How Much Does It Cost to Build a Gas Station?

|

As an entrepreneur who is particularly interested in high-profit establishments, oil and gas should be among your options. There are several ways to delve into the oil and gas industry, and owning a gas station is one of them.

Building a gas station is not a small task, and will obviously require a lot of capital. On the extreme, you will need a maximum of around $2 million to set up a gas station in the United States.

cost-build-gas-station

However, it is worthy of note that there are specific factors that influence the actual cost of building a gas station. 

This article will expose you to these determining factors as well as the breakdown of the total amount it costs to set up a gas station establishment in the country.

How Much Does it Cost to Build a Gas Station?

As I mentioned earlier, The average cost to build a gas station can range anywhere between $247,800- $1,104,600. The startup costs can extend up to $2 million depending on the size and value offerings of your gas station. in the United States.

The estimate above includes expenses related to land acquisition, business registration, construction costs, legal expenses, and other costs. Let’s take a closer look at them.

Breakdown of Costs of Building a Gas Station

As much as you may want to get this done on your own, I will always recommend the service of a consultant. 

Although their fees will add to the initial expenses, their expertise in the field may also help you cut some other expenses and navigate the complexities of the gas industry.

The breakdown of the costs to build a gas station includes:

Hiring a business consultant

As I mentioned earlier, hiring a business consultant is not necessary but it is extremely important. You may spend as much as $3,000 to hire the service of a business consultant.

This cost also includes writing out a business plan.

Property Lease or Purchase

Of course, you will need land available before you build a gas station. Depending on your preferences, you may either go for a land purchase or lease for a stated period of time.

Usually, I will advise you to purchase the land instead of leasing but your budget may be a hindrance. If this is the case, leasing the land with a buy clause in the agreement would be a great idea. This way, you can easily purchase the land later on. 

You may spend as much as $250,000 leasing land for your gas station and probably twice or thrice that amount to close a purchase deal.

Business Registration

Before you can begin operations at your gas stations, you must register the establishment as a legal entity. This way, you are complying with local regulations to run your business. 

Usually, the cost of registering your business may vary depending on your location and the requirements of your jurisdiction, but it can cost an average of $800

Construction costs

Construction may take as much as 30-40% of the total cost of building a gas station, and it includes the expenses associated with building the physical structure of the gas station. 

Construction costs include labor, materials, site preparation, design, and engineering fees, to mention a few. 

Legal Expenses

Aside from having a financial counsel and a contractor, the services of a lawyer are also important in setting up a gas station.

Lawyers will make sure you comply with local regulations while also avoiding potential legal risks. The costs of legal services may vary based on how complex your project is and how involved the legal professionals will be.

Insurance Costs

No matter how tempted you may be to skip this factor, you should never leave it out of your budget. Insurance is crucial for any business establishment to survive, especially a gas station.

This way, you are protecting your gas station from potential risks and liabilities. If there are unforeseen incidents, the insurance company may cover part of the total expenses.

However, you should do your research before paying for the services of any insurance company. Insurance may cost around $30,000

Equipment

The following equipment is crucial at any gas station:

  • Pumps
  • Fuel dispensers
  • Underground storage tanks
  • Point of Sale Systems (POS)
  • Security Systems

The cost of equipment is not fixed as this will vary based on the amount of items you purchase. 

Other costs include;

  • Gas transport
  • Supplies and inventory
  • Office furniture and supplies
  • Utility deposits
  • Marketing and Promotion, etc.

Factors that affect the cost of building a Gas Station

It is common knowledge now that some determinants affect the cost of building a standard gas station. These factors include:

Type of Gas Station

There are different types of gas stations and the one you choose to build will significantly influence how much you will spend. Types of gas stations include:

  • Full-service gas station
  • Self-service gas station
  • Truck stop or Travel plaza

Building a full-service gas station costs the most as it offers additional services such as fueling assistance, tire pressure checks, and windshield cleaning. These extra requirements significantly increase construction and operational costs.

A self-service gas station costs less to build as this requires fewer staff and amenities. However, you may want to budget more for a truck stop or travel plaza as this will offer many additional features even more than a full-service station.

Gas Station Size

Another thing to consider when building a gas station is its size which determines the total cost. Undoubtedly, larger fuel stations will require more land, labor, materials, and equipment, hence an increase in building costs.

Location

The location of your gas station also plays a big role in the cost of acquiring or leasing the land. You would not expect to buy land at two different locations and expect it to be at the same price.

Several factors influence the cost of this land in its respective location. Usually, prime locations in high-traffic areas or along major highways cost more.

Also, the condition of the land will influence the construction costs in its location. 

Cost of Licensing and Permits

This is closely related to location and different jurisdictions have various licensing requirements. The cost of licensing and permits can also vary based on the size of your project and the environmental requirements.

Number of Gas Pumps

Basically, the number of gas pumps at your station will affect how much you spend on completing the project. Some gas stations may even feature more complex installations, wiring, and underground storage tanks, which all add to the cost.

Products and Services offered

The range of products and services offered at a gas station will have a significant impact on its construction and operational costs. 

For example, if a gas station includes a convenience store, car wash, electric vehicle charging stations, or mechanics shop, the construction costs will be higher than for a gas station that only offers gasoline and diesel fuel.

Wrapping Up

As exciting and adventurous as building a gas station can be, it requires meticulous planning, effective management, and a deep understanding of how the gas industry works. This is why I will recommend hiring the service of a consultant.

By considering the average cost of building a gas station as well as its individual costs, I believe you should be able to navigate the construction process even with little help from a consultant.