Jeff Mearig has a word of advice for anyone thinking of opening a plain old gas station.

Don't.

"If we were relying on gas sales alone, we'd be out of business. There isn't enough of a markup to stay open," said Mearig, an owner of Brunnerville Garage.

And many stations here haven't.

At least five stations in Lancaster and its suburbs, too reliant on ultra-competitive gasoline sales or too vulnerable to other issues, have shut here in the past three years.

Yet in that same time, a handful of large convenience stores with numerous gas islands have opened — and prospered.

The opposing trends began decades ago, when motorists started to shift their buying habits.

With the closings of one type of store surpassing the openings of the other, the overall number of gas stations in Lancaster County has dipped to 183, down 45 (or 19.7 percent) since 1991, according to county records.

The drop is sharper in the city. The city now has 14 gas stations, down a third from 21 in 1991.

The different fates of the two kinds of businesses are rooted in their different ways of making money, industry officials say.

Convenience stores (or "c-stores") with gas islands are diversified.

By selling sandwiches, coffee and an array of other adequately profitable items inside their stores, they can withstand meager or no profits at the gas islands.

"The reality of the (c-store chains) is, they live and die by their 'inside' sales....," said an industry executive, who requested anonymity.

"If they were forced to run their businesses based on the profits of their gas islands, they'd have a very difficult time," he added.

In contrast, the c-store chains use their gas prices to attract customers that the chains hope will come into their stores, the executive continued.

"They want to drive business inside. How do you do that? By having the lowest price on the islands," he explained.

"The basic business strategy is changing," observed John Hostetter, sealer for the county Bureau of Weights & Measures, which inspects gas pumps annually for accuracy.

"They used to make money on gas. Now they don't. So they need to make money on other things," he said.

Gabe Olives of Turkey Hill Minit Markets compared the c-store strategy to a personal investment strategy: Balance is best.

"A good stock portfolio is diverse across sectors," said Olives, vice president of petroleum and information technology.

The Lititz area Brunnerville Garage, owned by Mearig and his brother Lynn since 1979, illustrates the soundness of that philosophy.

The two gas pumps out front "are more of a convenience for our customers," not a moneymaker, said Mearig.

Selling gas "is a bad market to get into. I wouldn't advise anyone to go into the gas business. It's too risky. You buy a load, then the market drops," he said.

Mearig remembered recently selling gas "for 15 to 20 cents a gallon below what we paid for it, just so we could get rid of it and try again."

With nearby c-stores featuring gas islands, the garage keeps its gas prices "as close to competitive as we can," despite a major disadvantage.

It buys gas from a local distributor, which delivers the fuel for a fee. C-store chains save money by buying directly from refiners; some chains have their own delivery fleets too.

Fortunately for Brunnerville Garage, it has other ways than gas to make money.

The garage has a small store and a busy vehicle-service operation. It's the service operation, with six technicians, "that keeps us going," said Mearig.

Other businesses haven't been so lucky.

Among the gas stations to go dark in the past three years are a Sunoco on Columbia Avenue, a Gulf at Lime and Lemon streets and an Exxon at Columbia Avenue and Rohrerstown Road.

This spring, a Sunoco at Marietta Avenue and Rohrerstown Road turned off its pumps for good. Just two weeks ago, a Sunoco at Main Street and Martin Drive, East Petersburg, closed.

Attempts to reach the former operators of these locations for comment were unsuccessful.

"It's very, very competitive landscape," said Olives, whose employer is the biggest gas-station operator here, with 46 of its 60 stores here having gas islands.

"The profits are measured in pennies. When you're an independent operator, you can't make any mistakes," he said.

The competition has intensified in recent years, noted Olives.

Not only are small gas stations battling c-stores for business, other kinds of merchants, such as grocery stores and wholesale clubs, have entered the fray.

Meanwhile, all of these competitors are fighting for a share of a shrinking market.

Nationwide, gas consumption is down 2.7 percent from 2008 and down 3.2 percent from 2007, said Olives, citing federal data.

As if those aren't enough challenges, small gas stations face additional hurdles, according to industry officials.

"Sunoco and Exxon/Mobil both have made decisions corporately to shed some locations. They feel their primary business is finding oil and getting it to the market.

"Sometimes they look at retail and say that's not where their business lies," said Lou Sheetz, vice president of marketing for Sheetz c-stores.

Other stations have closed because they can't afford costly tank replacements needed to meet environmental regulations.

"That was the problem at a couple of stations," said Hostetter, the county sealer.

"It's so capital-intensive to upgrade your tanks and equipment. If you're a small operator who doesn't have access to low-cost money, that could cause you to say you want out," Sheetz.

His Altoona-based firm still wants in.

It opened its seventh store here at Centerville Road and Columbia Avenue in 2006. Its eighth is scheduled to open Thursday at Dillerville Road and Manheim Pike.

Carlisle-based Giant Food Stores wants in, too. It finds the merchandise/gas concept so appealing that it began a test by opening its first c-store featuring gas islands at Fruitville Pike and Petersburg Road in April. A second, at Oregon Pike and Landis Valley Road, is planned.

"The businesses that are opening up are your (c-stores) that have a lot of pumps," said Hostetter. "I don't think we've had a small place, a mom-and-pop or a family business, open up for years."

An executive with the Pennsylvania Petroleum Marketers & Convenience Store Association did not return repeated calls for comment.

While the c-store chains are looking to grow, small gas-station owners are looking to hang on.

Industry officials say that's likely to remain the case, due to their different degrees of dependence on gas profits.

"It's easy for the small gas-station owner to be critical of the (c-store chains), because it's difficult if not impossible to compete with them," said the industry executive. "But they've absolutely built the better mousetrap."


Staff writer Tim Mekeel can be reached at tmekeel@LNPnews.com or 481-6030.