A few gas stations in my town have recently dismantled their pumps, and are just convenience stores now. Is this happening across the USA? Are many stations giving up on selling cheap gas to focus on things like sodas and lottery tickets?
Er… this has been happening for close to 20 years now, you just noticed this week?
Yes, a lot of places that used to sell gas are getting out of the business. I don’t think gas stations will disappear entirely, though.
IIRC high prices were also killing gas stations. I think the argument went that gas stations get a fixed markup from what they buy, not a percentage, and the credit card fees, which are a percentage, was killing them.
I haven’t noticed any stations closing around here, and lower prices usually means more driving and thus more consumption, so it would be good.
The large number of hybrids and electric cars around here would seem to be more of a threat.
I was lead to believe that gas stations make a very small profit per gallon anyway, pennies per gallon at the most. So if anything I’d say that the increases in MPG would be what would be killing the gas part of their business model, since cars, in the past 10 years in particular, have been getting better mileage and so have to stop to refuel less often, so retailers will have less opportunities to get them into stores to buy snacks after refueling.
We almost certainly will have gas stations for some time to come because people will want to buy gas for their cars conveniently. Unless the government or suppliers restrict the price it can be sold at, there must be some markup that lets the gas stations profit enough to survive. And if only some suppliers restrict the price they can sell at, well Exxon stations will become Shell stations or whatever.
I believe the problem is that different stations have different prices from the same suppliers, but by and large they cannot set retail prices to be much different as gasoline seems to be a commodity people are particularly price sensitive about. I believe that larger stations and those that are company owned often get lower supplier prices.
Is this only happening for “out of the way” gas stations? Like in the middle of a town that is a way off the freeway?
I ask because the number of gas stations in my city went from 4 to 3 to 4 again in the past 10 years so I’m not familiar with the “phenomenon” of the “past 20 years” of gas stations closing down their tanks and becoming convenience stores…but I wonder if that is because my town has a freeway running through it and three freeway ramps in 3 miles? The gas stations are all up against these freeway ramps and in areas zoned for gas stations & hotels.
While they all have greatly upped their “convenience” factor and upped the number of Slushee machines in town, the number of gas pumps in town has also increased.
I think it has more to do with the tanks meeting EPA regulations than the price of gas. I constantly see stations pulling out the tanks and another station showing up a couple of years later on the same spot. Most of the locations they currently have are there for a reason so unless they move the roads significantly there is good chance they will get replaced with a new station.
Most modern “gas stations” make there money off the stuff like $1.79 Monster drinks and junk food than they do gas.
I clearly remember when it was unusual to find an intersection of major suburban streets without four gas stations, one on each corner. I would guess this started to change after the 1973 crisis. Now it’s never more than one or two. So the decline has been going on a long time, and lower and lower per-vehicle fuel usage is going to keep pushing the street demand down.
Could be that their underground tanks are up for certification or replacement, and that’s fairly expensive. A friend ran a family owned fuel supply/gas station, he ran it and had a sister who only wanted her cut of the action. When it came time to replace the underground storage tanks, she balked at coming up with her cut (it was over $25K/ea IIRC) so the brother just sold the company. Small gas stations may not have cash on hand to pay for that, and figure it’ll take longer to make it back than it’s worth.
Just a WAG, but maybe one possible reason.
Traditionally gasoline sales are simply a loss leader to get people into the store; and companies make money off the convenience store items. I haven’t noticed the OP’s trend–instead I have notice a big increase in dollar store which are much cheaper than convenience stores. And of the course the long term trend has been the disappearance of the traditional gasoline station which combined gasoline sales with automotive repair.
According to the local ARCO ampm owners group they get 28 cents a gallon…
they had a "don’t blame us"story about it in the local fish rag and bird cage liner when gas almost hit 4.00 a gal . …
But here its mergers and safety issues that close gas stations down
although there were 2 notable exceptions 1 was a guy that inherited a bunch of money and opened 10 stores/stations with a deli inside each one at the same time …lasted about 2 years …
And the mobil owner who decided that he wasn’t making enough money from the sheriff department station across the street so he decided when he redid the gas tanks hed put in an hidey hole and distribute about 50 k in meth and coke a month that lasted about a year maybe …
Here in CA, it’s usually because there’s either new regulations about the underground tanks, or some other sort of regulation that is just too expensive to implement. We lost both of the gas stations on one of the corners here at the first of the year a couple years back because they couldn’t afford the new tanks. One of the corners has turned into a strip mall; the other is still a derelict gas station.
I think it may thin out the herd but make the remaining gas stations better overall. I mean people still have to have gas and someone will provide the stuff. The Circle K’s in my area seem to be doing really well. They’ve been expanding with new locations and also tearing down aging gas stations and building new modern ones that basically act as mini grocery stores. Some of the new ones I’ve seen have a huge amount of inventory and food items and such, and people seem to be buying the stuff up.
That would mean that they lose money on people who buy gas and nothing else. I can’t believe that’s true.
I can believe that they make a substantial portion of their income from convenience store sales, to the extent that they couldn’t stay in business without those sales.
ETA: There are also grocery stores that offer “fuel saver points” (reduced price gas) at their attached gas stations if you buy certain items. These could make the price of gas so low that it becomes a genuine “loss leader,” but I assume the profits on the groceries more than make up for it.
So they are selling the gas for more than they are paying for it, but not enough more to pay for the costs of running the station.
Gas stations are like movie theaters. They make their money on the sundry items and not the feature. If a locally owned station closes it’s probably because they are not making enough money with the milk, soft drinks, beer and tobacco products. If it’s a franchise location, the parent oil company may close a station to maximize sales, and net profits, with fewer nearby stations. Screw the franchisee.
Several years ago, Arco closed several franchise stations in our area. Most are in prime traffic areas near major roads and highways. Their competition at the time could not compete with the Arco gas prices. Turns out Arco can still make money, with no overhead, by keeping the stations closed and watching the local market. Arco recently reopened a couple and those are back to a brisk business. Travelers have a limited choice now but the locals know where the cheaper Arco station are still in operation just further down the road and around the corner.
With the closed Arco station closest to us, there is a schedule major road upgrade in the next year. They are primed to take advantage of this and either sell the land (at profit) or reopen when the timing is right. We hope for the latter because the former is a fools choice.
Regarding the bolded bit - if there was residual contamination from a leaking tank, it might be ineligible for other purposes. Some levels of residual contamination are OK for commercial/industrial, but not retail or residential, and others can only ever be used as gas stations or car repair areas.
And if there was a leak that hit groundwater, that can be an expensive cleanup.
I stand corrected, I guess. Some of the references in that Wikipedia article have broken links. I tried to find other sources online that define “loss leader”: some simply define it as merchandise that is sold below cost/at a loss, while others say something like “…or at a very low price.”
I second the EPA thing. I knew a guy who ran (but did not own) a rural gas station. When the time came to put in the upgraded tanks, the owners didn’t want to pay, and so they stopped selling gas, which killed the convenience store business.
Also, there’s a lot near me that was empty for over a decade. It had been a service station, and to do new construction there was (I’m told, this is secondhand) an expensive process to pull the old tanks and make sure the ground wasn’t contaminated.
The improved gas mileage with people buying less fuel for individual vehicles is more than offset by there being so many more vehicles to buy fuel for.
It’s more about tanks aging out and costing too much to replace them while meeting current regulatory requirements.
New Rules Driving Gas Stations Out of Business. Granted, this article is about local regulations, but it’s a variation on what’s happening on state and federal levels.