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Gas Station Owners Also Feel Pinch From High Prices

Posted on: Friday, 15 July 2005, 00:00 CDT

Jul. 14--As prices rise, gas station owners are feeling as pinched as the drivers at the pump.

Whether the gas price is $1 or $3, the profit a gas station takes from a sale is about 10 to 12 cents a gallon, said Alan Dikes, owner of Dikes Chevron in Ventura.

"We hate it as much as Joe Consumer, that's for sure," Dikes said of price increases.

It's a volatile industry. Dikes has owned the station since 1968 and has seen gas lines, price highs and lows. The recent increases are common for the summer months, when gas prices start to rise, he said. Countywide, the average gasoline price in May was $2.39 and as of Wednesday, the average was $2.56.

Some consumers think station owners are reaping the benefits of price increases, which isn't the case, he and other owners said. Instead, the market drives up the price of gas while the profit margin per gallon for the station owner stays about the same. Some of the large oil and gas companies had record profits this year, but the franchise owners are independent businesses.

Price competition is very visible, said Joe Miskinnis, owner of Westlake Village Mobil.

"It's particularly competitive on the retail side of gasoline," he said. "Every day we put our price right out on the curb for everybody to see."

There are about 167,000 retail gas stations across the nation, according to the U.S. Energy Department's Energy Information Administration. Aside from competition with each other, their prices are determined by several factors, including increases in crude oil prices.

Speculation that Gulf of Mexico storms this season could reduce offshore oil production have driven up the price of oil recently. On Wednesday, the U.S. Energy Department reported a reduction in crude oil produced this past week, causing a substantial drop in gasoline production. Despite that drop, U.S. crude oil reserves remain higher than average for this time of year.

Crude oil was trading at $60.01 a barrel Wednesday on the New York Mercantile Exchange.

Miskinnis said there is more demand for oil products than ever before. Consumption continues to rise for gasoline, heating oil, jet fuel and other products that come out of that same barrel of oil.

The Energy Information Administration noted a new trend in the past five years has been for gas prices to peak before the summer driving season and again near the end.

That was the case this year as the national average peaked April 11 at $2.28 a gallon and then dropped during May before rising again. On Monday, the average price reached an all-time high not adjusted for inflation of $2.33 per gallon.

For station owners, the price can change in a heartbeat.

Dikes said station owners get messages over their computers to say that the price has changed, which could happen as many as three times in one day.

There's no advance notice. The price goes up and the next tanker full of gas sent out to the station will cost that much more. And owners will post new prices at their pumps.

"You have to make a certain amount per gallon," Dikes said. "You've just got to grit your teeth and put prices up." Some customers at Dikes Chevron said their buying habits haven't changed with higher prices.

Terrie Tarin of Camarillo owns Termar Inc., a painting contracting company. She was at the station filling up a gas can for the equipment she uses.

"It hurts, but you've got to do it," she said. "There's no way around it."

Tarin said gas costs are something she can't pass along to customers, because higher-priced bids may mean she wouldn't get certain jobs.

Mike Denny of Ventura filled up his car and then went inside the station's store to pick up a soda and other items. He said he expected prices would follow the usual trend of rising this summer before they went down again. People have to fill up to get around, he said.

"Unfortunately, in this world, you have no choice," he said. "You're kind of stuck." Customers going in the store said the higher gas prices wouldn't keep them from buying a drink or bag of chips.

That's something that many owners count on to have profitable businesses.

"If it wasn't for a moderately sized convenience store, I wouldn't probably be in business today," Miskinnis said. "You can't live on 10 cents a gallon."

ON THE NET: http://www.eia.doe.gov

VENTURA COUNTY AVERAGE GASOLINE PRICE HIGHLIGHTS FOR 2005:

--Jan. 10: The lowest weekly gasoline average of the year so far (and most likely will be the lowest for 2005).

--Jan. 31: The first time the average hit $2 this year.

--April 11: The highest gasoline average of the year so far.

--June 4: This is how low the average dipped before the increase began.

--Monday: Our most recent gasoline average.

Source: Star staff

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Copyright (c) 2005, Ventura County Star, Calif.

Distributed by Knight Ridder/Tribune Business News.

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CVX,

Source: Ventura County Star

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