Oil companies have sold many gas stations since 2007 in response to sluggish demand
Los Angeles, CA (PRWEB) March 04, 2012
The Gas Stations with Convenience Stores industry has been running on fumes for the past five years. During the recession, unemployment rose sharply and consumers cut back on spending and traveling. In turn, consumer demand for gasoline and convenience store items fell. Because the vast majority of the industry's business is generated from consumers, rather than from commercial operators, consumer spending drives the Gas Stations with Convenience Stores industry's performance, IBISWorld industry analyst Justin Molavi said. Industry revenue is expected to fall at an average annual rate of 1.5% to $331.7 billion in the five years to 2012, with 0.3% growth expected from 2011 to 2012. Downward trends in demand have led to a wave of selling. Major oil companies have sold many gas stations since 2007 in response to sluggish demand for gasoline during the recession. Companies divested stations to concentrate on locations with higher profit opportunities and to focus on other, more profitable oil and gas business segments, such as refining. In doing so, gas stations were sold at a discount. Often, gas stations with convenience stores were sold to upstream petroleum-product distributors. These distributors, in their search for more vertical integration, picked up gas stations where they distributed fuel to customers in the same area. With lower transportation costs, distributors benefited from owning several gas stations in a particular region.
Revenue for the Gas Stations with Convenience Stores industry will flow more freely during the next five years. As the US economy gains steam, more consumers are expected to hit the road and demand more gasoline, Molavi said. Furthermore, strong economic growth will push demand for crude oil higher, paving the way for higher crude oil prices. These prices will ultimately be realized at gasoline pumps, and consumers will absorb the increases as disposable income rises in tandem with economic growth. Industry firms will also step in and invest in profitable locations to cater to consumers with more money. These trends will boost revenue.
Concentration in the Gas Stations with Convenience Stores industry is low. Industry concentration has decreased over the past five years as major players divested gas stations to concentrate on more profitable locations. The recession prompted many oil companies to concentrate on more profitable operations. The large size of the US market (both in terms of volume and sheer area) contributes to modest industry concentration. Although some industry participants have national coverage, others are active only in specific geographic regions. Branded locations (with major oil producer brands like Chevron) typically attract the highest volume of consumers. For more information, visit IBISWorld’s Gas Stations with Convenience Stores report in the US industry page.
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IBISWorld industry Report Key Topics
Firms in this industry retail automotive fuels such as gasoline and diesel from gas stations that are co-located with convenience stores or food marts. They may also provide automotive repair services.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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