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High Fuel Prices Hurt Gas Station Owners

April 5, 2008, 10:00 PM by Kelli Grant

High Fuel Prices Hurt Gas Station Owners
High gas prices may make you may cringe when you drive by a gas station. But you should know the station’s owner is feeling the pain as well. Profits for fuel sales are very low and those in the business are turning to other services to keep afloat. Just selling gasoline could shut off some station's pumps. 

You won't find many places like Dave’s Service & Repair. It's Lennox's local mom and pop quick stop.
And Dave Severson is the friendly face you see every day. 

“I don't have credit card at the pump. You can't pay at the pump. I have customers that pull up here, they fill up. They wave, I write it down, I bill them at the end of the month and away they go. They never come into the station,” Severson said. 

It's the locals that come to Dave's for more than just a fill up. 

“The oil changes, tires, towing, alignment.” 

Severson says if he didn't provide a full service station his doors would most likely be closed. 

“If I didn't offer all the rest, I wouldn't make it on the gas,” Severson said. 

That's because he'll pay 24 to 25 thousand dollars for a load of fuel. If the price drops the very next day he's out of money. Even selling it a nickel lower than what he paid could mean losing hundreds of dollars in profit. 

“Sometimes you're making a nickel. Sometimes you're making 25 cents. Sometimes you’re losing 30 cents,” Severson said.

Severson says the problem is as the price of gas goes up and down, the bigger gas stations will continue to compete. He says that could drive his mom and pop station right out of town. 

“I don't set the price, I gotta follow what the big guy does or I don’t sell gas,” Severson said.

So the trick is getting customers to come inside for a pop or a new tire. And Severson says even though gas brings in very little profit his customers count on him for the full service. 

The National Association of Convenience Stores estimates that gasoline accounts for 70% of a typical station's revenues but only 30% of its profits.

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