EYDER PERALTA, HOST:
These days, a stop at your local gas station can set you back $100 or more. The national average is up more than $1.25 per gallon since the start of the Iran war. So you might think that the people who own gas stations are doing pretty well. But many, especially independent gas station owners, are struggling just like their customers. Joining us now from a gas station in Stockton, California, is Jivtesh Gill. He owns several gas stations in the Central Valley and East Bay. Jivtesh, thank you so much for being with us.
JIVTESH GILL: Thanks for having me today.
PERALTA: I wonder if you could start by telling me, if you look at the sign outside your station there in Stockton, how much is a gallon of regular?
GILL: It's 5.69...
PERALTA: Oof.
GILL: ...For cash.
PERALTA: And there's a different price for credit card?
GILL: Yeah, it's 10 cents more.
PERALTA: So if the price on your sign outside is a lot higher than it was a few months ago, how come you're not making more money?
GILL: So it's - you know, price is basically reflected of what we pay the bigger oil companies, right? So, you know, when the cost of fuel go up, barrel goes up, and you try to do the best you can without having some sudden movements in your prices. You know, your customers are very sensitive to, you know, how fast you go up. So you have competition on the street, so you got to kind of be sensitive to that, how other folks are reacting. It's like uncharted territory. I mean, honestly, 26 years I've been doing this. I have never, ever experienced such a thing.
PERALTA: And so what, do you have to play with the margins or does the margin just stay the same?
GILL: Margins do not stay the same. You know, we are obviously working on pretty, you know, thin razor margins. So cost goes up without your - any control that you might have. You know, we get pricing every day. End of the day, you will get an email saying, this is going to be your cost starting 6:00 p.m. this evening. So any fuel that arrives after that point is going to be at that price. It could also depend on how much fuel you have in your tanks, right? So folks with a bigger tank, who - we call it in-ground cost. So the fuel inside those tanks underground - if somebody has bigger tanks or 20,000-gallon tanks, they might be sitting on 15,000 gallons, which might last them four days. But their cost bases are much less than somebody who just got a delivery last night or this morning, right? So there's so many things, variables that you got to be always worried about.
PERALTA: How do the big guys affect you? I assume that, you know, the Costcos and Walmarts of the world have the power to absorb some of these fluctuations in prices.
GILL: No, that's correct. The Costcos or the bigger grocery chains, you know, they're big multinational or multibillion-dollar companies. I mean, they are much better positioned to withstand these volatilities. I don't know exactly how they purchase their fuel, but I think futures are probably involved. They are dealing with - directly with certain suppliers, I'm sure, and getting a much better deal. They probably have more access and insight as well as relationships than a small guy, where you're pretty much dependent on the pricing you're going to get, and it is what it is. You know, independent stations are definitely at a disadvantage.
PERALTA: What are you hearing from other gas station owners?
GILL: You know, same challenges, right? Same challenges, you know, higher fuel price - the biggest impact is on customers' ability to spend some money inside the store, right? So margins shrink, and now you're sort of dependent more on inside sales, store inside sales. But the customer who might have filled their tank with say, 60, 65 bucks, now they're paying - depending on the size of the tank - $150. They just have less money to spend inside.
PERALTA: And what happens if prices keep going up? Is it existential, do you think, at some point?
GILL: I mean, folks who are already on a sort of an edge or barely surviving, this will be their kind of the last nail on the coffin sort of - you know, excuse me for saying that. But it's just like, this will get it done. And honestly, long term, I mean, who can survive in a business like this - right? - where you cannot forecast, you cannot predict, three months, four, six months out, and how long you keep juggling all these things in the air and hoping and praying that things settle down? I mean, it's stressing, honestly.
PERALTA: Yeah. I think a lot of listeners value their independent local businesses. But why does it matter if gas stations are independent?
GILL: I mean, we, you know, take a lot of pride in being part of the community. I mean, we are basically their corner store, right? I mean, that's the store where folks might go for quick bite to eat or, you know, some drink or, you know, whatever, frozen drink or whatnot. I mean, over time, your customers, I mean, probably between 60 and 80%, they are same folks, your neighborhood people. And independent stations against bigger companies, we keep things - the whole space competitive.
PERALTA: That was independent gas station owner, Jivtesh Gill. Jivtesh, thank you for talking with us.
GILL: Thank you. Thanks for having me. Transcript provided by NPR, Copyright NPR.
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