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Published on April 3rd, 2020 | by Jo Borrás

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Gas Stations Face Bankruptcy As Demand Plummets

April 3rd, 2020 by  


In a world where fewer people smoke, commuters get pickier about their snacks, cars need less gas, and apps like GasBuddy make competition especially fierce, gas stations were already facing a scary, uncertain future. Now, with the COVID-19 pandemic keeping many people and cars at home and the looming threat of mass bankruptcy forcing consumer demand even lower, we have to ask: are gas stations making any money?

If we look to the UK — which has been under a national-level lockdown in an effort to “flatten the curve” since March 23rd — the answer seems to be: no.

The lack of profits may force a number of gas stations and convenience stores to close down — especially in rural areas or markets that are especially dependent on commuters. And, like it or not, that presents a big problem for everyone. “To help freight move and help key workers travel safely and independently through this period of crisis, petrol filling stations must remain open, but this is proving to be a challenge for many filling stations,” explains Brian Madderson, chairman of the Petrol Retailers Association (PRA) in the UK. The problem is only being exacerbated by fact that the price of crude oil is hitting an 18-year low of about $20/bbl as I type this. That’s because the gas that many of the smaller, independently-owned gas stations have “in stock” right now was bought weeks ago, when prices were still high.

In the US, the situation is similarly dire. “More than 60% of convenience stores are independently owned,” writes MSNBC’s Robert Ferris. He also notes that these stores are often competing with massive conglomerates that own “more than 200 stores.” As such, these smaller stores have had to make tough choices.

“Fuel retailers are having to maintain pump prices at previous levels to avoid suffering significant stock losses,” offers Madderson, in an effort to explain why prices at the gas stations’ pumps haven’t plummeted along with the price of crude. “When the COVID-19 restrictions are lifted and high sales volumes return, then we expect to see reductions in retail fuel prices.”

The impact that mass closures of gas stations would have on the economy at large won’t be limited to trucking routes and cost of goods, either. Loss of those businesses will impact road and city taxes collection, as well, and may tip some smaller towns into default, causing even more chaos.

It will be worth keeping an eye on the UK — being a few weeks “ahead of the US,” as they are — to help us prepare mentally for what’s coming. Until then, keep your PHEVs and BEVs plugged in, and hope for the best? What do you guys think? Is this a problem that’s been a long time coming, or are American gas stations going to ride this out just fine? Let us know what you think in the comments.

Sources | Images: AutoExpress UK, CNBC

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About the Author

I've been involved in motorsports and tuning since 1997, and have been a part of the Important Media Network since 2008. You can find me here, working on my Volvo fansite, riding a motorcycle around Chicago, or chasing my kids around Oak Park.



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