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Pain At The Pump: Gas Stations Forced To Shave Profits To Keep Customers

Retailers Can Usually Expect 25 Cents A Gallon, But Many Are Settling For Less
(credit: CBS 2)

(credit: CBS 2)

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WHITE PLAINS, N.Y. (CBSNewYork) — As gas prices continue to squeeze drivers, they are now squeezing the people who sell it as well.

Some gas stations are shaving their profits to hang on to customers.

The rising gas prices are putting a damper on demand and big profit pressure on individual station owners.

“We were pumping 2,000 gallons a day, now we’re lucky if we pump 900 gallons a day,” gas station owner Jack DiBona told CBS 2′s Lou Young on Friday.

To keep customers coming in, some operators are cutting their already-narrow profit margins. Normally, a retailer can expect to clear 25 cents per gallon, but many said they are settling for less.

“We try to make about 15 cents, 20 cents a gallon,” DiBona said.

Which explains why DiBona’s gas this week was 10 cents a gallon cheaper than his closest competitor and neither one of them is getting rich.

The stations watch each other closely.

CBS 2′s Young saw one gas station in White Plains charge $4.04 for a gallon of regular, while a competitor across the street had its price set at a penny more.

Another station was charging $4.07, but was doing business from customers coming in to use the convenience store or the repair shop. The owner, however, was keeping an eye out for a drop in business.

“We have three stations around here. The whole idea is to keep the competition going,” said Ralph Menendez, of Ralph and Sons Repairs.

It’s a tight calculation.

CBS 2′s Young saw an invoice that showed the cost to one station – the gas wholesale cost is $3.16 per a gallon, plus 5 cents a gallon for delivery and 69 cents in federal and state taxes — meaning his profit margin is 14 cents.

In such an environment, prices may vary, but no one is happy.

Station owners said the shrinking profit margin is also one of the reasons many operators are offering lower prices to cash customers to avoid credit card fees.

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