Goodbye, Gas Stations

Abandoned Gas Station - Glen Rio, Texas

When I managed parking for Zipcar in San Francisco, some of my favorite partners were gas station owners. They were often characters in their own right who loved to chat and worked hard as independent operators running a station or two with their families. It turns out, Nick, Raj, Evelyn, Hassan, and Sam were representative of most of the country’s gas station owners. According to the National Association for Convenience and Fuel Retailing, which has an interest in tracking this kind of thing, in 2011 there were 123,289 gas station convenience stores which sold 80% of all gas purchased in the US. More than half were owned by an individual or family.

What’s fascinating about gas stations, though, is that it would be more accurate to call them coffee and cigarette stations. 24/7 Wall St offers this insightful analysis of the economics of owning a station, which I’ll repeat briefly here. 2/3 of convenience store revenue comes from fuel sales with the remainder made up of the sale of other merchandise. However, 2/3 of convenience store profit comes from cigarettes, coffee, and other merchandise. Gas stations generate a meager 2% net profit margin in the best of years, putting them among the 10 least profitable industries in the US.

Compare that with retailing which generates 2.9-4% net profit margin or transportation and software which rake it in at around 8% and 20% respectively.

So what? Why does this matter? First off, gas stations are still a big deal for our economy: in 2012 they collectively accounted for 3.4% of GDP in 2012 according to 24/7 Wall St.

Now let’s take at face value for a minute the predictions that autonomous vehicles will begin cruising our roadways by 2020. Add in the continued adoption of electric vehicles. What might some of the downstream impacts of these new technologies be?

For starters, no more gas stations. And for the land, it creates new opportunities for ideas like Sole Food Street Farms in Vancouver, BC, an adaptive reuse project which launched a dense, urban farm on the site of a vacant gas station, or Big Star, a hip taco shop on the site of a former Pierce service station in Chicago’s Wicker Park.

As noted before, this not only impacts fueling itself but potentially further shifts the dynamics of retailing. What opportunities are created for new business models? What changes as fuel itself shifts from gas to electric? What happens to all of the gas station parcels that aren’t located in city centers? How are long haul or on-demand trucking and delivery networks impacted?

And what about all of those gas station owners?

Photo credit: Bradley Fulton

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