With Hurricane Harvey starting to impact the price due to the large number of refineries temporarily closed and the interruption of transportation of the product caused by flooded roads, it is once again surfacing in the news. Oil industry analysts are predicting a fifteen to twenty-five cent increase per gallon, likely to last several months and we can already hear the howls from some when they see the new prices at the pumps. And many complain that the prices go up as soon as the problem begins and they howl that the station is gouging them since they recently took a full load of fuel.
Now I'm certainly not one to condone gas gouging, but it's important to note the amount of profit that the average gas station makes on fuel sales before we go off on the operator. While there are certain unscrupulous persons who do gouge prices, raising prices by invoice price is certainly not in that category. The most recent industry statistics I've seen indicate that the average gas station sells about four thousand gallons per day with a net profit of approximately five cents per gallon. Using this for estimation purpose, revenue per day for the gas station is about two hundred dollars, not nearly enough to cover costs such as rent or repairs, electricity, staff, equipment and much, much more. And from this baseline of information it's easy to figure how it figures its retail rate per gallon.
Most retailer gas bills are due within ten days of receipt, so the local dealer sets prices when the advance invoice cost is provided. He has to have his repayment cost factored in to insure his profit range is held and that he can make his payments on time. He can't count on his retail components in his operating store to pick up the slack and get him over the break even point and, remember, he also has to take in consideration his competition from other stations who might be on a different delivery cycle. It's not a real easy situation to handle yet to be successful in his business he must master it.
So the next time you want to complain at the pump, realize it's not the local small business operator who is the culprit. And also remember a large chunk goes to the government in taxes, an entity which provides very little for him except always demanding more revenue for its coffers. I hope we all remember these things the next time we go to an entrepreneur run gas station.