Independent Operators Feel Pain at the Pump

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Independent Operators Feel Pain at the Pump

NEW YORK --Consumer angst over gasoline prices has affected independent retailers, according to Inc. .

"[T]o the surprise of many motorists, the majority of the 167,000 retail outlets selling gas in the U.S. are independently owned and operated," reported Inc. . "With prices up an average of 37.5 cents per gallon from just a year ago, these small businesses have been dealt a one-two punch of shrinking profit margins and consumer backlash. While even gas station operators themselves do not deny that there can be price gouging in their industry, they contend that such practices are the exception and that many owners are now struggling."

NACS spokesman Jeff Lenard said in the report that the first nine months of 2005 "have been terrible for retailers," adding that the public assumes the strong profit statements of the big oil companies trickle down to the local retailers. "They don't," said Lenard, noting that consumers also assume that as prices rise, local retailers are collecting more profit.

"Actually, rising gasoline prices tend to shrink profit margins," added Lenard, stating in the report that the current retail profit margin is down four cents.

Inc. reported that high fuel prices have also had a negative impact on retailers who rely on in-store sales to boost their bottom line.

"A customer now paying $50 to fill up his SUV, instead of $35, is less likely to tack on a snack and a soda," reported Inc. , adding that high prices also lead to angry consumers.

"When prices go up, people tend to blame the retailers, which is really misdirected," Lenard told Inc. , noting that during the weeks following Hurricane Katrina, some retailers were faced with huge increases at the wholesale level and actually sold gasoline "at a loss."

Mike Rexford, an independent retailer located in Tonawanda, NY, told Inc. that he has gone so far as "to encourage customers to car pool" to help curb demand at the pump and lower his prices.

"The best way to get the price of crude oil down is not to use it," Rexford said in the report, adding that when prices peaked at their highest level, many customers weren’t shy about expressing their angst.

"When you take all things into consideration, especially the price of crude oil and credit-card fees, my profit margins are a joke," Rexford told Inc. .

Even as independent operators continue to cope with high prices and consumer backlash, recent EIA statistics on weekly fuel reports across the United States have shown a six-week decline in retail gasoline prices, according to the report.