"Dude, let me show you something," Singh said, shoving a sheet of paper across the counter. Subtracting his wholesale gas costs and 36 cents in state and federal taxes from the pump price, his station makes about 2 cents a gallon, according to a report in the Kansas City Star. And that's before any other costs are subtracted. [image-nocss] Figure in credit-card fees, for example, and the station is losing money on every gallon sold.
"We are praying to God to help us any way he can," he told the newspaper.
The answer to his prayers, actually, might be in that customer's Coke-and other high-profit "inside sales" food items. Survival for independent stations like his could depend on adopting a business model exemplified by c-stores such as QuikTrip.
Consumers have benefited greatly from the roughly 60% decline in gas prices since summer's peak. An average household with two vehicles could be saving nearly $200 a month. The savings were even better recently in Independence, where a gas war drove prices down to $1.24 at some stations.
But the rapid drop in pump prices increased the pressure on independent stations such as Singh's to sell fuel at or below cost.
Some point to the market power of QuikTrip, which is the area's largest gas retailer, as the reason for the local price squeeze, according to the report.
In these parts, at least, QuikTrip has come to symbolize the transformation in how gasoline is sold in this country. The Tulsa, Okla.-based company has seemingly perfected a strategy of pulling a regular flow of customers into convenience stores stuffed with more profitable items, such as soft drinks and sandwiches.
Despite its reputation as a gas price setter, QuikTrip officials said they didn't trigger the recent price war. After all, it's not the only business selling gas as a means to a larger retailing end. But QuikTrip officials said they have every intention of winning.
"We didn't start this," QuikTrip spokesman Mike Thornbrugh told the newspaper. "But we're not going to get beat on price."
Gas retailing has long filled an awkward niche in the oil business, the report states. Federal lawyers compiling an antitrust case against Big Oil in the 1970s-a case that was eventually dropped by President Ronald Reagan-were prepared to argue that the oil industry's retail stations weren't viewed as profit centers in themselves. Instead, they were needed to dispose of huge amounts of profitable Mideast oil that the companies owned before those supplies began to be nationalized in the early 1970s.
The loss of the Mideast oil made all those gas stations less necessary to their corporate owners, who increasingly viewed them as financial albatrosses.
Indeed, the total number of U.S. gas stations has shrunk from 216,000 in 1970 to 162,000 today, even with three times as many vehicles on the road, the newspaper reported.
As the major oil companies lost interest in owning gas stations, they began to spin them off to independent operators, a trend that continues today. Those station owners quickly discovered that they often had to supplement income from gas sales with other business, such as car repairs, car washes and, more recently, foodservice.
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