DENVER - Profits at many Colorado retail gas stations have fallen, with Denver, Colorado Springs, Grand Junction and Pueblo ranking among the country??s 20 least profitable U.S. markets for selling gasoline, the Denver Post reports.

The profit rankings come courtesy of OPIS, which shows that metro-Denver stations have average gross margins of 6.7 cents a gallon, compared with 14.3 cents nationally.

Many retailers say they??re losing money on gasoline because they can??t increase retail prices fast enough to keep pace with rising wholesale costs.

Additionally, many retailers are losing sales to big-box stores and grocers, who have been undercutting prices with shopper card promotions. A 2005 court ruling allowed City Market to sell fuel below market costs in Montrose, which has experienced a proliferation of fuel selling discounters.

Safeway, for example, said it sets pump prices on par with nearby competitors, but then offers discounts to shoppers based on their grocery purchase total.

Bill Gallagher, owner of a Commerce City Sinclair station, said he is forced to sell gasoline at or below cost to keep pace with his competitors. Last week, he was selling gas for $3.299, while earlier in the week, he had purchased it at a wholesale price of $3.30.

"Consumers are hypersensitive to price," Gallagher said. "They'll adjust their buying patterns based on a 3-cent difference or less. That puts a tremendous amount of pressure on retailers."

Factoring in operational costs, Gallagher estimates he??s losing roughly 12 cents on every gallon of gasoline sold.

However, he continues to try to match his competitors, because many retailers depend on fuel sales to generate in-store traffic, as drinks, snacks, and cigarettes are far more profitable than gas.

"No one dares to step out of line for fear of losing customers," said NACS Vice President of Communications Jeff Lenard.