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Gas station owners: Money stops at the pump
Fees rise with cost of gasoline for local store owners.
NORTH END — With drastically increasing gasoline prices, gas station owners must be raking in the dough. Right?
It’s a common misperception that’s driving owners up the wall, said Marcie Morgensen, who co-owns Kingston’s Streibel’s Deli Mart and Texaco gas station with her parents.
“My friends all think I must have all the money but we don’t. Even when gas was $2 a gallon, we never made a ton of money,” she said.
Gas prices in the area are hitting well above the nation’s $4.06 per gallon average, reaching upwards of $4.38 — a $1 increase since last month alone. The rising costs are hitting virtually every facet of the economy, crippling transportation-dependent businesses and pinching wallets tighter than ever. At a time when driving is certainly more of a privilege than a right, gasoline costs have Americans grasping for resources with few options left.
Now — between paying fuel suppliers, state taxes and credit card fees — gas station owners, too, are scraping pennies together and wracking their brains to figure how to continue making business profitable.
According to the Washington Gas Prices Web site, after crude oil costs, taxes are the next largest contributor to prices paid at the pump, and Washington has one of the highest state taxes in the nation.
In fact, its tax of 54.4 cents per gallon is tied with Michigan for the fifth highest in the country behind Illinois, New York, Connecticut and California, which leads the pack at 63.9 cents per gallon.
Next to come out of owners’ budgets are the credit card fees.
Every time someone uses a credit or debit card at a gas station, owners lose money off of every gallon sold.
“For every gallon of gas sold we pay 10 cents to credit card fees. That’s about what it comes out to. It’s a straight percentage of total sales,” Morgensen said. “When it was $2 a gallon we were only paying like 5 cents a gallon.”
The higher the price of gas becomes, the more people are using their credit cards, she said.
“Those (credit card companies) are the people who are making all the money on the gas. The oil companies are of course but the credit card companies are loving it.”
Daniel Han, owner of Poulsbo’s DJ Market and Deli and 76 gas station, had something similar to report.
“The biggest problem is the credit card fee,” he said. For every 10 gallons sold (a cost to the consumer of $43), Han makes a $1 profit, putting his profit per gallon ratio at 10 cents to one. But after credit fees are stripped from his earnings, that $1 profit on a 10-gallon sale can drop to 35 or 40 cents, he said.
“I can make a profit as a convenience store,” he said, “but not the gas.”
To add to his worries, Han said he hasn’t seen an increase in business since last winter. Summertime usually boosts gas buying, but this year — no increase.
Morgensen said her total gas sales are down 25 percent.
On an average day last year about this time her Texaco station would sell 3,200 gallons. Now, she said they are lucky if they even sell 2,500.
According to Seattlegasprices.com, prices over the summer last year dipped as low as $2.72 per gallon.
The situation is one leaving owners like Morgensen and Han working to encourage cash transactions and convenience store buying.
“I’m brainstorming ideas on ways to get people to come in and buy with cash. We can’t compete. We are always going to be more expensive going with the premium brand, especially when people are so money conscious,” Morgensen said.
Similarly, Han is creating an incentives program for buyers to earn free drinks and goods at his market.
Morgensen said with the rising increase there is also a greater fear of customers driving off without paying for fuel.
“That’s why 99 percent of gas stations are all pre-pay now,” she said.
For Han, many of his pumps don’t even go past $100 transactions. The limit, initially installed as a theft safety measure, now prevents some large vehicle owners from filling their tank full.
He and Morgensen both expect prices to remain on the rise, along with their costs.
“We don’t really know any sooner than you guys know, unfortunately,” Morgensen said. “We are faxed every night for the next day’s prices. Sometimes we’re faxed more than two times per day when it goes up drastically.”
When prices hit $5 per gallon, Morgensen figures she’ll pay 11 cents per gallon in credit card fees.
“I want more people to understand the plight of gas station owners,” Morgensen said. “And that we’re not the ones raking in all the dough.”