ConocoPhillips (COP): Gas Station Business Stinks, We're Out

ConocoPhillips (COP) is exiting the retail gas station business, just as ExxonMobil (XOM) did just a couple months back. COP is is expected to sell the remainder of its 600 company-owned gasoline stations to PetroSun West LLC for $800 million.

Why, when gas is at or just below record highs, is Big Oil leaving the business?

  • the margins are too low
  • the energy companies need to focus all their cash and resources on their most profitable business: finding new supplies of crude oil

This chart from the WSJ shows why the guy selling you your $4 gas is a surprising victim of high gas prices:

PetroSun plans to use the gas-station business as a way to lure customers to its new convenience stores, which plan to serve fresh sandwiches, provide financial services such as bill-paying, and even have dry cleaning, says Chief Executive Sam Hirbod. Most of the gas stations the company is buying are in high-traffic, urban areas.

The longer oil prices stay high, the more likely you are to be buying gas from places like Walmart (WMT) (which also love to lure you to its stores). Selling a couple cups of coffee and a few Snickers no longer cuts it if you want to be a profitable gas station.

See Also:
Surprising Victim of $4 Gas: The Guy Selling It To You

5 Reasons To Love $4 Gas

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