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Mom and Pop Business since 1958
In St. Anthony, Minn. Chuck Graff runs a gas station. Graff’s father started the family-owned business in 1958. Customers have cautioned Graff that they’ll be scaling back this summer: in jeopardy are their summer travel plans to their Northwoods cabins.
Customers Spending Less
Customers of Graff’s service station are frustrated that gasoline prices have risen so fast. They also worry that prices could go higher. It’s not just skyrocketing wholesale costs for fuel that is crimping Graff’s cash flow, sales in his convenience store are down about 18%.
‘We Hate Our Gas Prices, Too”
Ryan Mills at NRO reports that Graff decided to combat Biden’s recent message with his own. Graff recently displayed underneath his gas-per-gallon price sign: “We hate our gas prices too.”
Of the sign that gained national attention, Graff says,
It was just kind of a way to show a little empathy. We know it’s hitting you in the pocketbook, and we don’t like it either.
Before the July 4th holiday, President Joe Biden took aim at gas-station owners. Biden’s tweet seemingly pointed the finger at them. Was Joe Biden accusing station owners like Graff of gouging customers and unnecessarily contributing to the near-record gas prices?
Whose Idea to Have Joe Biden Tweet:
My message to the companies running gas stations and setting prices at the pump is simple: this is a time of war and global peril. Bring down the price you are charging at the pump to reflect the cost you’re paying for the product. And do it now.
Biden’s tweet was mocked as “economically illiterate,” writes Mr. Mills, adding that the president was accused of demagoguing an industry that Joe from Scranton seemingly knows little about.
There are 116,641 convenience stores that sell about 80 percent of the gas in the U.S., and more than half of those stations, or 55 percent, are single-store operators, according to the National Association of Convenience Stores, or NACS.
National Review reached out to gas-station owners across the country, and they pushed back on the idea that they’re gouging customers or are otherwise to blame for rising gas prices, which have been creeping up since they bottomed out during the worst of the Covid-19 pandemic.
Supply and Demand
Why have gas prices risen? Old fashioned reasons: Largely because of high demand and low supply.
Oil companies cut back on production during the pandemic when fewer people were traveling. Geopolitical instability caused by Russia’s war in Ukraine has further limited supply and rattled markets, and OPEC has missed production targets. Hardly the fault of mom-and-pop gas-station owners.
When asked, owners agreed that they’re making no more money on a gallon of gas now than in years past, and sometimes they’re making less.
Selling gas is a low-margin business — the gross margin on a gallon of gas in 2021 was 30.9 cents, up slightly from the five-year average of 27.2 cents, according to NACS.
Costs Packed into Graff’s $4.69/Gallon:
- Minnesota state gas tax is 28.5 cents per gallon
- Federal gas tax is 18.4 cents.
- Delivery and freight fees, environmental fees.
- A federal oil-spill tax.
- Credit-card fees — as much as 12 to 15 cents a gallon.
- Hidden Costs: Pump maintenance and required upgrades, testing, and licensing fees
“There’s a lot of hidden costs There’s a lot of money that goes into just staying compliant,” according to Graff.
The wholesale costs for fuel have refining and marketing charges built in, which make up the bulk of the price of gas. According to Graff, who gets a daily email with the latest wholesale rate:
When these prices were going up so fast, there were days you would check your prices, and one day it would be one price, the next day it could be 25 to 30 cents higher. And depending on what you paid for the fuel you have in the ground, that’s kind of going to determine where you have to sit at [with your price] until you use that fuel up.
Don Pommerville, owner of Pommerville Auto and Gas near Santa Barber, CA, said the spike in gas prices is “way worse” than anything else he’s seen in the 33 years he’s owned his businesses, which include eight fueling stations, an automotive garage, and a small convenience store. The high gas prices, he says, are hurting, not helping, his business.
I always tell my friends, when you see gasoline down at two bucks a gallon, I’m doing very well. When you see it above four dollars a gallon, I’m hurting. I’m hurting hard, The margins get tighter. People don’t drive as much, so my volume goes down extremely low.
Who’s the Bad Guy?
Pommerville joked with NRO about his complex method for setting gas prices: “I look across the street, see what the competition is, and I usually try to match them.”
Pommerville noted that what the state and federal governments combined receive in taxes from a gallon of gas in California “far exceeds” what he makes on that same gallon.
And we’re the bad guy (?).
Employees report of encounters with customers who are angry at the gas prices, particularly when prices spiked a few months back, reports Mills. Whose High prices and political demagoguery make gas-station owners look bad.
According to Joseph Birkho, owner of three San Diego-area gas stations, two branded and one independent:
Everybody thinks we’ve got a wheelbarrow, and we’re wheelbarrowing money home. It’s very stressful. The general population is very upset. There’s a huge misconception, and then they take it out on us.
Bullies from the Administrative State
Francis Menton, aka The Manhttan Contrarian, writes on his site of the bureaucracy-wide campaign under Joe Biden’s direction to “suppress oil and gas production in any way this administration can think of.”
… yet he (the president) has the gall to blame high prices on “companies running gas stations,” the majority of which are small independent businesses.
At this point Biden has become malicious.
