Pretty much on the mark in a general sense.
Marketers/jobbers - distributors after the pipeline, terminal, large wholesaler level (though may operate bulk plants). They typically pick up product at the rack to distribute to a retail/dealer network that may include some locations they own and operate themselves, some they own and lease for store operations, and some owned independently that they just supply with fuel. Sometimes they operate their own trucks or they use common carriers. They will also, in many cases, operate commercial cardlock fueling operations, mobile off-road fueling, lubricants, etc. in addition to consumer retail fueling.
Retailers/dealers. These are the stations on the street. They can be independently owned/operated or operated as part of a jobber/marketer or major oil company operation. Open dealers own the land and make their own branding/supply decisions. Lessee dealers lease the operations (typically with control of the store and store profits) from a larger marketer or less often from a major oil company (who keep the store supplied with fuel and make most of the profits from fuel sales).
There is also branded and unbranded. The supply contracts among at the branded marketer and dealer levels means generally that you get secured supply, but have to accept the branded wholesale price and may have some "zone pricing" controls set by the major oil company on your street prices. You also pay more, typically, than an independent buying on the spot market and may find your pricing quite different from that of others in the same branded network, even some that may only be a mile or so away.
There is a general (but slow) shift away from branded among marketers and retailers, and a shift away from downstream (refining/marketing/retail) at the major oil level. The majors know everything they pump will be used, and refining/marketing/retail are often underperforming (by major oil standards). The majors are getting rid of these assets, and pushing direct company op dealers on to larger branded marketers. Marketers and retailers note the change in major oil perspective, get less service than in decades past, typically pay more for fuel and in many cases question what the brand provides in return value on the street for that higher price. In some areas, the benefit of the brand can be worth the cost and hassle. However, you are more likely to get fuel than unbranded marketers and retailers, should a major crunch hit the market.
In general, at the retail gasoline gross margin is low, less than 10 cts/gal down to break even at times when the markets go haywire. Higher volitile street prices usually equate to lower margin since you price to the lowest in the marketplace to maintain your volume, and some operations use gasoline as a loss leader and do super high volumes/economy of scale. The goal in the industry today is to concentrate on the store and the car wash and foodservice, etc. to make money, using gasoline as more of a volume generator than core profit center. For the last 6 years or so the optimal goal is to get sites that can survive at the zero-margin level with gasoline, if need be (and “need be” is not that uncommon). Hard to believe with a pump price of $5.00, but you have to know what the, marketer/retailer is paying wholesale to understand.
It's a tough business to earn a living in today, very hard for a mom and pop, and not easy for an established smaller marketer chain of 20 or 30 stores operated/supplied, even with efficiency and economies of scale.
Charon
