TeeJaw Blog

Gas Station Price Sign From 1955

Posted in Government and Politics by TeeJaw on Monday, January 9, 2012, 9: 26 AM

This is the way price signs at all gas stations should read:

The retailer was making out a lot better in 1955 than today. The amount per gallon to the retailer is not much higher now than then, and 4 cents out of a total 20 cents per gallon is a 20% markup. That’s not profit because the retailer must pay its overhead out of that before realizing any profit. Even if the retail markup has doubled to 8 cents per gallon today, when the price is $3.00 the retailer’s share has declined to 2.6% per gallon. A retailer whose share of the total price tripled from 4 cents in 1995 to 12 cents today, and that would put that retailer on the high end of retail markup, would still only be getting 4% of the total price. The overhead for just the gasoline portion of the business could easily take all of that.

Gasoline is a loss leader today and that is why gas is sold almost exclusively at convenience stores. The profit from such a business is to be had from sales inside, not those outside. That’s why 1955-style gas stations no longer exist.

One thing is for sure. The government still gets the lion’s share of profit out of gasoline at any price level.

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