High prices hurt gas stations, too

RIO GRANDE CITY - The traffic is slower inside the Country Store convenience station in Rio Grande City now that gas prices are almost $4 a gallon.

Fewer people stop inside for a cold drink or a breakfast taco and fewer people buy lottery tickets, said store manager Raymond Garza.

"Gas prices are hurting us, that's for damn sure," Garza said.

Adding to the pain: the station's profits on gas are shrinking even as people complain about the high price of fuel.

Across the Rio Grande Valley and the nation, the pains of high gas prices are hitting gas stations as well. Gas station managers also say competition is driving down their profit margins and credit card fees are cutting into their bottom lines.

Garza, who runs three Country Stores in Starr County, said his profit margin on gas has dropped from 15 cents a gallon last year to less than 3 cents this year.

"We are barely breaking even on gasoline," he said.

Of course, much of the increase in gas prices have come from the skyrocketing prices for crude oil. A year ago, a 50-gallon barrel of oil sold for $58 on the New York Mercantile Exchange. Earlier this week oil peaked near $140 a barrel.

Five years ago when regular unleaded sold for a modest $1.47 a gallon, crude oil made up roughly 40 percent of the cost of gasoline, according to the Energy Information Administration. In April, crude oil accounted for more than 75 percent of the cost of fuel.

As fuel prices go higher, those in the convenience store industry say customers are becoming more price conscious.

"We have to keep our prices as low as H-E-B. or Wal-Mart, even though they get their gas for cheaper," Garza said.

Credit card fees are also cutting into revenues, said Chris Newton, executive director of the Texas Convenience Store and Petroleum Marketers Association.

Typically credit card fees range between 1 percent and 1.5 percent. With gas at $1 a gallon, credit card fees are only a penny, but at $3.84, it's 4 cents.

"Credit card fees are now the second-largest expense behind labor," Newton said.

Earlier this week The Associated Press reported that a West Virginia gas station owner stopped accepting credit cards because they were negating any profit he made on fuel sales.

For the average gas station, about 70 percent of all revenues come from gasoline sales, Newton said. However, gasoline brings in only a few pennies on each gallon. After paying for fuel, gas comprises much less than a quarter of a gas station's profits.

Another possible victim of high gas prices has been lottery sales, which have dropped almost 2 percent since the beginning of the year, said Bobby Heith, a spokesman for the Texas Lottery Commission.

"We don't have any data to connect lower sales to the price of gas, but we do know fewer people are buying lottery tickets," Heith said.

Retailers receive 5 percent of revenues for lottery and scratch tickets they sell in their stores.