With gas prices tumbling to levels last seen in 2004, Scott Royer has grown accustomed to seeing drive-offs by customers once loyal to his family-owned service station in central Pennsylvania -- but not the kind that make him call the police.
In recent months customers pull in but see a lower price posted at a big station across the street and pull right back out.
Small independent service station owners say they can't keep pace with plunging gas prices. By the time they empty a storage tank of gas, prices have fallen so far that the amount they must charge to recoup the purchase price appears exorbitant compared with high-volume chains, they say.
"We can't fluctuate as much," said Royer, whose father started Royer's Gulf Service Station in Carlisle in the 1960s. "Sometimes I have to just drop (the price) and take the loss."
It can take Royer three weeks to sell his 8,500-gallon shipments. When gas prices fall below the wholesale price he paid, he either has to eat the difference or stay with his higher price and risk losing customers.
In just the past month, the national average retail price for a gallon of gasoline has fallen more than 55 cents.
"If the price is falling, it really hurts," said Louis Ferrara, who sells about 60,000 gallons a month at his Sunoco in South Philadelphia, compared with average station sales of 75,000 to 100,000 gallons a month.
Gas station chains and large-volume sellers like Costco can lower their gas prices and absorb losses more easily than smaller stations because they buy so much gas and have other business to fall back on, said Ralph Bombardiere, executive director of New York State Association of Service Stations and Repair Shops Inc.
Prices in the Pittsburgh market are ranging from about $1.69 to about $1.85 a gallon, said Donald Bowers, who manages petroleum products for Superior Petroleum Co. in Ross.
"The guys who are at $1.85 aren't selling very much gas. They are still trying to get rid of it at better margin or no profit at all," he said.
Bowers' company distributes gasoline to about two dozen independent stations in Western Pennsylvania, including BP, Citgo, Sunoco and Valero, which entered the market last year.
Pittsburgh area fuel prices tend to be 20 to 40 cents higher than in Ohio, "and that in turn, doesn't help these smaller dealers," he said
Ray Moore, owner of Ray Moore's R&S Service, a Gulf station in Swissvale, said he's making money thanks to declining gas prices.
"I am supplied by a distributor, and every day my price is set. So when I get a load of gasoline coming in, I know the first thing in the morning what the price will be," Moore said. "And in a down market, I can make money because my market will change faster than, say, most of your Sunoco dealers who are on a contract and their prices may change every four or five days."
Moore said he bought gasoline for about $1.55 a gallon and is selling it for about $1.79 per gallon, "so I'm working on 14.5-cent profit," he said.
"That's the worst margin I've had in the last two months. There have been days where I've been leading the way down on my prices and consequently stealing business from other stations that when there is an up market can take business off of me."
"As my prices go up real fast, theirs don't, so they can hold a lower price longer than I can. So I'm making up for the days when I was selling gas at 2- or 3-cent profit margin when the prices were heading up."
"For the last two months as prices have been heading down, I've been making money," Moore said.
Over the past 15 years, the total number of gas stations across the country has fallen amid stricter environmental regulations, according to Carl Boyett, president of the Society of Independent Gasoline Marketers of America. Credit card fees have made business tougher for small station owners.
In 1994, the United States had 202,878 gas stations, a number that dropped to 161,768 in 2008, said Boyett, who is CEO of Boyett Petroleum, a gasoline distributor in California.
No comments:
Post a Comment