ALEXANDRIA, Va. -- While most drivers buy gasoline at least weekly and shop based on a store's specific price, the makeup of the retail locations at which they buy their gasolineand how much the stores profit from gasoline salesare a mystery to most U.S. consumers. Most Americans think that major oil companies own and operate the majority of fueling stations in the United States, far above the percentage that actually do, according to a recent report released by the National Association of Convenience Stores (NACS).
Just over half of consumers (52%) [image-nocss] say that most of the gasoline retailing locations in the United States are owned and operated by one of the major oil companies, according to findings from the 2007 NACS Consumer Fuels Report. In reality, less than 3% of the more than 112,000 c-stores selling gasoline are owned and operated by major oil companies.
C-stores sell an estimated 80% of the gasoline purchased in the United States, and roughly 60% of those stores are one-store operations, owned by independent entrepreneurs who may choose to sell a specific brand of fuel, said NACS.
Perhaps because most gasoline retailers sell a specific brand of fuel and have canopies promoting that brand, consumers assume that these stores are owned by major oil companies, said Greg Parker, NACS vice chairman of research and technology and president of The Parker Cos., which owns 23 Parker's Convenience Stores selling branded motor fuels in southeast Georgia.
Consumer misperceptions regarding who owns gasoline retailing locations are one of several that is common to the industry, the report found. Consumers also believe profits made by gasoline retailers are much higher than they actually are.
One in seven (14%) consumers between the ages of 18 and 49 believes that retail profits top $1 per gallon. In reality, after factoring in all expenses, including credit card fees, the real average profit per gallon is closer to one cent, NACS said. Overall, one in 11 consumers (9%) said that gasoline retailers make more than $1 per gallon in profit.
Consumer misperceptions about who operates stations and how much those stations make on gasoline sales are likely fueled by the strong quarterly profit statements from major oil companies, which are largely driven by upstream operations,' such as oil exploration and production, said Parker. Because more than half of the price of a gallon of gasoline is attributable to the cost of crude oil, gasoline prices tend to move in the same pattern as oil prices, reinforcing consumer misperceptions.
More than one of every three consumers (36%) said that gasoline retailers make more per gallon when prices increase, even though overall profit margins tend to shrink because of heightened competition for price-conscious consumers. Earlier findings from the 2007 NACS Consumer Fuels Report found that more than one in four consumers would change their purchasing behavior to save one penny per gallon. Only one in 20 consumers (5%) correctly said that profit margins typically decrease as gasoline prices increase.
Consumers' idea of fair profit is actually a lot higher than real profit. In fact, 11% of consumers say that at least 50 cents per gallon in profit, after expenses, would be fair.
Consumers are adamant about one thing when it comes to fuelingprice. Nearly two out of three consumers (66%) said price is the most important factor when shopping for gasoline. Virtually all consumers reported that they purchase gasoline at least weekly, with 93% indicating that they had purchased fuel in the past week and more than one in three (36%) indicating that they had purchased gasoline within the previous two days.
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