High Prices No Windfall for Station Owners
BRADLEY, Ill., May 30, 2005 — -- Jerry Huot hears a lot these days from customers at his nine Conoco Phillips stations who can't believe his profits haven't soared along with gas prices.
"We hear every day about how we're gouging the public and robbing the public," Huot said.
Except it's not true, he said.
Conoco Phillips made $3 billion in the first quarter of this year and the price of gasoline doubled over the past year. But still, Huot said, "We lost money the first quarter."
"In a lot of cases, it's OPEC countries that are making money, but the person who runs your local service station is not getting rich on these high prices," said Peter Beutel, an oil industry analyst.
Like most small station owners, Huot adds 10.4 cents to what he pays for gasoline, but rising taxes, insurance, and wages eat up 10 cents of that. He loses the rest to fees charged by credit card companies and the increasing number of people who drive away without paying.
Some of the small businessmen caught in the profit squeeze during the past year have fared worse than Huot. They have gone out of business. Almost 18 percent of small gasoline stations have closed in recent years.
Many of the former gas station operators couldn't compete with the cut-rate prices for gas at discounters like Wal-Mart and Costco.
"They [discounters] can do so [price gas] at a loss because they don't need gasoline to make their businesses work from a profitability standpoint," said Brian Beaver of Carter Energy.
But Huot, whose family business began in 1911, needs to make a profit.
"If it continues for a protracted period of time, we've got to find another business to get into," Huot said.
ABC News' Bob Jamieson originally reported this story May 22, 2005, on "World News Tonight."
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