Posted by Mike Smith :: April 24, 2008 @ 6:00 am

While you may feel gouged at their gas pumps, making other purchases at a gas station convenience store is where you might see the highest prices.

We often hear conspiracy theories about the profits made by gas stations, but this recent article helps to put things in perspective. It describes how many stations are barely breaking even on gasoline sales. Some are even losing money. How can they stay in business? By selling other products and services at marked up prices.

The biggest obstacle for these stores is the fact that another convenience item, paying at the pump, keeps you out of the store. By making an investment in advertising and offering other incentives, owners are trying to lure you back into the store. By selling everything from snacks and drinks, household items, groceries, and made to order food, they are able to satisfy many of the needs that were traditionally reserved for larger stores. For years, they have also had ATM machines, which have above average withdrawal fees for borrowing money.

Depending on what your time is worth, picking up a few items at a truly convenient store, may be worth the higher prices. If you can save time and gas by not having to drive to a distant store with better prices, you may be able to justify it. For many of us, knowing that the prices at convenience stores are inflated to make up for small margins on gasoline should be reason enough to avoid making any purchases other than our main reason for going: to buy gas.

While you have to buy your gas from a gas station, you have better choices when deciding where to buy other items. Making an occasional purchase at a convenience store may be unavoidable, but on a regular basis, lower prices elsewhere likely beat any perceived convenience.