There are 121,998 convenience stores selling fuel in the United States, and these retailers sell about 80% of all the fuel purchased in the country. Overall, about 58% of the convenience stores selling fuel are single-store operators—roughly 70,000 stores across the country. These small businesses often don’t have the resources to brand their stores beyond the brand of fuel they sell and promote on their canopies, often leading to consumer misperceptions that they are owned and operated by a major oil company.
Approximately 50% of the fueling outlets in the country have a major oil company brand or carry the brand of another refining company. The remaining 50% sell “unbranded” fuel.” These stations often are owned by companies that have established their own fuel brand and purchase fuels either on the open market or via unbranded contracts with a refiner/distributor.
Most of these branded locations are operated by independent entrepreneurs who have signed a supply contract with a particular refiner/distributor to sell a specific brand of fuel, but these retailers do not share in the profit/loss of their suppliers.
The gross margin (or markup) on gasoline in 2018 was 23.8 cents per gallon, or 8.7% of the average price of $2.72 for the year. Over the past five years, retailer gross margins have averaged 21.6 cents per gallon, or 8.5% of the overall price.
To counter slim profit margins for fuels sales, store operators seek to drive profits by growing their in-store sales, especially on food and beverages. Virtually any item inside the store can carry a healthier profit margin than a fill-up at the pump.
The pattern of retail profitability is the opposite of what most consumers think. Due to the volatility in the wholesale price of gasoline and the competitive structure of the market, fuels retailers typically see profitability decrease as prices rise, and increase when prices fall.
Over the course of a year, retail profits (or even losses) on fuels can vary wildly. In some cases, a few great weeks can make up for an otherwise unprofitable year, or vice versa.
In-depth insights on motor fuels and market conditions that affect fuel prices are available in the Fuels Resource Center.