Local gas retailer releases profit report

October 14, 2008 5:14:07 PM PDT
Many station owners say they can't make any money when they sell gas at high prices.But profits announced Tuesday by North Carolina's largest gas retailer may make that line sound a little hollow.

Almost 60 percent of North Carolina gas stations are mom-and-pop operations and their profits at the pump are not public information. But companies which trade on the stock market do release profit figures.

One earnings report out Tuesday, does contradict a popular company line that there is no retail profit in expensive gas.

Gas retailers often defend their prices by saying profits come not really from fuel, but from the stuff sold inside their stores.

"Convenience stores want them inside to buy a Pepsi cola, pack of cigarettes, whatever," independent station owner Bunkey Morgan said. "Gas is a loss leader."

But selling gasoline as a true loss leader would mean selling it cheaper to customers than store owners are buying it.

"I don't buy into it all the way, maybe some. But not totally," Durham resident Darrell Parker said.

In fact, North Carolina's largest gasoline retailer, the Pantry, which owns Kangaroo stations, released rosy profit figures during a time when many companies are hurting and the Pantry did make money on gas --between $.10 and $.13 cents per gallon.

The Pantry's CEO Frank Paci, told investors the gasoline profit margin is typical.

"It really hasn't changed that much over the years," Paci said. "We end up with a very comfortable range of 10 to 13 cents."

Pantry executives also said they think profit margins will go up during the last three months of the year. That's because the price of crude oil has dropped 46 percent from its high of $147.00 a barrel this year. But prices at the pump are not falling as fast.

"We've got favorable gas margins in the fourth quarter," Paci said. "So those numbers will improve as we move forward."

The Pantry reports that it does make more profits on convenience store food than on fuel. But over the last 10 years, the Pantry shows it has almost always sold gas at a profit, not at a loss.

Officials at the Pantry said they did recently sell gas at a loss, during the shortages after the recent hurricanes, but they may be making up for it now.

One private station owner told Eyewitness News that retail gas profit margins are very good right now --perhaps better than any time since the 1970's.


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