Many stations pump up profits
Gas station owners in many parts of the United States are buying fuel at some of the lowest prices they’ve seen in a year, yet many are padding their bottom lines rather than passing along all the savings to motorists, industry figures show.
Nationwide, the profit margin on a gallon of gasoline has widened since the start of the year and now is 20.7 cents a gallon – almost double the historical average – thanks to the growing spread between wholesale and retail prices.
Many gas stations have struggled in recent years, industry trade groups contend. Rising credit-card transaction fees chip away at profits per gallon, and competition has intensified as discounters like Wal-Mart Stores Inc. and Costco Wholesale Corp. increasingly sell cheap gasoline as a way to lure customers into their stores.
The past few weeks have been pretty good for the industry, though.
Gasoline futures have fallen 30 cents, or 17 percent since Jan. 30, while average pump prices have declined just 7 cents, or 3 percent, over the same period. Nationwide, the average retail cost of regular unleaded is $2.28 a gallon, according to the Department of Energy.
This week’s average profit of 20.7 cents a gallon for retailers is up more than 11 cents from a month ago, according to data from the Oil Price Information Service of Wall, N.J. Over the course of a year, retailers say their average profit is about 10 cents a gallon. While some states have laws preventing gas stations from selling fuel below cost – a measure intended to prevent predatory pricing – there are no state or federal regulations limiting how much retailers can charge.
Experts said retailers are likely to enjoy above-average profits for another few weeks, but that margins will erode as spring approaches. While gasoline supplies are abundant right now, they are expected to tighten in March.
OPIS oil analyst Tom Kloza said he expects pump prices to rise by about 50 cents a gallon this spring, with the possibility of $3 a gallon in some regions this summer.