Fuel Retailers Finding it Difficult to Turn a Profit

May 1, 2012

HighwayBusinessMatters.jpg

Decreased fuel consumption, the high price of fuel and high credit card fees are taking their toll on fuel station owners nationwide. Turning a profit on fuel is growing increasingly difficult, the Wall Street Journal reported.

Interestingly, since 2008 ExxonMobil Corp. has sold more than 95 percent of the roughly 2,000 stations it owned, and it plans to sell the rest by the end of the year. Chevron Corp. is also reducing the number of stations its own, with 491 at the end of 2011, a decrease from 1,348 in 2001.

Decades ago fuel prices and rents were low, which made it easier for operators to turn a profit, the Wall Street Journal reported. Now, U.S. gas consumption is estimated to be at an 11-year-low and margins have decreased. Fewer vehicles at the pump often translate into fewer inside sales.

What’s more, today’s consumers use credit cards for the bulk of their purchases, further cutting into operators’ margins. Credit card-processing fees are based on a percentage of sales and can range from 1 to 3 percent plus a flat fee of 10 cents per transaction.

For operators, uncovering new ways to attract customers and becoming a destination stop can increase sales. Industry suppliers are in a prime position to join with their customers to find innovative ways to drive traffic to the location. By better understanding operators’ needs and concerns, suppliers can partner with them to uncover such as improved food offerings or additional services to attract customers.

View the full Wall Street Journal article, while it is available, here.

 

Mindy Long's photo

Before launching a full-time freelance career, Long edited NATSO's Stop Watch magazine. Prior to that Long worked as a staff reporter for Transport Topics, a weekly trade newspaper, covering freight transportation, fuel and environmental issues. In addition to covering the transportation sector, Long has written, reported and edited for a variety of media outlets. She was the Washington correspondent for WCAX-TV (CBS) in Burlington, Vt., a criminal court reporter in Chicago and a freelance copy editor for Kiplinger’s Personal Finance magazine in Washington D.C. Long hold a master’s degree from Northwestern University’s Medill School of Journalism in Evanston, Ill., and a bachelor’s degree in Communications from Westminster College in Salt Lake City.More
Source:
Highway Business Matters (HBM)
Supplier Focus:
Chevron Corp.ExxonMobil Corp.

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