America's Corner Market

Members of the Petroleum & Convenience Marketers of Alabama (P&CMA) operate in every part of the state, and economic activity here would come to a standstill without them. Yet, P&CMA members remain relatively low profile as names in the news, and maybe that’s a sign of a job well done.

The P&CMA has more than 400 members, comprised largely of petroleum wholesalers and distributors and convenience store owners and operators. The association also includes businesses that supply petroleum marketers and convenience stores. That includes a range of products and services — from soft drinks, groceries and tobacco to pump and tank installation firms, cash register vendors, insurance agents and others.

Some P&CMA members are overwhelmingly committed to selling motor fuels and lubricants to various industries — steel, mining, natural gas and numerous others. But most P&CMA members are involved in some way with gasoline and diesel sales, with convenience stores or with both.

It wasn’t until 1964 that there was a self-service gasoline station in the United States. In those days, the large oil companies — Shell, for example — typically owned their stations and staffed them with company employees. Over the next generation or so, retail sales became more and more a part of those stores.

As that trend continued, the major oil companies sold the retail side of those stores to concentrate more on the sale of gasoline and petroleum products. A franchise-like arrangement between the storeowners and the oil companies evolved, and the oil companies continued to supply gasoline and diesel on a contractual basis.

- Sponsor -

As time went on, however, more of the new owners of these properties decided they didn’t want to run the retail side of the business, either. They came to view their stores more as a real estate investment, not a retail business.

As a result, many of today’s convenience store owners have contracted with independent third parties who actually operate the stores. Association officials say many of these stores are now operated by “new Americans” — Indians, Pakistanis, Vietnamese and others — especially in more urbanized areas. But most of the convenience stores in Alabama are still owned by family businesses that have owned them for years, and they still operate in a franchise-like arrangement with the major oil companies.

“The overwhelming majority of these stores are family-owned businesses with local roots, ” says Bart Fletcher, president of the P&CMA. “They are independent Alabama businesses.”

There is often a misconception, however, that convenience store operators are sharing in the profits of the major oil companies, especially when gasoline prices are high.

“If Exxon reports record profits, there is an unintentional mental connection that the owner of that store is participating in those record profits, and that is not the case, ” Fletcher says. “The owner of that store, or the operator of that store, is usually going to be an independent, locally owned Alabama business. The sign out front just means they’re in a franchise-like arrangement with BP, or Shell, or whomever. It’s no different from a Ford dealership or a State Farm office.”

The scope of business conducted by Alabama convenience stores is enormous. According to the National Association of Convenience Stores State of the Industry Report through December 31, 2012:

  • Alabama has 3, 950 convenience stores that employ 47, 375 people, not counting employees of wholesale petroleum marketers in the state.
  • Convenience stores in Alabama do 4.5 million transactions a day.
  • Total sales in those stores are $18.2 billion per year; of that, in round numbers, $14 billion is for motor fuel, $3.5 billion is for merchandise and $675 million is for food service.
  • Total motor fuel sold is 5.8 billion gallons annually.
  • Fees paid to credit card companies totaled $297 million last year — roughly double the amount paid for utility bills.

Fletcher has more than a full plate as 2013 unfolds. Major issues include environmental regulation, the new health care law, an ongoing trend of increased license fees and simply complying with the numerous laws and regulations for the industry.

Fletcher expects the current federal administration “to be more aggressive in regard to environmental issues and other things that will have a direct impact on our industry, ” adding that “Environmental groups are pushing for (Tier 3) gasoline that would require refineries to lower sulfur levels, and that would cost billions of dollars for refinery upgrades. And that would almost certainly lead to significantly higher retail gasoline prices.”

P&CMA members also worry about changes to health care laws, says Fletcher. “Convenience stores are a labor-intensive business, and the economics of the retail convenience store industry do not provide the amount of excess revenue necessary to comply with this huge financial burden. Our members are still trying to figure out how they are going to be able to implement this mandate and still remain profitable.”

Another concern for the association is that, with budgets so tight, state agencies are receiving less from the General Fund, and they are raising fees to cover the shortfall.
On top of everything else, P&CMA members deal with an incredible number of products regulated by the state and federal government. “We try to help them manage all those laws, so that they are in compliance, ” Fletcher says. “That’s part of what we do.”

Jasper-based Hager Oil President Steve Hager says, “Businesses are targets. Businesses all over the U.S. need protection in state capitols and Washington, D.C. The P&CMA has been very, very important. Being a member of the association pays. I’m a past president and have been a P&CMA member my entire business career. I think it is vital to our survival.”

Charlie Ingram is a freelance writer for Business Alabama. He lives in Birmingham.

Charlie Ingram

The latest Alabama business news delivered to your inbox