It seems like most places are actually somewhat oversupplied by gas stations. It’s quite rare to have to wait to pump gas, yet the margins are incredibly low. You’d think that more gas stations would go out of business until the margins rose a little and/or the wait times at the pumps rose a little.
A family friend inherited a small chain of gas stations (4) from his dad. He had no interest in running a gas station and managed to sell 3 to major names who wanted the location. The 4th nobody wanted so he sold off the gas and closed it up/put it up for sale. This triggered some kind of state and or EPA inspection (that the big boys who bought the other stations handled on their own) who determined there was massive soil contamination and they would need to initiate some kind of mitigation immediately.
The sale of those 3 gas stations did not cover the cost of the cleanup and damn near destroyed him financially (and he was a dentist).
[my mission]
Not lead, LED.
[/mission]
Other contributing factors:
Cars used to need a lot mor maintainance. A lot of those gas stations were garages until they closed the garage.
(Around here) a lot of gas stations are owned by the big gas companies (Shell, BP etc). They supply the gas and compete unfairly with the independents.
In particular, (around here) a lot of the small independents were shaken loos by a pricing strategy that rewarded owners that could do big capital investments: larger forecourt, larger tanks, huge swings in traffic instead of a steady drip.
And then a tie-up with super-market coupons tied a huge section of the market to Shell stations, again shaking loose more of the independents.
A chunk of the costs has to have been affected by “self service” pumps. It used to be that labour costs scaled with the number of pumps. With self-service pumps, on guy on the cash register handles as many pumps (and as much storage) as you can put in. That gives a price advantage to a few big stations, and a cost to have many small stations.
Well, it depends on the gas station.
Yes, another point was that cars used to be easy to repair. the income from the repair bays was an appreciable chunk of the total income.
Cars needed fixing - elctromechanical automatic choke, brakes, tires, coolant systems, transmissions, etc.
Now everything is electronic, precision, and the mechanics usually need to be trained on a particular model to avoid serious damage to the vehicle. It’s become specialized. People go to dealers or large shops that can afford the training. Self-made mechanics are less able to keep up.
So the attached two or three service bays used to provide decent income too. Converting them to convenience store has helped some, but a lot of people just buy gas.
(Used to offer free air because the service bay needed the compressor - now it’s another money-making opportunity.)
In the UK, it’s the supermarkets that have put the independents out of business. Pretty much all of the above applies too, but there are three filling stations local to me that are retail stores now. The one that remains is part of a big chain and attached to a large convenience store that opens 24/7.
There’s also a strange regulation in the UK. If a petrol (gas) station closes down, the tanks must be filled with concrete. This makes it much harder for a station to re-open a few months later, so once they’re closed that’s pretty much it for that location.
The oil companies say they have no choice and they’re just following government rules. But these rules seem to favour them quite nicely. If the tanks weren’t full of concrete, an independant might be able to take over the site and run it with a smaller profit margin. The oil companies have been using it as a tactic to reduce the number of stations in an area and give them a larger share of the take. Franchisees and independants get pushed out.
I worked at a gas station in the '90s. It’s been this way for a long time; I’d see the bill sheet after we got a load delivered. After adding up everything including state and federal gas tax, the station’s markup was about 5-8 cents per gallon.
That’s a good point, but it only explains the service stations that close their repair bays, and become plain gas stations.
But widespread closing of gas stations? This is something that I have not seen here in northeastern NJ. I’ve seen big names become small names, such as an Exxon becoming a Delta, but very rarely the other way around. And I certainly haven’t driven anywhere and said, “Where did all the gas stations go?”
Perhaps this is a regional phenomenon? Almost all my driving is urban or suburban; maybe they’re closing only in the rural areas?
One big exception to all the above is New York City itself, especially Manhattan. Property values have gotten so high that ALL of the thin-profit-margin places are leaving, and gas stations are but one example.
My town has lost two gas stations in the last 10 years, but they were both very unsuitable locations for a modern gas station. One was right under the local airport approach and was grandfathered into the local zoning laws that now prohibit building anything there (it was the last full-service station in town and it had no convenience store at all), and one was on a tiny lot that only had space for two pumps and a tiny building with room for a cashier and a candy rack. The first is now just empty space and the second is a corner of a Walgreens parking lot.
From a 2013 report:
-
There were 156,065 total retail fueling sites in the United States in 2012. This is a steep and steady decline since 1994, when the station count topped 202,800 sites
-
U.S. gasoline demand decreased 0.2% in 2012 and has decreased 6.1% since demand peaked in 2007
-
The gross margin (or markup) on gasoline in 2012 was 18.4 cents per gallon, or 5.1%. Over the past five years, retailer gross margins have averaged 16.9 cents per gallon.
-
major oil companies own and operate less than 0.4% of all convenience stores in the U.S [that means corporate owned, not branded]
-
58.6% (72,206 stores) of the country’s 123,289 convenience stores selling fuels are one-store operation
There are lots of other goodies in that report, such as:
From here: Fuels Resource Center | NACS
My town lost one and gained one. I know one local store owner just adds ~10 cents per gallon to whatever he pays for it. My impression is that pay at the pump affects their business more than gas prices do. The new gas station is a big Sheetz with lots of different made-to-order food and a seating area inside, so that gives people a reason to go in.
Perhaps, but the independent stations in the Bay Area are much, much cheaper than the branded stations. Safeway has a program that gives you 20 cents a gallon off of the prices at Chevron stations. That is still more expensive than the independent next door.
I believe the cost, totally. Even small soil contamination situations aren’t cheap, and if the plume has hit the groundwater, you can end up running a remediation/monitoring system for years.
There is a reimbursement program, though, that’s been available since 1986. As a small owner, he’d have priority.
The main difference between the old tanks and the new tanks is that the old tanks were single-walled and you’d only notice leaks with an inventory audit. Or when your well water started tasting funny. The new tanks are double-walled with a way to test to see if the inner wall is leaking.
There is a new gimmick afoot in several chains of gas stations. You basically sign up for a debit card attached to your checking account and the card is only good at that station. In return, you get a nickel to a dime off per gallon. Of course, the money for the chain is from two things- extra sales due to the ease of using the card and more so from penalties. The overdraft penalty for one place comes out to nearly a hundred dollars, not including those for the bank.
One of the three (kind of) gas stations in the very small town I live in just wiped out their old building and built a brand new one. They even got a Godfather’s Pizza Express in it!!
They used to allow that here but I don’t think they do any more. I think now you have to actually remove the tanks.
US motor fuel consumption hasn’t declined significantly, just hardly growing anymore. It’s close to the highest ever now and more than it was 20 yrs ago, whereas the number of gas stations has declined around 25% in the last 20 yrs.
It’s a number of reasons, like general trend to consolidation and volume, environmental liability and compliance costs, and one I didn’t see mentioned which is change in the pattern of living and land use toward urban areas and corresponding land price increases. As an extreme example, gas stations have almost disappeared in Manhattan. They were never as visible there as suburban places but there were still pretty many at one time in lower rise parts of the island. Now the land is just too valuable everywhere on Manhattan for gas stations to make sense as a use of it.
No, if your station made $X+Y and now only makes $X it may not be viable.
The question is whether the sales of convenience store items compensates for the income from the bays that were closed. Repair work was pure profit, except for the mechanic’s wages or share. Markup on convenience store munchies and drinks would be pretty high - considering I can buy a 2-Litre in a grocery store for less than the price of a 10-oz pop in the gas station.