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Party at the gas station!

Marketplace Staff Oct 17, 2007

Party at the gas station!

Marketplace Staff Oct 17, 2007


KAI RYSSDAL: We mentioned something pretty rare on the program the other day: A profit warning from ExxonMobil. The world’s largest publicly traded oil company said lower margins for its refineries will hit the bottom line. It’ll still probably clear somewhere near $8 or $9 billion, though.

Slide down the supply chain a bit, closer to your gas tank, it’s a different story. Gas stations are seeing hard times, even the local Shell. And especially independents, Mom-and-Pops that sell non-branded gas.

Kate Golden found one that’s trying hard to hold on.

Kate Golden: On a lazy Sunday, in a ritzy part of Berkeley, California, the locals schmooze over wine and cheese at the Bridgeway.

Bridgeway Guest: Yeah, I have to say I’ve been to a lot of things, but I’ve never been to a gas station party before this.

This is no ordinary gas station. The Bridgeway closes by 6 p.m. on weekdays. You can’t buy gas here at all on Sunday. The place fixes cars, but it doesn’t sell chips or cigarettes. And forget swiping your credit card right on the pump.

Steve Carvalho runs the place — his family’s been in the service-station business for six decades, three of them on this corner. Steve still remembers the day he and his dad sent mom out for some tires:

Steve Carvalho: She came back that day and said, “I bought another service station.” Yeah. But they had been in the business so long that they know — mom knew — what was going on.

Back then, 30 years ago, you could make money owning a gas station. No longer, says Steve’s dad, Harold:

Harold Carvalho: The gas go up and up and up… I never thought it’d get this high.

Golden: Do the profits go up and up and up?

Harold Carvalho: No, the profits didn’t go — the profits went down, down, down.

We’re talking profits of a penny or two a gallon here. The average station sells $5 million worth of fuel and corn chips each year, but makes just $45,000 net profit before taxes. That’s partly because people will drive out of their way to save a few cents per gallon.

Meanwhile, credit card companies are jacking up fees to gas stations, and big companies like Costco and Safeway can buy in bulk and deeply undercut the little guys — which is why independents like Carvalho have the roughest time. They buy wholesale gas that isn’t branded.

Theoretically, it’s a bit cheaper. But when supplies run tight, refiners make independents the lowest priority and Carvalho’s gas gets more expensive. That’s been happening a lot lately.

So lots of gas stations bank on being convenience stores more than anything else. Gas is only marked up about 6 percent. But candy can be marked up 40 percent, and sunglasses 100 percent. Three-quarters of the purchases are impulse buys. But Steve Carvalho is interested in helping people, not exploiting them.

Steve Carvalho: I’ve loaned money to the kids when they’ve forgotten their lunch money, I’ve taken people home… I’ve bailed a customer out from jail once.

And he abhors the modern anonymity of self-serve. When you pull up at the Bridgeway, a couple of greeters take your credit card while you pump your own gas. Regular Georgia Wright has been hooked for 30 years:

Georgia Wright: These two older guys, who are not mechanics, who take your card… and ask you about your family and the weather and the traffic. And you know, you come away and think, “I’ve just had a human transaction!”

That’s Steve Carvalho’s secret weapon, the one thing that most gas stations don’t provide. As the party winds down, Carvalho breaks dog biscuits into tidbits for customer Greg Lewis’ three dachshunds.

Golden: That is a full service station.

Greg Lewis: Steve is like the only person who can approach our car with them in it. Anyone else, they’ll kind of attack — they get very defensive. This is definitely the station.

The difference of a few pennies won’t lure him to the Chevron down the street. In Berkeley, California, this is Kate Golden for Marketplace.

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