Gas station owners struggle as fees soar, food sales skid
By SUSAN SALISBURY
Palm Beach Post Staff Writer
Thursday, May 15, 2008
PALM BEACH GARDENS — Gasoline prices are breaking records every day, with some local stations now charging more than $4 a gallon for regular.
But for gas station operators, the high prices are anything but a bonanza.
A host of problems, including soaring credit card fees, fewer snack and beverage sales in their stores and the expense of replacing fuel storage tanks, is making the cost of doing business unprofitable — so much so that experts predict a wave of station closings in the next couple of years.
"Our margins since last February have been down dramatically as gas costs increase," said Kevin Dalton, 42, who owns Shell stations in West Palm Beach and Palm Beach Gardens and a Sunoco in Palm Beach Gardens. "My three gas stations equated last month to $38,000 in credit card fees. More people are using them."
A recent national survey found about 83 percent of consumers use credit cards to buy gas, up from 55 percent to 60 percent five years ago, said Jim Smith, chief executive officer and president of the Florida Petroleum Marketers and Convenience Store Association in Tallahassee. Credit card fees are soaring along with gas prices.
"Visa and MasterCard are making more per gallon than the retailer," Smith said.
With gas at $4 a gallon, the credit card fees amount to as much as 12 cents a gallon. The typical station's average gross profit is 9 cents on each gallon of gasoline.
Convenience stores paid $7.6 billion in card fees last year, up $1 billion from 2006, Tom Robinson said at a House Antitrust Task Force hearing Thursday. Robinson is vice chairman of government relations with the National Association of Convenience Stores and a California retailer.
He urged lawmakers to approve the Credit Card Fair Fee Act, which would require Visa and MasterCard to negotiate the fees.
Then there's the matter of hard-pressed consumers spending less on snacks and other items sold at gas stations' convenience stores.
"Inside-store sales are killing me," Dalton said. "Before, people were spending $40 to fill up. Now they're spending $75. They are not going to come inside and spend a dime."
Ron Perkins, who owns a BP station in Jupiter, said credit card fees are "destroying us."
"Add that to the rent and the electric bill, and you are swimming backwards," said Perkins, 55. "That is what is happening to the gas station business."
Perhaps the most difficult thing for some owners is a new state mandate that requires petroleum storage tanks to be replaced by the end of 2009.
The storage-system redos can cost from $200,000 to $400,000 per station, said Pat Moricca, president of the Gasoline Retailers Association of Florida in Longwood. That will put some stations out of business, said Moricca, who has seen his group's membership decline to about 100.
"The situation is: 'Why should I invest $400,000 to lose money?' " Moricca said.
The state passed a law in 1992 requiring double-walled storage tanks by Dec. 31, 2009, said Bill Burns, environmental administrator for storage tank regulation at the Florida Department of Environmental Protection. The law is designed to protect the state's groundwater, the source of 90 percent of its drinking water, from contamination.
About 60 percent of the state's 9,200 stations are in compliance, Smith said. A "good rough estimate" is that 3,000 stations will be unable to comply with the requirement for double-walled systems and will go out of business, he added.
"It will be primarily in rural areas, but you will have stations in downtown Fort Lauderdale that will close," Smith said. "Big Oil doesn't operate more than 3 percent of stations nationwide."
Perkins, who said it appears that BP, which owns the tanks at his business, is not going to bring them into compliance, agrees that more stations will go out of business. That will create a less competitive market, he said.
The Associated Press contributed to this story. |
