If you own a gas station and you want to make a profit from the business, then you must make sure you buy your gas at wholesale price.
Interestingly, gas stations buy their gas at wholesale prices from a variety of sources, depending on their size, location, and affiliation with major fuel brands.
In this article, we are going to look at some of the places gas stations buy their gas at wholesale prices.
Common Sources Gas Stations Obtain Their Fuel
-
Refineries
Gas stations, particularly large or independent ones, often establish direct relationships with refineries to purchase fuel in bulk at wholesale rates.
Refineries process crude oil into gasoline and other petroleum products, making them the primary source of fuel for gas stations.
By cutting out intermediaries, gas stations can secure lower prices, allowing them to maintain competitive pricing at the pump.
Please note that independent or unbranded stations often rely on these direct relationships with refineries to ensure a steady supply of fuel and to manage costs more effectively.
-
Wholesale Fuel Distributors
These distributors act as intermediaries between refineries and gas stations, offering fuel at bulk rates to independent or unbranded stations.
Wholesale fuel distributors typically have long-term contracts with refineries, allowing them to purchase fuel in large quantities at discounted prices.
They then sell this fuel to gas stations, ensuring a steady supply of gasoline while managing logistics and transportation.
For independent gas stations or those not affiliated with major oil brands, distributors provide a crucial link to secure affordable fuel.
Notable examples of large fuel distributors include World Fuel Services and Guttman Energy, which serve numerous gas stations nationwide with competitive pricing.
-
Major Oil Companies
Branded gas stations, such as Exxon, Shell, and Chevron, typically purchase fuel from their parent oil companies or affiliated suppliers.
These companies operate their own distribution networks, ensuring a consistent supply of fuel directly to their branded stations at wholesale rates.
This allows branded stations to maintain control over fuel pricing and availability. In many cases, gas stations are part of franchise agreements where fuel supply is included as part of the contract, often at negotiated wholesale prices. I
nterestingly, building relationships with major oil companies provides stability for the station owner while benefiting from the brand recognition and support of major oil companies.
-
Terminal Operators
Gas stations also purchase fuel from terminal operators, who manage fuel storage tanks at distribution terminals. These terminal operators buy fuel from refineries and store it until it’s needed for distribution.
They then sell fuel to gas stations at wholesale rates, which can fluctuate based on market conditions, including crude oil prices, transportation costs, and regional demand.
This method is especially common for independent or unbranded gas stations that don’t have direct relationships with major oil companies.
By purchasing fuel from terminal operators, these stations gain access to competitive pricing while maintaining flexibility in their fuel supply.
Terminal operators typically deliver fuel to stations, helping them streamline logistics and reduce the need for large-scale infrastructure investment.
-
Direct Contracts with Pipelines
By bypassing intermediaries, gas stations can secure more favorable pricing and ensure a steady, reliable supply of fuel.
These direct agreements often allow for bulk purchases, which reduces the per-gallon cost and improves overall profitability.
Gas stations benefit from a streamlined supply chain, avoiding markup costs added by wholesalers or distributors.
This method is particularly advantageous for larger gas station networks or those with high fuel demand, as it ensures greater control over fuel pricing and logistics.
Direct relationships with pipeline companies can also offer long-term stability and competitive pricing in volatile markets.
-
Fuel Co-Operatives
Lastly, smaller gas stations, or local chains, often buy their gas at wholesale prices through fuel cooperatives.
These co-ops aggregate the purchasing power of multiple stations, allowing them to negotiate better terms and bulk discounts with fuel suppliers.
By joining a co-op, small gas station owners can access the same competitive pricing as larger chains, helping them maintain profitability despite their smaller scale.
Co-ops also provide a collective bargaining advantage, securing lower fuel costs and often offering additional services like fuel delivery and storage management.
This approach allows smaller stations to stay competitive in the market, ensuring they can offer affordable prices to customers while reducing operating expenses.