Local gas stations not getting rich
I wanted to respond to the Southern Standard editorial of Feb. 14 about gas prices and the profits that are made in the oil/gas industry.
When gas prices go up, everyone is affected. But what many people don’t realize is that when gas prices go up, it doesn’t mean your local convenience store or service station is making more money on gas sales. Far from it. Typically, stores actually makes less money on a sale as prices go up because they don’t pass along all of the price increases to their customers.
Please remember that nine out of 10 retail gas stations are independently owned. That big oil sign out front just means that is the brand we sell. The gasoline you put in your tank is the end product of a very long supply chain with the gas nozzle at your local retail outlet the last link.
When you buy a gallon of gasoline, what are you paying for? Here’s a breakdown from the U.S. Energy Information Breakdown of the four biggest cost factors:
• Crude oil – 44 percent
• Federal and state taxes – 30 percent. In Tennessee, the combined state and federal tax is 39.8 cents per gallon so when you buy 10 gallons of gasoline, you’re paying about $4 in state and federal tax.
• Refining costs – 19 percent
• All other distribution and marketing costs are about 7 percent of the price. This includes transportation, storage, credit card fees (typically 2 to 4 percent), cost of doing business and the retailer’s gross margin.
Yes, someone is getting rich off gas prices. It is the big oil and refining companies and the government. It is not your typical retailers. I hope everyone will remember that and not blame their local retailers when prices of gas go up.
Bill Harris
730 Garfield Street
McMinnville