You're saying that a station owner makes $0.40 on a 20 gallon sale of $4.00/gal gasoline after 2% cc merchant fee? That doesn't seem right.
2-4 cents would be a good net profit estimate per gallon depending upon their volume/contracts or if they are a marketer (distributor) as well as retailer, etc. There can be exceptions to the rule, but the market is generally very competitive and you try to match the lowest price in a specific market to keep your volume up.
There will be periods where perhaps you can get a few more cents for a few more days, but having those signs with the big price numbers clearly in view makes retail gasoline pricing perhaps the most transparent of any industry leading to little opportunity to manipulate the local market. Might a bunch of stations decide to keep retail prices higher after wholesale prices drop (not formally in an FTC antitrust sense but through "I won't drop until so and so drops") -- sure. But, there is always a "so and so" with a better wholesale deal who decides to drop and pull your customers away so they can get more volume at their sites and in the stores where the real profits are. Riding the "high" prices usuall lasts only days -- maybe a week or two -- and the "gouging" would still likely be less than a typical profit margin on just about anything else you buy.
Similarly, when some pipeline gets disrupted etc. and wholesale rack prices shoot through the roof you have to keep your retail prices down as best you can to match whoever happens to be sitting on a better supply deal at the time and decides to break even at the pump and get volume through the consumer sticker shock that follows where people become even more price sensitive.
Now, in the store you can make 30+ percent margin on your shelf goods. You get some of the ATM fee. You get a good margin on the Car Wash and foodservice/coffee/beverage program. Lottery tickets, etc. When gas was at $2 per gallon you made more on gasoline. Not as much as the 1990s, but enough to be useful.
Gasoline is largely the one-stop-shop volume generator -- get them on the site and hope they go into the store. Make some money when you can, and try to match you competitor making as much margin as you can without losing volume. There are price modeling companies that can allow a retailer to perhaps charge a few more cents than the lowest in the market without losing volume depending upon such things as the side of the street, time of day and other offers you have at the site. Maybe 3-4 cents above the lowest price. For a while major brand loyalty allowed that as well -- Shell, BP, Chevron, etc. But, price is king in petroleum and the transparency assures the consumer that there will usually be a high degree of competition.
I know a few station owners.. they say they make a lot of money on gas.
I'd like to talk to them. E-mail me their contact info. I know a few hundred who collectively own tens of thousands of stations who don't. Gasoline has moved from being a primary profit center to a volume generator and that has been the case for about a decade or so now. Gasoline still is a primary source of revenue, but not profits. The goal is to not lose money, and perhaps make a few cents most of the time.
I know some larger distributors who earn a very good living moving gasoline to retailers, not at a huge profit margin even there but we're talking millions of gallons and without the CC fees, of course. One actually races a modified Sea Fury and has a few AT-6s (as well as kids flying in the Air Force). Still not a ticket to mint money realtive to other areas.
Charon
