Gas Stations

This post originally appeared on Orphan Road.

There are a lot of interesting nuggets in this BusinessWeek article on gas stations.

The context is that gas stations are in a bind. They have to keep prices low or people will just drive across the street, keeping margins very low. But since credit card fees are based on the total cost of sale, the fees are now exceeding the margins. So, stations lose money on every gallon sold. Like movie theaters, they make their money on the extras, except instead of popcorn, it’s cigarettes and auto services. Gas itself is often a loss leader (and most filling stations are not owned by the company whose logo graces their pumps, they’re franchises).

So, the result is predictable. Stations are going out of business:

Plenty of filling stations have already gone under. Last year, 3,184 of the nation’s 164,292 gasoline stations closed their doors and went out of business, the biggest drop in five years, according to National Petroleum News. In the mid-1990s, there were more than 200,000 stations in the U.S. Experts think there are more closures to come.

…

[One] station, which sells almost 2 million gallons of gasoline a year, picked up 500,000 gallons’ worth of business last year when the other stations disappeared. If filling stations keep closing or selling out, “I could end up with a near monopoly here,” he says.

The immense network of filling stations has been one of the gas-powered auto’s key advantages over other alternatives. Could that be going away, too?