Apparently convenience store owners are particularly screwed by high gas prices.
Profit margins for gas, which are already slim, tend to shrink when prices rise. In 2003, convenience store owners reported an 8.8 percent margin on gas, meaning if gas cost them $1.00 per gallon, they could sell it for $1.088. That’s the lowest margin since 1985, according to the National Association of Convenience Stores. Add in credit-card fees—typically 3 percent—and the cost of distribution, which ranges between 2 and 4 percent, and the margins for gas are razor-thin, at the most a couple of pennies on the dollar.
And if you have to eat price increases, your margin slips further. That’s what happens when gas prices rise. Convenience store owners buy gas every day or once every couple of days, and they constantly adjust their prices. But as this Energy Department report shows, it takes about 10 weeks for a change in the spot price of oil to filter fully into the retail price of gas, with about half the change working its way in within two weeks. This lag is a boon for convenience store owners when gas prices are plummeting: The price they pay to fill up their tanks falls rapidly, while the price they charge falls more slowly. But it’s poison when prices are rising. Each day they pay more to fill up their tanks, but they’re unable fully to pass on the hikes to their customers….
Rising gas prices hurt profits inside the convenience store as well as at the pump. When drivers spend more on gas, they’re likely to spend less on Twinkies and Marlboro Lights…. [G]as accounts for two-thirds of the sales but only one-third of the profits.
Considering a good portion of these convenience store owners don’t even pay taxes, about all I can manage is “sucks to be them.”
