There are several estimates of the number of gas stations in America. Most point to a figure of 120,000. According to the Bureau of Labor Statistics, these locations employ 950,000 people in total. As oil prices plunge well below $15 and the number of drivers turns down sharply, the future of this industry is bleak.
Many of these stations are also convenience stores, which gives them another line of business. However, as driving drops, they are in nearly as much trouble as places where only gasoline is sold.
The gas price that stations have relied on is about $2.60 on an inflation-adjusted basis since 1979. A year ago, the price was $2.80 for a gallon of regular nationwide, according to the AAA Fuel Gauge. That number dropped to $2.15 a month ago and is currently $1.80. In 16 states, the figure is under $1.60. Most industry experts, including widely used gas price site GasBuddy, expect the number to go lower — in some cases much lower. Suffice it to say, the gas station business has been built on prices much above $2 for the past 50 years. They now face prices that could go below $1 in many places.
Fewer drivers will harm gas station financials nearly as much as falling fuel prices. INRIX puts the decline in car travel down by 30% in late March, compared to early February. That number has probably fallen since then. In some of America’s largest cities, the figure is down by half. In these cases, station traffic and gas prices are each down 50% compared to just a few weeks ago.
One thing is certain. The number of gas stations in the United States will drop precipitously over the next year. Many are small businesses that likely do not have access to capital. The Paycheck Protection Program (PPP) may carry some of them to the end of June. However, miles driven will not rebound to past levels until much later in the year, if they do at all. And gas prices could be below $1.50 for months. These problems, in turn, put over 900,000 jobs at risk. It is another example of how COVID-19 has blitzed the American economy sector by sector.