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As gas prices hit another record last Friday, Jeff Curro couldn’t take it anymore.

After owning the Shell gas station at 3075 N. 124th St. in Brookfield for 20 years, Jeff Curro has stopped selling gas. As gas prices rose, his profit margin dropped.

He wasn’t a motorist at the pump fed up by the blur of numbers spinning higher as he filled his tank.

Curro is a gas station owner who has stopped selling gas to his own customers.

After selling gas at N. 124th and W. Burleigh streets for 20 years, Curro turned off his pumps at his Shell station in Brookfield when the price he was being asked to pay was just too much.

Including the wholesale cost of gas and other taxes and charges, he was being asked to pay $3.44 a gallon Friday, a day when the competing stations down the street were selling gasoline for $3.47.

“Three cents a gallon doesn’t cut it,” Curro said. “It doesn’t pay the bills.”

Add to that the money he loses every time a motorist uses a credit card at the pump, and there was no reason to keep selling gas, Curro said.

Credit card companies and banks get an average of 2.75% on every gallon of gas sold, and credit card processing fees now rank as the second-biggest expense for gas station operators, according to the National Association of Convenience Stores.

“The way I see it is, I’m doing all the work of providing the labor, the wages, the electricity, the lighting, the maintenance of the pumps, the repairs and the insurance, which is quite substantial,” Curro said. “I’m doing all the work, and somebody else is getting fat on me.”

Curro isn’t alone in deciding to not sell gas anymore. Casey O’Gorman did the same thing. In business for 25 years near State Fair Park, his West Allis service station is now doing business exclusively as Auto Analyzers. The Shell name came down a few months back.

“I finally had to just pull the plug on it and say, ‘I can’t afford to do it anymore,’ ” O’Gorman said.

High wholesale prices
Curro and O’Gorman are leaving a relatively small and disappearing group of service station owners who both sell gas and repair cars.

Independent auto-repair shops face competition from car dealerships and quick-lube repair shops, and in the sale of gasoline, they compete against full-line convenience stores.

Most gas stations today double as convenience stores, and although they generate more than two-thirds of sales from gas, two-thirds of profit comes from in-store sales of cigarettes, drinks and food, according to the convenience store association.

When drivers are paying more, they think that means higher profits for the filling station, said Bob Bartlett, executive vice president of the Wisconsin Petroleum Marketers & Convenience Stores Association.

The case of the two Shell stations stopping sales of gas illustrates the challenges faced by independent station owners across the state, Bartlett said. Nine of 10 stations in the state are independently owned and run, he said.

Between Feb. 1 and Monday, Bartlett said, the average wholesale price paid by service stations in Milwaukee to buy gasoline rose from $1.66 to $2.94. Add in taxes paid to the federal and state governments, as well as transportation costs, and the average service station had to cover $3.47 on Monday, without charging any profit. On that day, stations were charging their customers $3.47 on average in Milwaukee, according to AAA’s Daily Fuel Gauge Report.

“People are upset about oil and gas prices, but it’s not this guy right here,” Bartlett said of the independent gas station owner. “He’s not OPEC. He’s not refining it. He’s buying it kind of like I am, right at the end of the line here.”

Sales up, profit down
Curro has been thinking about shutting down his gas pumps for about a year, and he has complained to his supplier about prices.

When he shut down his pumps, he was charging $3.59 a gallon, 12 cents higher than the competing stations nearby.

“Even at $3.59, I was making 15 cents, but I was still giving 10 of those cents to MasterCard,” he said.

Nationally, the Association of Convenience Stores estimates that sales rose 12% but profit fell 23% industrywide last year, and for the first time, credit card fees were higher than the industry’s profit.

Lower margins on the sale of fuel and credit card fees were the two main factors behind the drop in profit, the association said, as profit margins on the sale of fuel dipped to their lowest point since 1983.

Until January, O’Gorman and the predecessors at S. 84th St. and W. Greenfield Ave. sold gasoline on that corner since 1938.

He says he never made much money selling gas but started seeing margins nosedive last year when gas prices rose.

“More and more, it was crowding out my real form of income,” O’Gorman said, referring to car repairs.

“Then you listen to the public, and they say we’re gouging them. Who needs to listen to that? I’d need to have my head examined.”

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The House yesterday passed a bill that would make price gouging by gas stations and oil companies a federal crime as prices at the pump surpassed a 1981 record reached at the height of the Iranian oil crisis. The White House, which has threatened to veto the bill, warned the legislation amounts to price controls and would lead to gas shortages and lines like in the 1970s.
 
The cross over the threshold of $3.23 a gallon reported by GasBuddy.com equals the inflation-adjusted record high for gas prices and heralds a new era of high energy prices and scarcity of fuel as growing demand in China, India and the U.S. collides with scarce new sources of oil and sluggish increases in gasoline production worldwide. Economists say the House bill will not help to ease those shortages or bring down high prices.

Business groups said the bill would be difficult to enforce and would set a dangerous precedent by opening the floodgates to frivolous lawsuits, further driving away any hopes of increased energy production that would take the pressure off prices.

“This is a first step in addressing the outrageous prices we are seeing at the gas pump,” said bill sponsor Rep. Bart Stupak, Michigan Democrat. Prices in recent years have peaked at about the Memorial Day start of the summer driving season, but they could climb higher this year if hurricanes or conflicts in the Middle East or Nigeria disrupt supplies.

“This bill is all bark and no bite, and will do nothing to lower gas prices,” said House Minority Leader John A. Boehner, Ohio Republican. “No American likes paying high prices at the pump. … This bill could make the pain felt by consumers at the pump considerably worse.”

The supply pressures that have driven up gas prices this year eased somewhat yesterday as the Energy Information Administration reported an increase in output at U.S. refineries and a 1.5 million-barrel increase in gasoline stocks, which are about 7 percent below average for this time of year. That helped to reduce wholesale gas prices, though demand for gas remained strong, growing at a 1.2 percent pace.

In coming years, Americans face sharply higher prices for energy as they compete with burgeoning demand for gasoline to power cars in emerging giants such as China, India and Russia. A separate report from the energy agency Monday said energy demand worldwide will soar 57 percent by 2030. To keep pace with that demand, production of oil would have to grow more than 40 percent to 118 million barrels a day.

But because of dwindling reserves and production of petroleum, the report projects that other liquid fuels such as biodiesel and liquefied coal will meet about one-quarter of the increased demand. Economists say oil and gasoline prices will have to rise significantly higher for that to happen, since expensive technologies are needed to tap into the alternative fuel sources and make mass production possible.

The sobering outlook for energy resources was not discussed much yesterday as the House entertained a perennial favorite among lawmakers and the public: legislation enabling the Federal Trade Commission and Justice Department to impose on oil companies, traders and retail operators jail sentences and fines of up to $150 million a day for charging “unconscionably excessive” prices or taking “unfair advantage” of consumers.

The bill’s enforcement provisions would be triggered if the president declared an energy emergency such as might occur if hurricanes disabled Gulf Coast oil fields and refineries as they did in 2005 after Hurricanes Katrina and Rita. The bill could be enforced by state attorneys general and class-action lawsuits.

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U.S. retail gasoline prices hit a record high for the second week in a row and matched the inflation-adjusted peak reached in the early 1980s during the Iran-Iraq war, the government said on Monday, as concern about low motor fuel supplies pushed up pump costs.

The average price for regular unleaded gasoline soared 11.5 cents over the last week to a fresh record of $3.22 a gallon, according to the federal Energy Information Administration’s nationwide survey of 800 service stations.

The much larger Lundberg industry survey of 7,000 stations showed the national price of gasoline jumped 11.4 cents over the last two weeks to a record $3.18 a gallon.

The latest EIA pump price also equals the all-time high fuel cost of $3.22 a gallon, when adjusted for inflation, reached in March 1981 after war erupted between Iran and Iraq.

Guy Caruso, who heads the EIA, said on Monday that consumers should not see gasoline prices begin falling until next month.

“We are expecting that things should improve in June,” he said. “We still have some more of the wholesale (gasoline) prices to pass through (to the pump). We’re not at the peak yet.”

Gasoline prices have skyrocketed $1.05 a gallon since the beginning of February and are up 33 cents from a year ago.

With several large refineries down this spring for maintenance or shut by problems, gasoline production has been reduced, cutting into available supplies.

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