Earlier last month the Energy Information Agency reported that the US will now return to importing more crude and petroleum than it will export. This was huge news, as the agency had just reported the US did not import any Saudi Arabia crude  for the first time in 35 years ……As America became less reliant on OPEC the prices at the pumps decreased in 2020 but margins remained healthy.

Along comes President Biden who has promised to increase regulations on Oil to make the US more dependent on foreign supply which will push up the price of a barrel.

The cancelation of the Keystone pipeline is just the beginning of the Democrat’s agenda to increase the cost of driving a petrol car.  The President is being pressured by green politics (who contributed big money to his campaign) to tax dirty petroleum to the max, the penalty for which is passed to the consumer by driving prices up and volumes and margins down. ‘They want to kill your business”

Add to that the advent of the electric car, the Governor of CA banning new petrol-powered cars in 2035 and we find the downstream marketing world of the gas station in a state of flux.

We are not seeing any panic selling yet but many owners are on the fence about divesting before volume numbers start to fall.

The market today is very strong for the Gas Station owner with an average station selling for 4 to 5 x the Gross Profit. Financials are relatively good too, showing strong 2019 and a surprisingly good 2020 (due to high margins).

The big question mark is how are banks going to underwrite a loan on a 30 yr. mortgage with only 15 years left before new petrol cars are banned. All reports suggest banks want to see an alternate business plan for the a TBD % of the area used by your MPD’s. How this is going to work has yet to be seen.

The new Politics favoring a greener mode of transportation and the changing retail climate due to covid has many owners questioning the sustainability of the income stream they have come to expect.

The prices are at a high so my advice is to sell now but the dilemma of course is where to invest your gains without paying capital gains tax, the 1031 market  is very tight too.

So, how will Green politics effect your station in the future ?

The Democrats green political agenda is to remove your station from the map by deleting the demand for petroleum. Auto makers are moving fast with new EV models coming down the line so we can expect to see stations in the wrong geographic areas struggle for survival in the next 10 years if not sooner.

But…and this is a biggy,  can California  sustain and power a majority electric car population ? The answer of course is a resounding NO. It would however be naive of this author to suggest that the tsunami is not coming and we need to plan for the future.

Timothy Haves is the Broker officer for Petroleum Realty Group. He has over 20 years experience in the industry. For a personal evaluation of your station call 949-636-3961