Gas Stations

Industry Profile Report

Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters

Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

Call Preparation Call Prep Questions, Industry Terms, and Weblinks.

Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.

Industry Profile Excerpts

Industry Overview

The 9,000 gasoline stations in the US sell automotive fuels, preferably at high-traffic locations, to individual motorists and fleets. Products sold include gasoline, diesel fuel, and gasohol. Other sources of revenue may include repair services, the sale of automotive oils, replacement parts and accessories; and/or providing limited food services.

Volatile Fuel Costs

With such low margins, gas stations have difficulty absorbing significant and sudden fuel cost increases.

Competition From Alternative Retailers

About 80% of all fuel sold in the United States is sold at convenience stores, according to the National Association of Convenience Stores.

Industry size & Structure

The average gas station employs about 7-8 workers and generates about $7-8 million annually.

    • The gas station industry consists of 9,000 firms that operate about 12,800 stations, employ 96,700 workers, and generate about $99 billion annually.
    • The industry is concentrated at the top and fragmented at the bottom: the 20 largest firms represent 56% of industry revenue.
    • While some gas stations are owned and operated by refiners, most are independent businesses that purchase gasoline from refiners and markets for resale to the public.
                          Industry Forecast
                          Gas Stations Industry Growth
                          Source: Vertical IQ and Inforum

                          Recent Developments

                          Feb 26, 2024 - Producer Prices Fell in 2023
                          • Producer prices for gasoline stations declined 6.6% in December compared to a year ago, according to the US Bureau of Labor Statistics. Last year's decline in gas station producer prices reversed robust gains in the two previous annual comparisons when producer prices jumped 19.5% in 2022 and 25.8% in 2021. On the labor front, employment by other gasoline stations was relatively flat in December (up less than 1%) year over year. Average industry wages were also relatively unchanged last year after rising steeply starting in 2021, according to BLS employment data.
                          • Average US retail gasoline and diesel prices are forecast to decrease this year and again in 2025, according to the US Energy Information Administration’s January 2024 Short-Term Energy Outlook (STEO). The latest STEO forecast is for motor gasoline (regular) to fall from an annual average of $3.52 per gallon in 2023 to $3.36 this year and $3.24 in 2025. Likewise, on-highway diesel prices are forecast to fall from $4.21 last year to $3.92 and $3.85 in 2024 and 2025, respectively. The EIA credits increased inventories, new refinery capacity, and a slight reduction in motor fuel consumption for the decline in prices. Additional refinery capacity came online last year, raising US operable refinery capacity from 18.06 million barrels per day (b/d) in January 2023 to 18.31 million b/d in December 2023.
                          • Oil giants Chevron and Exxon Mobil are developing cleaner gas as an alternative to electric vehicles, Fuel Market News (FMN) reported in December. Chevron and Exxon in April disclosed road test results from partnerships with automaker Toyota Motor Corp using renewable gasoline partially made from soybeans or other non-fossil feedstocks. The blends could be used by the existing US car fleet and gas stations, according to the two companies. If made commercially available, the fuels could extend the life of the gasoline market as part of the world's transition to cleaner fuels and electric vehicles. Bringing the cost of these renewable gasoline blends to affordable levels would depend on supportive government policies, according to Exxon. Chevron added it could be years before the renewable fuel could be available in pumps, Reuters reported.
                          • Demand for crude oil is expected to peak before the end of the decade amid an uptick in electric vehicles and developing nations' transition to cleaner sources of energy, according to a new forecast by the International Energy Agency (IEA) reported by The Wall Street Journal. The IEA forecasts rising demand for transport fuels such as gasoline will be the first to peak before starting a steady decline. Near term, demand from Asian economies – notably China – will continue to feed the global appetite for oil. The IEA raised its 2023 oil-supply forecasts by 200,000 barrels a day to 101.3 million barrels/day and it expects further supply growth of 1 million barrels/day in 2024. Oil demand will grow by a further 1 million barrels/day in 2025 after which the rate will begin to cool notably, says the report.
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