What $3.50 a gallon of gas buys
Posted March 25, 2011
Raleigh, N.C. — Drivers paid $3.46 for a gallon of regular, unleaded gas at a Marathon station on Lake Wheeler Road Friday morning.
If you think store owner Steve Byers is getting rich, think again.
"A couple weeks ago, I sold $40,000 worth of gas and made about $140," Byers said.
So where does all of that money go?
In February, about 80 percent went to the cost of buying oil and refining it, according to the federal government.
Another 14 percent covers federal and state taxes. North Carolinians currently pay 32.5 cents of state tax on a gallon of gas, plus the federal tax of 18.4 cents per gallon. The state adjusts that rate every six months based on the price of wholesale gas. North Carolina's total gas tax of 51.2 cents per gallon is slightly higher than the national average of 48.1 cents per gallon.
Add a few more cents to transport it, and that's what the retailer is paying when the shipment arrives.
After Byers receives a shipment of gasoline, his supplier sends him a fax telling him how much it costs. Byers adds only a tiny profit margin.
"Depending on what my competition is, I'll mark it up a few cents," Byers said.
Gas retailers like Byers are always thinking of how to pay for the next shipment.
The big retailers get wholesale price updates twice a day, and if crude oil costs jump in the morning, "it will be reflected in the price that comes in that afternoon," said Gary Harris, with the North Carolina Petroleum and Convenience Marketers Association.
"That's how much this shifts, and that's the value of the product at the time," he continued.
Byers said his 1 percent profit margin on a gallon is a best-case scenario.
"If you use a credit card, then the credit card company is going to charge you 3.5 percent, so I lose money," he said.
Selling gas is a tough business, with cut-throat competition, Byers said.
"It's really a loss leader. Nobody's making money off gas," he said.