Not So Fast
12-08-2007, 07:10 AM
Gas retailers also feeling the oil pinch
By John Rudolf
Friday, December 7, 2007 9:16 PM MST
Arizonans burn an astounding 2.3 billion gallons of gasoline each year, and gas prices are holding steady at $3 per gallon, but that doesn't mean gas station owners are making out like bandits, said a representative for Arizona's petroleum marketers.
"They're hurting too," said Andrea Martincic, spokesperson for the Arizona Petroleum Marketers Association, during a visit Friday to Lake Havasu City. "It's frustrating for a lot of retailers because they're the ones dealing with the public at the end of the supply chain."
Martincic stopped in the city during a tour through northwestern Arizona as part of a charm offensive by the retailers and wholesalers in the state, who she said are feeling like scapegoats as gas prices continue to hover near record highs.
While oil prices flirt with $100 per barrel, profit margins for everyone from refiners and wholesalers to retailers are being squeezed, she said.
"A lot of times consumers don't know that," Martincic said. "They think the guy who's selling the fuel is just raking in profits."
Rick Fuscardo, owner of oil and fuel wholesaler Parker Oil, agreed.
"Our margin has not changed since 1989," he said. "It's pennies a gallon."
For every dollar paid at the pump, consumers pay an average of 56 cents for the underlying crude oil, 18 cents for state and national taxes, 17 cents for refining and only 9 cents for "post-refinery" costs, according to statistics from the National Association of Convenience Stores. Those "post-refinery" costs include transportation, via pipeline and tanker truck, the operation of fuel depots or terminals, and the cost of retailing the fuel.
Once all the intermediaries have taken their cut of the gasoline dollar, Martincic said, retailers make about 1 cent in pretax profit.
Retailers must also pay a hefty surcharge to credit card companies between 2 and 3 percent, which stays the same even while fuel prices rise.
"As gas prices go up, retailers make less money," Martincic said.
The character of the market for petroleum has shifted in the state over the past five years as well. Out of the state's 2,174 gas stations, refiners own only about 7 percent. Profit margins are higher for oil companies in exploration and crude oil, not marketing refined products, leading many of them to sell off many of their gas stations.
But while gas stations in the state and locally are probably not owned by oil industry titans like Chevron or Shell anymore, they have not reverted to mom-and-pop operations. Many, like Arizona's 400-plus Circle K stores, have been bought up by outside corporations. In the case of Circle K, the purchaser was Canadian corporation Couche-Tard.
:idea: :idea: Somehow I just cant believe the stations can operate on a profit of $.01@ gallon but I do believe the cost of gas will cripple this ecomomy!!:( Can it survive, only time will tell:idea: NSF
By John Rudolf
Friday, December 7, 2007 9:16 PM MST
Arizonans burn an astounding 2.3 billion gallons of gasoline each year, and gas prices are holding steady at $3 per gallon, but that doesn't mean gas station owners are making out like bandits, said a representative for Arizona's petroleum marketers.
"They're hurting too," said Andrea Martincic, spokesperson for the Arizona Petroleum Marketers Association, during a visit Friday to Lake Havasu City. "It's frustrating for a lot of retailers because they're the ones dealing with the public at the end of the supply chain."
Martincic stopped in the city during a tour through northwestern Arizona as part of a charm offensive by the retailers and wholesalers in the state, who she said are feeling like scapegoats as gas prices continue to hover near record highs.
While oil prices flirt with $100 per barrel, profit margins for everyone from refiners and wholesalers to retailers are being squeezed, she said.
"A lot of times consumers don't know that," Martincic said. "They think the guy who's selling the fuel is just raking in profits."
Rick Fuscardo, owner of oil and fuel wholesaler Parker Oil, agreed.
"Our margin has not changed since 1989," he said. "It's pennies a gallon."
For every dollar paid at the pump, consumers pay an average of 56 cents for the underlying crude oil, 18 cents for state and national taxes, 17 cents for refining and only 9 cents for "post-refinery" costs, according to statistics from the National Association of Convenience Stores. Those "post-refinery" costs include transportation, via pipeline and tanker truck, the operation of fuel depots or terminals, and the cost of retailing the fuel.
Once all the intermediaries have taken their cut of the gasoline dollar, Martincic said, retailers make about 1 cent in pretax profit.
Retailers must also pay a hefty surcharge to credit card companies between 2 and 3 percent, which stays the same even while fuel prices rise.
"As gas prices go up, retailers make less money," Martincic said.
The character of the market for petroleum has shifted in the state over the past five years as well. Out of the state's 2,174 gas stations, refiners own only about 7 percent. Profit margins are higher for oil companies in exploration and crude oil, not marketing refined products, leading many of them to sell off many of their gas stations.
But while gas stations in the state and locally are probably not owned by oil industry titans like Chevron or Shell anymore, they have not reverted to mom-and-pop operations. Many, like Arizona's 400-plus Circle K stores, have been bought up by outside corporations. In the case of Circle K, the purchaser was Canadian corporation Couche-Tard.
:idea: :idea: Somehow I just cant believe the stations can operate on a profit of $.01@ gallon but I do believe the cost of gas will cripple this ecomomy!!:( Can it survive, only time will tell:idea: NSF