III. Industry Analysis
The Gas Stations industry has experienced growth over the past five years. Since the majority of the industry’s business is generated from consumers rather than commercial businesses, consumer spending plays a major role in determining industry performance. Consumer spending has increased over the five years, boosting spending.
Driving rates are expected to increase and as people drive more, they will require more fuel for their cars. Coupled with low oil prices, this trend has also encouraged consumers to trade up to premium grades of vehicle fuel, facilitating industry profit growth.
Moreover, the decline in the world price of crude oil has enabled operators to lower purchase costs without passing on all of the savings to consumers, boosting profit. With business owners relying more on convenience store sales, as in-store products are more profitable than gasoline, the average industry profit margin has reached historically high levels over the past five years.
