In Sri Lanka, Lanka IOC has established an island-wide petroleum retail network that provides international-standard fuels.
What does it cost to start a gas station?
Fuel provision is a necessary service (at least for the time being) that accounts for more than 6% of South Africa’s gross domestic product (GDP). It is also one of the most robust industries in South Africa, and with the right approach, it can enjoy solid earnings even during economic downturns.
How much does it cost to open a petrol station business?
The cost of establishing a local petrol station varies between R15 million and R100 million, depending on the size and location. Furthermore, depending on the cost of development, predicted volumes, and profitability, the operation payment to the oil business ranges between R2.5 million and R15 million. Then there’s the typical working capital requirements for stock and operating expenses, which might range from R1.2 million to R1.5 million. Contrary to popular assumption, when the price of gasoline rises, the petrol station does not benefit. In reality, every R1 increase in fuel price necessitates an additional R100,000 in operating capital for the average service station. The RAS (short for Regulatory Accounting System) retailer margin, as estimated by the Department of Energy, is insufficient, and there is an under recovery of roughly seven cents per litre. What this all boils down to is that while a petrol station’s massive start-up expenditures are one thing, a successful petrol store also requires constant access to fuel.
Is it profitable to operate a gas station?
- Franchisees who pay royalties to name-brand gas refineries (ranging from 3% to 14%) in order to use their branding
- Independent operators that own and operate generic “no-name” gas stations and purchase gas on the open market.
Because selling gas isn’t very profitable, most large oil firms have backed out of the retail market.
Gas stations make an average net margin of just 1.4 percent on their fuel, according to IBISWorld.
This is significantly lower than the 7.7% average across all industries, and it places it below other typically low-margin firms such as grocery stores (2.5%) and car dealerships (2.5%). (3.2 percent ).
Let’s take a step back and look at a typical gasoline supply chain to see why.
The profit pipeline
Gasoline starts off as crude oil, which is mostly sourced in the United States, in places like Texas and North Dakota.
- Freight vehicles transport it to gas stations, where it is stored in underground barrels with a capacity of 20,000 gallons.
Let’s say you pay $4.09 for a gallon of gas at your neighborhood station (the national average, as of April 13, 2022).
Typically, gas stations only get a fraction of the price shown on the sign. After subtracting overhead costs such as labor, utilities, insurance, and credit card processing fees, the average profit per gallon is $0.03 to $0.07.
However, assuming daily sales of 4000 gallons at $0.05 a gallon, your typical station’s gas revenue might only be $200-300 per day.
Those coin-operated air machines you see at most stations, on the other hand, can make $300 to $500 per month in profit even after paying the corporations that lease them out.
For starters, petrol stations are well aware that the bulk of customers make their purchasing decisions entirely on the basis of pricing.
They have an incentive to keep those statistics as consistent as possible on the board.
Even if they didn’t, they’d be kept in check by local competition: The finest locations, such as high-traffic freeway exits and on-ramps, are frequently crowded with competing stations.
In actuality, they despise it just as much as you do, owing to the fact that competition forces them to compete on price. Catch-22:
- When wholesale gas prices rise, many station owners would rather maintain their pricing and lose money than lose customers to competition.
- Many petrol stations are wary about cutting their prices as wholesale costs fall, fearing a price war.
The real money is made inside the store
According to the National Association of Convenience Stores, 44 percent of gas station consumers enter the store. And one out of every three of them indulges in some sort of indulgence.
The merchandise sold inside these businesses Doritos, sunglasses, lottery tickets, and energy drinks contribute for only 30% of the average gas station’s revenue but generate 70% of the profit.
Card readers are now standard on most contemporary pumps, eliminating the need to walk inside to pay. The average time spent at a gas station by a consumer is now only 2-3 minutes.
Convenience stores also have some of the highest crime rates of any industry in the United States, with average yearly robbery losses of $761 per location.
The gas station of tomorrow
Gas stations in the United States sold 135 billion gallons of gasoline last year, enough to fill 204 thousand Olympic-size swimming pools.
In 1995, there were 195k of them in the United States; currently, there are only 115k.
- Long-term, electric vehicles (EVs) and self-driving cars pose a threat to gas sales.
- Real estate in urban regions (NYC, DC, San Francisco, Boston) can be exploited for more profitable activities, like condos or office projects
Many stations have taken the pricey decision to install electric vehicle charging stations, which may cost up to $100,000 each.
Given that EVs presently make up of automobiles on the road, it’s a difficult cost to justify. However, the sector is rapidly growing: 4 out of 10 consumers say they’d consider buying an electric vehicle as their next vehicle, and stand-alone EV charging stations are springing up all over the country to serve them.
In the long run, EV-agnostic stations particularly smaller enterprises that can’t afford the upfront cost risk being left behind.
But, if everything else fails, gas stations have a hidden financial weapon in the form of those hypnotic rotating hot dog machines.
- What’s the deal with the 9/10ths of a penny? When gas was only $0.15 per gallon almost a century ago, the government imposed a fraction of a penny gas tax. It’s no longer relevant, but station owners keep it since it makes prices appear slightly lower.
- Explosions aren’t limited to the restroom. Each year, 4.2k flames erupt at gas stations around the country, resulting in $30 million in property damage. Cars are to blame for the majority of them. Hot dog machines are to blame for a handful of them.
- When it comes to restrooms, a beautiful toilet can boost a gas station’s sales. According to one survey, 22.6 percent of customers who use the restroom “regularly” make an impulse purchase on their way out.
- KFC got its origins in a gas station. Colonel (Harland) Sanders created his first fried chicken plate while operating a gas station in North Corbin, Kentucky, in the 1930s.
How much does a petrol station make per month in South Africa?
The convenience store raises the station’s cost, but according to Engen, it earns R309,000 in average monthly turnover in this example. An Engen at the high end of the scale will set you back around R7 million.
How much profit do you make per litre of gasoline?
Petrol stations, according to sources, earn Rs3.91 per litre on petrol and Rs3.30 per litre on diesel. According to sources, petrol stations make a 2.75 percent profit per litre, which the Pakistan Petroleum Dealers Association (PPDA) has demanded be increased to 6%.
How much profit does a gas station make on a gallon of gas?
There’s a reason why nearly all gas stations are also stores: profit margins on gasoline are roughly 2%, so they make the majority of their money on pricey sandwiches and drinks.
Independents, I believe, make much less since they lack the purchasing power and storage capacity of the big boys. I’m not sure how viable it is for some of the smaller businesses to buy ex Rotterdam when the wholesale price is low and sell to us when the price rises again; I’m not sure how sustainable that policy is.
For both petrol and diesel, fuel duty is now collected at a flat rate of 57.95p per litre, with VAT of 20% applied to both the product price and the levy. With petrol costing 1.20 a litre, the government receives approximately 82p from each litre.
In Nigeria, how much does a tanker of gasoline cost?
A Petrol Filling Station owner who operates under his own name purchases items directly from NNPC and is represented by a representative and an assistant representative at the Petroleum Products Marketing Company (PPMC) depot.
Advantages
1. You operate your company under your own name and develop your own brand and marketing strategy.
2. You lift products straight from NNPC Depots at lower prices and earn a set amount each litre of petrol products lifted, and you can source your product from wherever.
3. You are not bound by the policies and standards of another organization, and you deal directly with the authorities and agencies. You run your firm on your own terms and policies.
Disadvantages
1. The smallest amount of petrol you can buy from a NNPC depot is a 30,000-litre tanker, which costs around 2 million Naira. As a result, you’ll need to figure out a way to pay for it.
2. You either have your own tanker to transport your items, or you must contract with a haulage company, which will cost money and may cause delays in delivery.
3. Because you are in charge of promoting your brand, you must engage in some sorts of advertising that are both costly and time-consuming.
4. Payment for NNPC petrol products must be made by bank draft payable to The Central Bank of Nigeria in the state from which you plan to lift. You’ll need to hire someone to do it for you.
5. You pay N5,000 to the Independent Petroleum Marketers Association of Nigeria (IPMAN) for insurance and membership fees each time you lift items.
6. Moving gasoline goods from depots to filling stations on your own entails numerous dangers, including accidents, fire, extortion, and cost. You’ll have to put up with it all.
7. Several times. You could have a difficult time getting supplies through the NNPC, but if you’re a Major Marketer’s Franchisee, you’ll be able to obtain as much as you want, whenever you want it, directly from them.
You can now choose the type of marketer you want to be using these, and once you’ve settled on your marketing status, the next step is to buy a property and construct your Petrol Station.
Where does Sri Lanka get its gasoline?
Refined Petroleum is mostly imported from Singapore ($367 million), India ($259 million), Malaysia ($210 million), the United Arab Emirates ($143 million), and China ($127 million). China ($77.5 million), Kuwait ($14.5 million), and the Netherlands ($10.8 million) were Sri Lanka’s fastest increasing import markets in Refined Petroleum during 2019 and 2020.
Where in the globe can you get the cheapest gasoline?
The Top 10 countries that pay the least amount of money for gasoline are shown below. Venezuela is the world’s cheapest place to buy gasoline, with a litre costing only 2 pence (GBP).
This is due to the fact that it is home to some of the world’s largest oil reserves. However, it is also a country with an extremely low income. You’ll also notice that oil-rich Middle Eastern countries have some of the cheapest gasoline prices in the world.