How Do Gas Stations Work? Unveiling the Mechanics

Many of us go to the gas station every week. It’s a simple process: you pull up to the pump, pay, and pump your gas. The whole errand takes just a few minutes. But a lot is going on that customers don’t see. From underground storage tanks to gas pumps, payment systems, and all the other extra amenities, gas stations have a complex operating process that requires millions to build. 

Key Points:

• Gas stations operate with the help of underground storage, fuel pumps, and payment systems inside the station and outside at the pumps. 
• Gas stations are often convenience stores as well, so they offer other products besides fuel. 
• Unlike other businesses, gas stations must abide by many environmental regulations to operate within the law. 

Understanding How a Gas Station Works

Gas stations operate in a few different ways depending on the size and services offered by the owner.  

Gas Station Components

There’s a lot more to a gas station than what the common consumer can see. There’s a whole infrastructure running underground and aboveground, and every component has to operate well for the customer to get gas. These components include:

• Fuel storage tanks: Underground storage tanks hold different grades of gasoline or whatever alternative fuels the gas station may offer. 
• Fuel dispensers and pumps: These are the devices that give you the fuel that you’ll pump into your vehicle. They typically have multiple fuel grades available and are equipped with nozzles and hoses for fuel delivery.
• Payment systems: Just like other retail locations, gas stations employ various payment systems including cash, credit/debit cards, and mobile payments, allowing customers to conveniently pay for their fuel purchases.
• Convenience stores and other amenities: Many gas stations go beyond just offering fuels and have convenience stores that offer a range of products, including snacks, beverages, toiletries, automotive supplies, and sometimes even hot food. 
• Canopy: The canopy is the structure that provides shelter over the fuel dispensers and protects customers from weather elements while refueling. It’s often the cover with the name of the fuel provider slapped on the side in big bold letters. 
• Signage: Gas stations often utilize huge signs to display their brand, fuel prices, and special offers. 
• Environmental controls: Gas stations employ systems to prevent fuel spills, which are a huge environmental hazard. These systems include leak detection systems, vapor recovery units, and containment measures.

Fuel Delivery Process

To operate, a gas station needs to have one thing: gasoline. To get it delivered every few days, gas stations go through the following process:

• Transportation: Fuel is transported from crude oil refineries to the gas station. Tanker trucks or pipelines are commonly used for this purpose. 
• Fuel storage: Once it arrives at the gas station, the fuel is pumped into underground storage tanks. These tanks are designed to hold different fuel grades, ensuring you have enough to meet customer demand.
• Quality control: Before fuel is ever dispensed to customers, gas stations must conduct quality control checks to ensure that the fuel meets regulatory standards. This includes testing for octane rating, contaminants, and compliance with environmental regulations.
• Fuel dispensing: Once everything has been tested and cleared, customers can now drive up to the gas pumps, select their desired fuel grade, and pump gas into their cars. 
• Payment from the customer: When you drive up to the pump, you’re of course asked to pre-pay. This involves either going into the gas station to pay in cash or with a card or paying at the pump with your debit or credit card. 

Gas Station Safety Measures

Gas stations can be dangerous places when a spill or fire occurs. To eliminate this danger and keep your customers and staff safe, every gas station should take a variety of safety measures, including (but not limited to):

• Taking safety precautions such as having clearly marked safety signage, traffic control measures, and designated areas for vehicle refueling.
• Having fire prevention measures in place like installing fire extinguishers, fire suppression systems, and emergency shutdown mechanisms. Additionally, conduct regular inspections and maintenance of equipment to ensure everything is functioning properly.
• Proper protocols for the safe handling and disposal of fuel. This includes training employees on proper fuel handling procedures, utilizing spill containment systems, and implementing environmentally responsible practices for fuel disposal.
• Compliance with safety regulations. Gas stations must adhere to local, regional, and national safety regulations and standards. This includes regular inspections by regulatory authorities to ensure compliance with safety protocols, equipment maintenance, and proper training of employees.
• Having an emergency response plan in place to address incidents such as fuel spills, fires, or accidents. 

Gas Station Operations

Managing a gas station effectively includes having the right people and systems in place to manage inventory, equipment maintenance and repair, compliance with regulations and safety standards, record keeping, and focus on customer service.

• Gas stations require a dedicated staff to manage day-to-day operations. This includes hiring and training employees for various roles, such as fuel pump attendants (although these are becoming rare), cashiers, convenience store personnel, and maintenance staff. 
• Gas stations employ inventory management systems to track fuel levels, convenience store products, and other supplies. Regularly monitor your inventory to help determine stock levels and place timely orders.
• Gas stations have a responsibility to maintain and repair equipment to ensure everything is properly functioning. This includes regular inspections, maintenance schedules, and timely repairs of fuel dispensers and other operational machinery.
• Gas stations must comply with a range of regulations and safety standards. They’re dealing with hazardous material, so to make sure no damage is done to customers or the environment, state and local governments put policies in place. Compliance with these policies is monitored through inspections and audits.
• Gas stations maintain detailed records of fuel sales, inventory, equipment maintenance, employee training, and safety inspections. Accurate record-keeping is essential for regulatory compliance, financial reporting, and tax time.
• Gas stations strive to provide excellent customer service and ensure customer satisfaction. This includes prompt assistance, friendly staff, clean facilities, well-maintained pumps, and relevant products in convenience stores.

How Does a Gas Station Pump Work?

The gas pump makes up the heart of the gas station. It’s what’s going to give the customer what they’re there for. Here’s how gas pumps work and what makes them up:

• Gasoline storage tanks: As mentioned, gas pumps are connected to underground gasoline storage tanks that store different fuel grades. 
• The check valve: The check valve is a one-way valve that prevents fuel from flowing back into the storage tank after it has been dispensed. It ensures that fuel only flows in one direction, from the pump to the customer's vehicle.
• The flow meter: The flow meter measures the amount of fuel being dispensed. It accurately calculates the quantity of fuel passing through the pump. This helps pre-pay customers correctly measure fuel and get charged accordingly.
• The blend valve: In some cases, gas pumps have a blend valve that allows the mixing of different fuel grades to achieve the desired octane level. This valve blends different grades of fuel as per the customer's selection to meet their specific requirements.
• The automatic shut-off: The automatic shut-off mechanism is a safety feature built into most gas pumps. It senses when the customer's vehicle fuel tank is full and automatically stops the fuel flow. This prevents overfilling and potential spills.
• The display panel: The display panel on the gas pump provides important information to customers, such as fuel price per gallon, the total fuel they’ve dispensed, and the amount they’re being charged for the fuel. 
• The keypad or touchscreen: Most gas pumps have a keypad or touchscreen interface that allows customers to select fuel grades, enter payment information, and perform other functions related to their fueling transactions. 
• The hose and nozzle: The hose and nozzle are the physical components that deliver the fuel from the pump to the customer's vehicle. The nozzle is designed to securely fit into the vehicle's fuel tank, while the hose transports the fuel from the pump to the nozzle. 

How Do Eco-Friendly Gas Stations Work?

Eco-friendly gas stations are designed to minimize environmental impact and promote sustainability while still helping fuel transportation. Among other things, they:

• Integrate renewable energy sources like solar panels or wind turbines on their buildings.
• Offer alternative fuel options such as electric vehicle charging stations.
• Prioritize energy efficiency through efficient lighting systems and advanced HVA.
• Implement measures to reduce their environmental impact, including proper fuel storage, vapor recovery systems, and eco-conscious landscaping.

The future outlook for eco-friendly gas stations is promising as the number of eco-vehicles purchased creeps up. They contribute to a greener fueling industry, supporting the transition to a cleaner world overall.  

What’s Included in an Eco-Friendly Gas Station?

Some components commonly found in eco-friendly gas stations include:

• Renewable energy sources such as solar panels or wind turbines, generate electricity.
• Alternative fuel options like electric vehicle charging stations and hydrogen fuel cells.
• Energy-efficient technologies such as efficient lighting systems.
• Environmental impact reduction measures including proper fuel storage and spill plans in place.
• Sustainable materials and construction practices: to reduce the station's carbon footprint.
• Integration of smart energy management systems to optimize energy usage.
• Emphasis on water conservation and efficient waste management practices.

Will Gas Stations Go Out of Business?

While the fueling industry is undergoing significant changes, it's unlikely that gas stations will go out of business completely.

Convenience Store Operations: Additional Ways Gas Stations Make Money

Gas stations often double as convenience stores, offering products like snacks, drinks, and even alcohol in some states. These convenience stores make much of the gas station’s profits, selling:

• Snacks and beverages including wide varieties of snacks, cold beverages, coffee, tea, etc. 
• Grocery and household items like basic groceries, toiletries,  and cleaning supplies.
• Tobacco and vaping products (only in some states).
• Lottery tickets and scratch-offs (again, only in some states).
• Automotive supplies like motor oil, windshield wipers, automotive tools, Windshield washer fluid, engine coolant, and other car maintenance fluids.
• ATM services for customers to withdraw cash.
• Hot food and fresh deli, often including pizza, sandwiches, salads, and more. 

How Does Gas Station Financing Work?

Since the average cost to build a gas station is a cool $2.5 million, anyone looking to renovate or build a gas station from the ground up is going to need some help securing the cash to do so. Some of the most common funding options include:

• Loans from banks or credit unions: Future gas station owners can apply for loans from traditional banks or local credit unions, which may offer competitive interest rates and repayment terms based on the borrower's creditworthiness and business plan.
• SBA loans: The Small Business Administration offers numerous loans that can help entrepreneurs build or buy a gas station. These loans often offer favorable terms, such as lower down payments and longer repayment periods, but in return, they have long wait times. You might like to read more about SBA loans for gas station owners.
• Equipment financing: Gas station owners just looking to replenish the equipment in their gas stations can opt for equipment financing, which helps you spread the cost over time while acquiring essential equipment.
• Franchisor financing: Gas station franchises offer financing options for prospective franchisees. These financing programs are tailored to the specific needs of the franchise and may include support in securing loans or leasing property.
• Seller financing: In certain cases, gas station owners looking to sell their businesses may offer financing options to potential buyers. They recognize that this is an expensive purchase that most can’t make upfront. The arrangement allows the buyer to make payments directly to the seller over an agreed-upon period, eliminating the need for traditional bank financing.

How Do You Get Gas Station Loans?

Now that you know where to get a loan, what does the actual process look like? Well, to get a gas station loan:

• Research the loan options listed above and decide which works for your needs. 
• Gather necessary documents such as your business plan, tax records (business and personal) for the last few years, and any other paperwork the lender asks for. 
• Complete the loan application and make sure to provide accurate personal and business information.
• Your credit score gets run and will be evaluated based on your overall credit history and financials.
• You’ll hear back about approval. If approved, review the terms and conditions of your loan carefully to make sure you understand your payments. 
• Close on the loan (aka, sign a bunch of paperwork), and finally you’ll secure financing