Station owners say they lose out

Higher gas prices lead to lower profits, not more, station owners say.
By DON SHILLING
VINDICATOR BUSINESS EDITOR
A small McDonald service station took delivery Wednesday of 2,000 gallons of gasoline at $2.69 a gallon. The problem is that the station was charging its customers 10 cents less a gallon that day.
"These prices are killing me," said Steve Treharn, owner of Steve's Service, 51 E. Marshall Road.
He accepted the higher-priced gas because his tanks were low, and it was the best deal he could find.
"It's a gamble. You buy it and hope the street price goes up," he said.
To minimize his risks, he bought just one- quarter of a tanker truck, about 2,000 gallons. The gas should last him a few days.
Owners of independent gas stations say it's common to buy gas at a wholesale price that is near or even above retail.
Shoppers often think gas station profits increase as prices rise, but that isn't so, said Randy Manley, owner of Randy's Gas and Auto Repair Service, 1992 Elm Road N.E., Warren.
"The higher the price gets, the less we make," he said.
Here's why
That's because credit card fees eat up the profits at a higher rate when prices increase, he said. Stations pay 3 percent of each transaction that's paid with a credit card.
The credit card charge for gas bought at $1 a gallon is just 3 cents a gallon, but the charge for gas bought at $2.50 a gallon is 7.5 cents a gallon.
Manley said he usually charges 6 cents a gallon more than he pays for gas, so he's losing money every time a credit card is used. About one-third of his business is paid by credit card.
After the credit card payments, the station has to pay normal overhead, which includes payments for government-required leak monitoring and tank insurance.
An official with the U.S. Energy Information Administration said this week that he expects prices at the pump, which averaged $2.68 a gallon nationwide last week, to increase 10 cents to 15 cents in coming weeks, peak in May and then drop off in late summer.
Manley said he paid $2.63 a gallon for gas that was delivered Tuesday. His retail price Wednesday was $2.68.
The 5-cent markup nets just $300 on 6,000 gallons of gas, which cost him nearly $16,000.
"I'd never suggest anyone get into the gas business if they don't know what they're doing," he said.
Manley and Treharn said getting out of the gas business would be costly. Once a station stops selling gas, the government requires that the underground tanks be removed.
Investigation needed
The lack of a larger spread between wholesale and retail prices baffles Treharn.
"There needs to be an investigation," he said.
Gas retailers have to rely on other lines of business for profits, he said. The national gas retailers, for example, are pushing the sales of food and other items inside their stores.
For Treharn and Manley, most of the profits come from repairing vehicles. Both operate two-bay garages.
Treharn said he would love to charge more for gas and establish a bigger profit margin, but he has to stay close to what other stations are offering.
"If you're too high, they'll drive right past you and go somewhere else," he said