Profit margins for private gas stations below average
Gas prices continue to rise, but interestingly enough, only a small portion of the profit is actually going into the pockets of gas station owners. According to industry data from Sageworks, private gas stations have lower net profit margins than the average private company.
“The average private company is making roughly eight cents of profit for every dollar of revenue brought in,” said Sageworks analyst Libby Bierman. “The owners of privately held gas stations, however, are making less than three cents for every dollar. In fact, for at least each of the past ten years, the industry has had a net profit margin of less than 3 percent, at times as low as 1 percent.”
Those are slim margins for gas station owners to work within, and any unexpected expense could be crippling to their income statement. To make money, Bierman explained, gas stations must rely on volume of sales like your typical grocery store. “While it may seem like the price of gas is high, it isn’t the case that the extra money consumers are paying is passing through to gas station owners as profit,” said Bierman.
See below for an infographic, based on data from eia.gov and Sageworks, showing the breakdown of money spent at the pump:
Note, the profit margin data comes from Sageworks’ proprietary database of private companies, which provides industry benchmarks, whereas the data for other costs was published in the Energy Information Administration’s Gasoline and Fuel Update.
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