By Chris Isidore, CNN
(CNN) — Chris Bambury’s family has been selling gas in Sonoma Valley, California, for more than 100 years, but never at prices like this.
The price at his two stations was $6.29 for a gallon of regular gas last week, which is actually cheap for his part of California — AAA put the average price in his county at $6.36.
Gas station owners are struggling with rising gas prices just as much as their customers. The overwhelming majority of gas stations are small businesses — not the big oil companies whose brands they sell — and the rise in the wholesale gas price they pay has cut deeply into their already thin profit margins.
Wholesale gas prices aren’t the only rising cost putting the squeeze on station owners. Credit card fees and delivery charges for fuel are both higher than earlier this year. Labor costs are still up from the last gas spike in 2022.
Bambury’s great-grandfather, August Bonneau, started selling gas back in 1922, before there were even paved roads in his part of California. Bambury started in the family business as a teenager doing entry-level jobs — such as pumping gas and cleaning bathrooms. Today, he has 37 employees between the two stores and a third location that doesn’t sell gas.
However, to remember a time when gas was a lot cheaper, Bambury only has to think back to before the war in Iran started in late February. He was selling gas for $4.79.
“We don’t want to move up (prices too fast) and drive customers away,” he said. “We always prefer prices to be lower. The market thrives better. Our customers are happier.”
But for the most part, customers haven’t blamed him or his staff for the prices.
“They hear all about the war and the Strait of Hormuz,” he said.
But as much as he wants to keep prices low, Bambury needs to make at least a profit on gas sales.
“We can’t survive losing on fuel (sales),” he said.
Across the country, another gas station owner told CNN he is considering shutting down his fuel sales.
Harry Singh has owned a gas station in Nutley, New Jersey, since 2009, but now he’s thinking of closing up and just keeping open the attached car repair garage.
“If (prices) stay like this another two or three months, I’m going to start losing money (on fuel sales),” he said.
While his station sells below the local market price, he said he is losing customers to a nearby Costco that sells gas for even cheaper. Even his regular customers aren’t buying as much as before the Iran war.
“They used to fill it up, now they say give me $20, $30,” he said.
The average gap between wholesale and retail prices is about 22 cents a gallon, according to Jeff Lenard, spokesperson for the National Association for Convenience Stores. Those stores sell about 80% of fuel nationwide.
That might sound healthy, but that 22 cents have to cover all the other costs, so a station owner is only likely to break-even, Lenard said. The average gross margin over the last five years was 38.3 cents a gallon.
“There are likely many members losing money on fuel sales currently, and others making only a few cents a gallon,” Lenard said.
Even once wholesale gas prices start to fall, it can take some time for retail prices to follow, Lenard said. That’s because owners will need to lower prices slowly to recoup the profits lost during the run up in prices.
Bambury said even when they learn of falling wholesale prices, station owners paid more for the gas they have on hand. That delays how fast they can cut their retail prices even when they start to see some relief on wholesale prices.
In Minneapolis, gas station owner Lonnie McQuirter saw a decline in sales when increased enforcement by the Immigration and Customs Enforcement in the city caused a drop in driving. That caused a major hit to his bottom line.
“If your fuel volumes are dropping and you’re getting squeezed on margins, you really have to watch your pennies,” he said.
Now, he’s dealing with the problems brought on by high gas prices.
McQuirter bought his station at only 19 years old and will mark his 21st year in business next month.
“We’ve had days over the past week … (when) our wholesale cost has gone up over 20 cents per gallon, and that’s been a little bit difficult in terms of how it impacts cash flows,” he said.
He said when there’s a big jump in wholesale prices, he tries to balance his own costs with what he believes his customers will be able and willing to pay.
“You understand that people are on a very thin thread, struggling to kind of maintain their lifestyle and afford to live,” he said.
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