Why most gas stations don’t make money from selling gas

I am Indian too, with a father that owned and ran a gas station. (My dad's shop was among the top gas-volume stations in America during his time, I forget exactly how much, but he had a few trophies from the company for it).

They preferred cash during his time because the 2-3% charge was a significant dent in margins. When credit cards started becoming popular, dealers still did not want to take it. So the company encouraged dealers to accept it by promising to refund the charges for a time.

I don't dispute that cheating like what you described happens. I dispute the implication that cheating the IRS is why most businesses prefer cash instead of credit.

I do not know about this. Every single gas station that is cash-only, they also allow debit cards which you cannot be used for tax evasion. The main reason is station owner doesn't want to pay processing fees for credit card transactions since margins are so thin.

But if they have a store they will enable CC, Apple Pay, Android Pay, and all other things. This is where the money is. This is my anecdotal experience (from talking with an owner) and this article confirms that.

Why is this relevant?

>The reason gas stations run aggressively on cash [...]

they do? Most of the gas stations I see are pay at the pump, and inside the convenience store I'd say most people are paying with credit/debit.

I worked at a service station in the early 90s, the owner was honest but going broke. We made $0.10/gallon on average, the sales of cigarettes, chips, and soda kept that station going. We had service bays but as more cars became proprietary and needed dealer service we had less service business. When the US invaded Iraq it really removed any profit that small station owners made from gas.

That station no longer exists, it was removed and in the space is now a small medical office.

I do wish the article would cover some of the nefarious aspects of small business sectors in the USA.

This is why I get annoyed when I hear people say "the 'rich' aren't paying their taxes." In fact it's the "poor" -- or rather the people who purport to be poor -- who aren't paying their taxes. Every dime I earn the Government knows about.

But every time I have to do business with a someone who will only accept cash, I see much evidence of shady bookkeeping.

When I did the books margins were 0.075/gal for regular and 0.013/gal (edit: should be 0.13/gal) for premium. I could see those as double for an independent station.

This should not be surprising at all. Consumers are incredibly price sensitive and will drive 19 min to save $0.05/gal (save $0.75 and burn $0.60 of gas in the process). The supply chain for gas captures margins, not the gas stations. I would get calls from corporate for $0.03/gal adjustments several times a day if gas prices were volatile.

It all came down to in store sales where mark ups were 50-100%. Youd be surprised how many people paid $5 for a bottle of mustard they could buy for $2 at Safeway. Cigarettes were the other huge sellers.

On a holiday weekend we’d sell 12,000 gal of gas on a Friday, make $800 on the gas and $30,000 (after COGS) on in store sales.

40 cents on a gallon of gas sounds pretty exceptional- perhaps a geographic specific thing.

Gas stations might not be quite as drastic as that, but still seems like the same principle applies.

Although conversely the convenience stores at fast charge stations probably do a lot better. If you have to wait for 30 minutes anyway might as well go in...

Gas stations are situated near population centers, because you tend to run out of gas wherever you're driving, and you drive where you live.

In practice, consumer EVs almost universally charge at home[1] and "never" just "run out" of charge. You're car is always charged, there's little value to topping up at the shopping areas or whatever. Instead, you need DC fast charging where you travel: on the long distance arteries where your car can't otherwise reach.

To be clear: you need gas there too. But rural highway gas stations represent a small fraction of all gas service. Most gas stations won't be able to shift to EV charging and keep their business model.

[1] Though there are growing pains with apartment facilities being slow to install AC charging. Right now an EV works much better in a home with a garage, though that seems likely to sort itself out. Cheap electrical work is cheap, it's just a question of how to get people to pay for it. Some regulation is likely to be needed.

The kind of mediocre little shops that you mostly only stop at for gas and only go into the store if you really need something though will suffer.

The only places I see dedicated electric 'gas stations' surviving is in rural locations along major highways.

And also consider that electric vehicle users can charge overnight at home, so those people driving 50-100 miles per day may not need to use a charging station at all, apart from long journeys - which is likely to impact the favorable locations significantly.

Even with super fast chargers, you're looking at 15-30 minutes for 100-200 miles of range, vs 5-10 minutes for 400-600 miles of range.

Assuming a limited amount of space for vehicles, a traditional liquid fuel filling station can probably handle 4-6 times as many customers, so the electric charging station will need more physical space to serve a similar amount of customers.

Users are going to want to do something for that time, so that convenience store will probably expand to add sit down food/drink facilities.

In short, I suspect that in 10-15 years time, filling stations will have evolved into something completely different.

Or maybe electric charging will be a bolt on to anything that has a car park, and dedicated charging locations will be relatively rare.

Even many commercial fleets won't have a need for stopping there as it'll be cheaper to charge wherever they're parked when not being driven.

Fast chargers will be necessary when traveling, but that's a small fraction of what gas stations see now. And even then it might look different (big trucks require a lot of space to park while charging, consumer traveling is concentrated in bursts based on time of the year).

Here in Finland the two largest charging networks are owned by ... grocery store chains.

Why would you stop at a janky gas station selling overpriced crap and day-old hot dogs, when you can take a 5 minute detour and go charge at a supermarket? Which usually has at least one fast-food place, maybe a restaurant and the snacks are orders of magnitude cheaper.

Also just by plugging in to an AC charger (11-22kW) when doing your shopping, you usually get back home with more charge than you left. The EV parking spots are usually at the best spots too, so that's an additional incentive.

In fact we want them dead. Gas stations are usually occupying very nice commercial land.

1) EV charger margin is higher when you compare the kWh rate they charge drivers to the local electric rates (sometimes 10c/kWH spread)

2) EV charging is 20-40min so they have more time to shop

3) EV owners are on average higher income, so should have more disposable income to spend

Probably some sort of Starbucks x Pret-A-Manger x fancy convenience store model would do well.

Anybody know what's going on in our brains, that this works on us?