FARAI CHIDEYA, host:
Tired of high gas prices? Well, so are gas station owners. Contrary to what some people think, high prices at the pump do not mean big bucks for them. In fact, these days, gas station owners are struggling to stay afloat. Continuing our multimedia series, Road Trippin', we're speaking with David Griffith. He owns a Shell station in Northern California, and joining us also is our regular economics contributor Keith Reed. He's a business reporter for the Cincinnati Enquirer. Keith and David, how are you?
Mr. KEITH REED (Business Reporter, Cincinnati Enquirer): Great, how are you?
Mr. DAVID GRIFFITH (Owner, Shell Gas Station, California): Thank you.
CHIDEYA: So Keith, we have been here before talking about high gas prices. Give us a simple reason as to why gas prices are so high.
Mr. REED: I don't know that there is one simple reason. I mean, you can look at any one of several geopolitical situations throughout the world. You could look at the wars in Iraq and Afghanistan. You could look at supply - the supply that the OPEC nations are releasing. You could look at the weak dollar. You could look at increasing demand in China and other developing nations. There are any number of a dozen reasons that gas prices are spiking right now. You could take out any two or three of them and gas prices would still be spiking.
CHIDEYA: Now, David, you're a station owner, and your station is in San Mateo, California, Northern California. What's your gas price today?
Mr. GRIFFITH: Four dollars and seventy-nine cents for regular.
CHIDEYA: How does that compare to people who are a few blocks away, other stations from, you know, different companies?
Mr. GRIFFITH: I'm higher.
CHIDEYA: Why are you higher?
Mr. GRIFFITH: Well, I'm competing against company operations where they have their own operation. They supply their own station and they don't have the overhead cost that I have to incur, which is credit card fees, my rent, and the other thing is they put us in zone-type pricing, so I can have a station as close as two miles from me and that price will be different at the wholesale end.
CHIDEYA: So it sounds like you're facing a number of challenges that just have to do with the structure of your business. What has happened over, say, the past three months to the kind of money that you've been able to bring in, revenues that support your business? Have they dropped?
Mr. GRIFFITH: Oh, substantially. My revenue for gasoline has dropped, you know, anywhere - you're talking as much as 25, 30 percent lost revenue in gasoline. And that's just sheer number of gallons that I'm no longer doing because of the pricing you see at the street level. And that equates to gross dollars of gasoline. I'm having to compete against these company operations, and you can't compete against them.
CHIDEYA: Are you afraid that this just might not be the right business for you long term, that you might have to give it up if things continue this way?
Mr. GRIFFITH: Very much so. I mean, I've been here, this is my 21st year and I look at the future now, I don't see what the future really holds for us as a retailer. There's so many factors that go into this, and you're dealing with these big-box retailers like the Costco's and the Safeway's, and it's very difficult to compete.
CHIDEYA: Keith, it sounds to me like individual proprietors have some specific challenges that, you know, gas stations that are owned by the big companies don't. Are you finding that there are these differences that may be affecting different stations in different ways?
Mr. REED: Yeah, there are huge differences, as he explained, and one of the things that didn't come up but tends to be the case with the individual proprietors of a gas station is that in many cases they are also operating a convenience store, and when they're operating a convenience store, the gas is what you call a loss leader. In other words, they are willing to take X number of cents on the dollar loss on a gallon of gas that they sell in order to get you in the convenience store, which is where they'll actually make their profit on a gallon of milk, on eggs, on candy, on cigarettes, whatever the case may be.
If the cost of gas goes up at the wholesale level, two things will happen. Number one, they're paying more for that gas, so that will extend a little bit into the loss that they are taking. Number two, fewer people are coming to the pump because more people are driving, taking bikes, filling up less, buying fewer gallons of gas when they get there. So that means that that loss that they take to get you in, fewer people are coming in to buy things on the profit end, and more people are coming and buying less gas. They're paying a higher price for it, so it really hurts. They're in a big disadvantage right now.
CHIDEYA: David, do you ever get attitude from people? You know, we're - as human beings, we're emotional and sometimes, even if it's not someone else's fault, you take things out on them. Do people ever get emotional with you about the price of gas?
Mr. GRIFFITH: You know, very, very rarely now, but it does happen. I had a customer that not too long ago was actually raising his voice at the pumps and talking inside - we have an auto repair shop. And yeah, he was very vocal about it and it does disturb me. I don't like the price of gas the way it is.
And one thing that Keith mentioned was about the convenience store and it is a very good point to bring up, but as a far as a loss leader in gasoline, you just can't do that anymore because of your fixed costs. And I'm talking - excuse me, fixed costs could be rent, could be your credit card fees. Your credit card fees today are just huge and especially with the price of gas the way it is.
CHIDEYA: So you pay a percentage on each dollar of a sale? Or how does the credit card fee work for you?
Mr. GRIFFITH: Well, it's basically through the oil company, and yeah, they take a percent of the dollar. And it's - it equates to be about nine cents a gallon for me. For every gallon of gas I pump, it averages out to about nine cents a gallon for credit card fees.
CHIDEYA: Keith, what do you see ahead for people who are - you know, so many people have used gas stations as a solid business to build families' life on. Whether it's people born in the U.S., immigrants, whatever. Do you think that some of the shine is going to leave that?
Mr. REED: Yeah, I think much of the shine has already left that. Unless you're in a business that has some other form of revenue coming through the door besides just the sale of gas, or unless you're in a position where your family or you're in a cooperative situation where you're an owner of several gas stations and you have that scale, it's going to be very difficult for you as an independent operator of one or two gas stations to continue to make a living, much less a profit, going forward.
CHIDEYA: Well, Keith, I want you to stay with us. We're going to talk in a second to someone who works in the auto industry. And David, I want to thank you so much for your time, and maybe we can check in with you down the road.
Mr. GRIFFITH: You're welcome. No problem.
CHIDEYA: We've been speaking with David Griffith. He owns a Shell service station in San Mateo, California.
Copyright © 2008 NPR. All rights reserved. Visit our website terms of use and permissions pages at www.npr.org for further information.
NPR transcripts are created on a rush deadline by an NPR contractor. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.