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Gas stations are a staple in the U.S., providing fuel spots from cities all the way to the rural corners of the country. But as oil consumption becomes more of an environmental hazard and electric vehicles take hold, will gas stations disappear completely? While unlikely, gas station owners will certainly need to adapt as hybrid and electric vehicles take over the vehicle market.
Will gas stations disappear completely in the future?
- Gas stations are in a slight decline as electric vehicles start to take hold in the transportation industry.
- Still, gas stations are unlikely to completely disappear, as gas-powered vehicles are likely to exist for a while.
- Gas stations provide other services, such as convenience stores, mechanics, car washes, and more — all of which are still profitable and desirable services.
Will Gas Stations Go Out of Business?
Gas stations are facing a decline in numbers due to factors such as stricter environmental regulations and a general shift toward electric vehicles. That said, gas stations are unlikely to go out of business completely. Gas-powered vehicles have been popular for so long for a reason, and they’re likely to remain popular for a long time. This is mainly because they’re often more affordable than electric vehicles currently on the market. Many gas station owners are adapting their business models by offering electric vehicle charging services as well as gas pumps.
The Current Status of Gas Stations
Gas stations have been a part of American life since the early 1900s, making it more convenient to buy fuel, which was previously purchased from a barrel at your local grocer or hardware store. By 1935, over 200,000 gas stations peppered the United States.
In 1994, the U.S. was home to over 200,000 gas stations, falling to 168,000 locations in 2004. Nearly twenty years later, the number of gas stations in the U.S. has fallen even further, currently sitting at 145,000 locations across the country.
The Future of Gas Stations
One of the biggest challenges facing the gas station industry is the uprising of electric vehicles and their hybrid cousins. With over 10 million electric vehicles sold in 2022 and electric vehicle sales projected to grow by 35% in 2023, gas station owners will need to get with the times to keep their stations open long-term. This could include installing electric car chargers and even carrying biodiesel.
Additionally, many gas station owners have also long understood that their profitability relies not only on selling gasoline but also on a diverse range of other products and services. That is unlikely to change. Convenience stores attached to gas stations have become a staple, and some gas stations have incorporated services like car washes, oil changes, and vehicle maintenance, further diversifying their revenue streams.
So, even as the demand for gasoline decreases due to the rise of electric vehicles, gas stations can leverage their existing infrastructure, customer base, and convenience store operations to cater to the needs of electric vehicle owners.
How Long Will Gas Stations Be Around?
Although the future of gas stations isn’t likely to reflect the boom of past decades, they also aren’t likely to become obsolete anytime soon. That is, as long as gasoline-powered vehicles are on the road, they’ll need a place to fill them up.
Many states, including California, have set timelines for when they will stop allowing the sale of gas-powered cars, with seven of them (California, Maryland, Massachusetts, New Jersey, New York, Oregon, and Washington) forming a pact to only sell zero-emission vehicles past the year 2035.
President Biden has even signed an executive order with the goal of half of new passenger cars and trucks sold in 2030 being zero-emission vehicles. However, gas-powered vehicles would still be allowed on the road and would need a place to fuel up.
That said, as the sale of gas-powered vehicles declines, you can expect that the number of gas stations will continue to trend downward, too.
Challenges Facing Gas Stations
Gas stations, especially those in areas where electric vehicles are becoming more dominant, are facing several challenges that require them to adapt and evolve to remain competitive. These challenges include:
- Competition from alternative fuel options: Gas stations face competition from electric vehicles, including plug-in hybrids, and alternative fuel options, reducing the demand for gasoline.
- Adapting to consumer needs: Gas stations need to adapt to changing consumer preferences, including a shift towards eco-friendly options and convenience-driven experiences.
- Costs of upgrading infrastructure: Gas stations incur significant costs when upgrading their infrastructure to accommodate new technologies and fuel options.
- Evolving regulatory landscape: Gas stations must navigate complex environmental regulations and safety standards.
How Gas Stations Can Adapt and Remain Profitable
To remain profitable and relevant in the face of the shift towards alternative fueling sources, there are changes gas stations can make to stay relevant. Here are several approaches you can take:
- Provide electric vehicle charging stations: Incorporate convenient and reliable electric vehicle charging stations to attract EV owners and make your gas station a green gas station.
- Offer alternative fuel options, such as hydrogen fuel cells: Diversify fuel offerings to include alternative options like hydrogen fuel cells, catering to a broader range of customers and meeting evolving market demands.
- Upgrade convenience store offerings and enhance station ambiance: Revamp your gas station’s convenience store to offer a wider selection of high-quality products. Fresh food options and appealing amenities like clean restrooms and comfortable seating areas create a welcoming and enjoyable customer experience.
- Partner with electric vehicle manufacturers: Collaborate with EV manufacturers to offer exclusive discounts or incentives for EV owners who charge their vehicles at your gas station(s).
- Explore additional revenue streams: Consider additional services such as car maintenance and repairs, car washes, vehicle accessories, or electric vehicle rentals to diversify your offerings.
How to Finance Shifting Industry Demands?
Securing funding is essential for aligning gas stations with the transition to alternative fuel sources. Gas station loans offer a viable financing option for implementing adjustments and facilitating the transition. There are multiple channels through which one can seek out these loans.
One option is to approach traditional commercial banks or credit unions that offer commercial real estate loans or business loans specifically tailored for gas stations. Another option is to explore specialized lenders or financial institutions that focus on providing loans for gas station acquisitions, construction, or refinancing.
Additionally, the Small Business Administration (SBA) in the United States offers loan programs that can be used to build a gas station. Research and compare different lenders and make sure to consider factors such as interest rates, loan terms, collateral requirements, and eligibility criteria to choose the most suitable financing source for your gas station needs.
What Will Happen to Gas Stations? Final Thoughts
While the exact future of gas stations remains uncertain, it’s clear that significant changes lie ahead. The rise of electric vehicles, advancements in charging infrastructure, and the increasing demand for renewable energy sources are likely to reshape the traditional gas station model. You can expect to see:
- An expansion of the EVE infrastructure: As the adoption of electric vehicles continues to increase, the need for an extensive charging infrastructure becomes essential. This includes public charging stations, workplace charging facilities, and home charging setups. Existing gas stations may need to adapt to this changing demand by incorporating EV charging points alongside their conventional fuel pumps.
- The diversification of fuel options: Alongside electric vehicles, alternative fuel options like hydrogen fuel cells and biofuels are gaining traction. Gas stations may need to evolve to accommodate these new energy sources.
- An evolution into mobility hubs: As the transportation landscape evolves, gas stations could transform into multi-purpose mobility hubs (aka, they offer more services than just gas pumps). They may offer services such as electric vehicle charging, vehicle maintenance and repairs, car-sharing or ride-sharing facilities, and even retail or dining options.
- A gradual transition and coexistence with EV tech: While the future may see a decline in the number of traditional gas stations, it’s highly unlikely that they will disappear entirely overnight. The transition from gasoline-powered vehicles to alternative energy sources will take time, and during this transition period, gas stations will coexist with charging infrastructure and other fueling options