handle a credit card transaction, nothing more. Thus the discount for cash.

 

The Station still gets some of the biggest pie "Oil Company" as profit, or they would all close due to losing money on every sale.

 

I suggest that you speak with a Station owner and ask him/her what they make on a gallon of gas. They will gladly tell you, and set you straight.

 

Next time, don't believe everything you read.

 

So is their some kind of kickback or something? I've been told they usually operate on a 2-3% margin on average, which on $50 is $1-1.50. It sounds bad, but we all have a REALLY poor concept of how much gas they pump. A small station with a couple 4 nozzle pumps in a decent location can pump 100,000+ gallons a month. A couple went up for sale by me, and I was shocked at the volume they moved.

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From speaking with one of the managers, they say, most of their sales comes from the mini marts. They say selling gas is more of like a bonus, but they dont count on that for revenue most of the times. That is why i thought the chart seem realistic. Remember this is inside the gas stations mini marts, not just a mini mart on corner of some random block.

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You rarely see a gas station that is not also combined with a convenience store; thus allowing the store to sell gas at low, low profit margins. I don't know the percentage, but almost everyone who buys gas is also buying something else inside the store. And most of that stuff has very high margins (think coffee and soda, cost is almost nothing so it is pure profit). The gas is a "loss leader" to get people in to buy the stuff that pays for the business. Think about it. If you are selling gas and you lower the price to one cent less than the guy on the other corner. Even selling at break-even or a loss, you will more than make it up because you now have more people coming to your station rather than the other guy's; and the increased revenue on those high-margin incidentals will more than make up for the revenue decrease on fuel sales.

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From speaking with one of the managers, they say, most of their sales comes from the mini marts. They say selling gas is more of like a bonus, but they dont count on that for revenue most of the times. That is why i thought the chart seem realistic. Remember this is inside the gas stations mini marts, not just a mini mart on corner of some random block.

 

This, companies like WAWA got into gas for one reason and one reason only... to bring people into the store.

 

This is why so many mom/pop stations are gone. they cant compete with the big guys and minimarts thats are basically giving the gas away to bring in customers. as insane and unrealstic as that chart seems it's probably mostly correct. although the oil companies may get most of the money per gallon also you need to remember.... they also spend the most to get it.

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This is an article 3/19/2008 and the Gas Station doesn't make that much money:

 

http://money.cnn.com/2008/03/13/news/economy/gas_gallon/index.htm

 

NEW YORK (CNNMoney.com) -- Motorists may fume when forking over $3 a gallon at the local service station, but as it turns out, your local filling spot makes chump change from a gallon of gas.

So exactly who is getting rich?

Oil traders: While often blamed for pushing up prices, traders don't necessarily benefit from the high price of crude or gasoline; they profit from how much the price changes. Traders can get rich - as long as they bet correctly on whether prices will rise or fall.

For example, an investment bank that makes a bet that the price of oil will rise makes money when oil prices go from $95 to $100 a barrel - or $100 to $95 if it bet the price will fall - not on the difference between production cost and trading price.

"If you wanna keep your job, you gotta be more right than wrong," said John Kilduff, an energy analyst at the trading firm MF Global in New York, explaining how traders make their money.

Gas stations: A surprisingly small amount goes to the guy who runs the station.

Most service stations are independently owned and operated and take in between 7 and 10 cents for every gallon they sell, according to the U.S. Energy Information Administration.

That 7 to 10 cents going to the gas station isn't even profit. Out of that, station owners still have to pay leases, workers, and other expenses - leaving them with a profit of just a few cents. For the service stations, most profit comes from selling coffee, cigarettes, food and other amenities.

These calculations are based off of EIA's most recent numbers, when gas was $3.04 a gallon. Gasoline hit another record nationwide average of $3.27 a gallon Thursday.

Taxes: The government takes about 40 cents right off the top, with about 18 cents going to the feds. State taxes vary widely, but the national average is about 22 cents a gallon. Most of this money is used to build and maintain roads.

Transportation: Getting the gas from refineries to service stations via trucks or pipelines - and the cost of storing it in large tanks - eats up another 23 to 26 cents per gallon.

Refining: About 24 cents a gallon goes to refining companies like Valero (VLO, Fortune 500), Sunoco (SUN, Fortune 500) or Frontier (FTO, Fortune 500) that specialize in turning crude oil into gas. Some companies like ExxonMobil (XOM, Fortune 500), Chevron (CVX, Fortune 500) and ConocoPhillips (COP, Fortune 500) also have refining operations.

Profits for refiners have been squeezed lately because the price they pay for oil has risen so much faster than the price they can sell the gas for. This helps explain why Big Oil companies -like Exxon, which actually buys more crude oil than it produces - haven't seen their profits rise as much as the price of oil.

Crude oil: This is the most expensive part of a gallon of gas. Of every gallon of gas $2.07 from every gallon of gas goes to producers of crude like Chevron (CVX, Fortune 500), BP (BP), and smaller outfits like Anadarko (APC, Fortune 500) and Marathon (MRO, Fortune 500), or national oil companies controlled by countries like Saudi Arabia, Mexico or Venezuela.

Crude currently trades around $110 a barrel, but breaking down the money in that barrel of oil is tough. Exploration and production costs, royalty payments - all a big part of $110 a barrel oil - vary widely country by country and project by project.

"It's difficult to generalize; there's a whole spectrum of costs," said Ron Planting, an economist with the American Petroleum Institute, an industry trade group.

They can range from $1 a barrel to produce crude in Saudi Arabia to over $70 a barrel to find, develop and pump oil in the deep water Gulf of Mexico or off the coast of Algeria, said Ann-Louise Hittle, an oil analyst with the energy consultants Wood Mackenzie.

EIA estimates it costs U.S. oil companies an average of about $24 a barrel to find, develop and produce oil worldwide, but that doesn't include costs like transportation, administration, or income taxes - which can be substantial. While Exxon made $40 billion in 2007, a 60% increase from 2004, it paid $100 billion in taxes and royalties.

Nonetheless, $40 billion - or any of the record profits seen by most oil companies over the last few years - is certainly a lot of money, and it has put Big Oil in lawmaker's cross hairs.

Rep. Edward Markey, D-Mass., has called the chief executives of the five biggest oil companies to testify on the industry's record profits on April 1st. Markey's office swears it's no April fool's joke

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I know a station owner who sold off the gas business and just kept the auto repair side. Both he and the new gas owner work side by side. He said it just became a pain in the rear end. Although he'd buy the gasoline at wholesale prices, there really wasn't that much of a profit margin, unless he sold thousands and thousands of gallons of gasoline. He didn't have a convenience store either, so the auto repair business is what really kept it afloat. Add the fact that his workers would sometimes bail out on him and it just became too much running between fixing cars and running to do a fill-up. Overall, the SOB is happier now and when I do drop in to say hello, he still tries to sell me his most expensive tires!! :)

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Taxes: The government takes about 40 cents right off the top, with about 18 cents going to the feds. State taxes vary widely, but the national average is about 22 cents a gallon. Most of this money is supposed to be used to build and maintain roads.

 

I fixed it

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I was searching for that article, but couldn't find it any where; maybe wrong search words. But yes, the pie is relatively correct. And i guess what the manager told me is correct as well. They get more profit from what they sell in the mart then in gas.

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I believe that they have a tight margin, yes, but I have spoken to Station Owners who both have and don't have the Mini-Mart. And yes there is a system in place to compensate Stations for accepting credit cards. And the credit card companies do discount their rates for transactions at the pump due to high dollar amounts yielding a low profit margin. Most of the time I never see anyone going into the Mini-mart where I gas-up, even with all of the islands running, especially in bad, hot or cold weather, for nobody wants to leave their vehicles. Hess and WaWa are the exceptions, not the rule.

 

The WaWa by our indoor range is quite busy inside. Most of the cars parked directly outside would have stopped anyway to buy stuff. Hardly ever do I see someone leave the pump island and drive over to the store to go inside, but maybe it's just me.

 

Most smaller Stations don't even get a "drop" every other day. If the tanker drained itself at a single Station, approx 7,000 gallons would be delivered. This hardly ever happens, since the tankers have a route and deliver to several Stations per day. 1 drop every three days would be 10 drops a month, or approx 70,000 gallons IF every drop was an entire tanker-load. High-volume locations don't always have significantly more storage tanks than lower-volume ones, and so more drops are required, sometimes more than one in a 24 hour period when it gets busy.

 

And since this is NJ, you can't really call them SERVICE Staions anymore, since most of them don't even allow you to check your own oil or sell oil at the pump islands for that matter...

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if you want to open a gas station you need your head examined mark up is between .08 and .12 a gal and thats not profit.the c store is the only good part of it and usually supliments the losses at the pumps if given the chance of getting into a station id rather compost my money

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I pumped gas/worked at a service station through high school and some college(4-5 years ago). The profit was roughly $0.05-$0.13/gal. And there was a significant cut from the credit car companies, thus why you see so many doing cash discounts.

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