Gas station operation appears relatively straightforward, but owners face a variety of government regulations. Depending on the geographic location of the station and the services offered, government laws and codes regulate a number of services, construction, storage and delivery of the gasoline product. Regulations also control posting gas prices. When stations add related services including food sales, the number of regulations and code requirements increase even further.
States require gas stations to account for mandatory taxes collected at the pump. States assess a gas tax based on either a percentage of the sales price or a set fee based on each gallon sold. The tax per gallon ranges from $.70 in Connecticut and $.69.1 in New York to the lower tax range of $.26.4 in Alaska, according to prices collected by the American Petroleum Institute in May 2011.
Environmental regulations for gas station operators varies with the state regulations. Some states, including California, require pumps to incorporate a capture system on pump nozzles to collect fumes, while other states have few environmental requirements on stations or the method of gasoline service or storage. States with strict environmental standards for underground gasoline storage tanks, such as California and Florida, regulate tanks and mandate inspection of the underground storage and require replacement when major leaks occur (see Resources).
Gasoline products use labels to designate the grade offered to the consumer. Grades include premium or "super" to regular or "unleaded," with some stations also offering middle grades labeled variously as "mid-grade" or "medium." Each designation describes the level of octane in the product, an alkane series hydrocarbon present in all gasoline. The higher the octane, the greater protection against engine knocking. While the owner determines the range of octane levels offered at the station, the pump octane labeling must match the gasoline product delivered to the consumer. State laws, including those in Massachusetts, also require the posted prices match the price paid at the gas station pump.
Operators of gasoline stations must hold a business license and federal and state tax identification numbers. In addition to taxes on fuel, the business must collect taxes on repair services, in some states, and on any goods sold at the station, including food and convenience store items. Gasoline stations selling food prepared on the premises must meet county restaurant codes and regulations for health and safety and post public inspection signs listing an overall rating in meeting codes in some areas, including Los Angeles. Stations offering vehicle smog checks mandated by state law must also hold licenses to certify catalytic converters reducing toxic gas released during car operations.
Motor Fuels License
Gas station owners must also have regular business licenses and also a motor fuels retail outlet license to do sell gasoline. The license mandates payment of a fee and also requires renewal each year. The application requirements, in states including Michigan, also include the owners name, address, type of business holding and the number of motor fuel grades offered at the retail location.