As gas prices rise, so does my anxiety. We are planning a trip to New Jersey this summer to visit family and based on current prices, it seems the most expensive part will be the fuel to get there. While there is speculation that gas prices will rise to $5 a gallon by summer, I’m not totally convinced since the same claim has been made – albeit unsuccessfully – for the past three years.
However, I could just be in denial.
But what has caused gas prices to skyrocket? One consumer myth is that gas station owners and operators are making a killing at the pumps. In reality, most operators make their profit from selling snacks, sandwiches and soft drinks inside the store rather than from fuel sales. According to the National Association of Convenience Stores (NACS), a trade group representing gas station and convenience store owners, the markup on motor fuel sales averaged 18.5 cents per gallon in 2011. However, profit margins in 2011 typically were 3-5 cents per gallon, which sets the average breakeven on fuel sales after expenses at around 14 cents above the wholesale cost.
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