Self-Serve Evolution

By Sarah Hamaker

It's hard to believe there was a time in the not-so-distant past when pumping your own gas was not only unheard of, but illegal. Only Oregon and New Jersey forbid self-service these days —a huge game chang­er for the convenience industry when it emerged.

The Early Days

The first filling stations began cropping up around 1909. From the beginning, an attendant filled the gas tank for the mo­torist. Twenty years later in 1929, more than 143,000 stations, mostly run by major oil companies, crisscrossed the United States.

The mechanics of buying gas contin­ued to change during the first part of the 20th century, as curbside and portable pumps gave way to the boxy, stationary versions still in use today. Major oil com­panies branded their fuel at company-owned stations and also distributed fuel to other vendors, who could sell it unbranded. Attendants at gasoline stations also did more then just pump gas; they provided a plethora of other compli­mentary services, such as washing windshields and checking oil levels and tire pressure.

The number of gasoline outlets began to soar as more and more Americans bought cars. By 1933, there were 170,000 gasoline stations, and that number jumped to 231,000 by 1940. World War II temporarily halted expansion, but in the decade after the war’s end, Ameri­cans took to the road in droves, and gas stations once again flourished, poten­tially oversaturating the market.

Then in 1947, Frank Urich opened the first self-service gasoline station in Los Angeles. The station featured rows of gleaming pumps and girls on roller skates who zoomed around to collect money and reset dispensers. Jerry Cum­mings, now retired from Robinson Oil, said that in the late 1940s, Coast Oil Company opened a self-service station in San Jose, California, the second such station in the state.

"The pumps were run by a mechani­cal computer that allowed an attendant to manually turn the pump back to zero for each new customer," said Cum­mings. The worker also took money and made change for the customers, who pumped their own gasoline.

"The big attraction [for retailers] was saving money, because we only needed one man instead of a team of employees to service the gas pumps," said Cum­mings. "Gasoline was selling for around 20 cents a gallon and we could offer cus­tomers a nickel per gallon discount with self service."

While some stations switched to this type of self-service gasoline, the idea didn't really catch on with many retailers at the time. The major oil companies continued to compete with one another via unique gimmicks —such as gasoline-pump shaped salt and pepper shakers  and promoting clean restrooms.

But overall, not too much changed in how gas was dispensed "until 1964, when remote access of self-service gas­oline debuted.

A Visionary Man

John Roscoe at first wanted nothing to do with remote access self-service gaso­line. He had opened his first conve­nience store in 1957 in Denver. Seven years later, he owned a chain of 12 Short Stop convenience stores in the area. One day, Roscoe recalls, a man named Herb Timms stopped by with a box he had invented that would allow an attendant inside the store to dispense gasoline at the pumps outside.

"I was initially reluctant," said Ros­coe, now retired from the convenience store industry. "But fortunately for me, my banker knew Herb and he convinced me to give his invention a try."

On June 10, 1964, at a Westminster, Colorado, location, Roscoe flipped the switch activating the first U.S. remote access self-service gasoline pumps. Sell­ing gasoline was never the same.

"What made self-serve so important to the convenience store industry was that we already had the facility," said Roscoe. "By spending $10,000, we ef­fectively got the gasoline business from the other stations without their [labor] expenses."

Jumping Hurdles

For remote self-service gasoline to ex­pand, regulatory changes needed to oc­cur. "Most state laws had provisions that forbade self-serve dispensers in service stations," said Bob Benedetti, who is responsible for the flammable liquids code project for the National Fire Protection Association.

Gradually, 48 states changed the fire codes to allow for self-service dispens­ers. "Some thought there would be an increase in the incidence of accidents or fires at service stations with self-service dispensers, but that never material­ized," said Benedetti.

However, despite the change in state law, acceptance in the convenience store industry moved at a snail’s pace. "The idea was so foreign to the estab­lished line of thinking that some conve­nience store owners thought it was ri­diculous, that no one would want to pump their own gas," said Fred Lowder, who, with his father, owned the Jiffy convenience store chain.

To spur others into joining the self-serve fold, Roscoe shared his gasoline sales volume numbers with his fellow founding members on the executive committee of the fledging National Asso­ciation of Convenience Stores. He also gave a presentation to the general assem­bly at the 1964 NACS Annual Meeting.

"John would send out a printout of his gasoline volume and that got my at­tention," said Lowder, who became president of NACS in 1966.

"A good share of convenience store operators didn't have the $10,000 to in­vest in the device, so overall acceptance was extremely slow," said Roscoe, who traveled the country drumming up in­terest in the technology, which he be­came licensed to sell. "It probably took at least 10 years before there was much acceptance by the industry."

Lowder agreed: "It took more than a decade for the tipping point in self-service to happen. It was a process for the indus­try to finally figure out that they couldn’t have a convenience store without gaso­line, and self-service was the way to go."

Initially, the major oil companies re­sisted self-service gasoline, seeing no need to change their operation. "How­ever, the oil jobbers who were running many stations saw the economic ad­vantage and began to adopt self-service gasoline and convenience stores," said Roscoe. "The advantage was so strong that eventually the entire gasoline mar­keting system was changed." Milestones of gas history include:

  • 1947 Frank Urich opened the first self-service gasoline station in Los Angeles.
  • 1964 John Roscoe installed the first remote access pumps at his Short Stop convenience store in Westminster, Colorado.
  • 1969 Self-service gasoline accounted for 16 percent of all gasoline sold in the United States.
  • 1973 A gasoline station in Abilene, Texas, invents pay-at-the-pump.
  • 1981 All states but New Jersey and Oregon legalized sale of self-service gasoline.
  • 1982 Seventy-two percent of all gasoline sold in the United States was self-service.
  • 1987 Self-service gasoline grabbed 80 percent of the entire U.S. gasoline market.
  • 1994 Thirteen percent of convenience stores had pay-at-the-pump.
  • 2002 Eighty percent of convenience stores had pay-at-the-pump.
  • 2004 Sheetz introduced touch-screen kiosks at the pump.
  • 2011 Around 90 percent of all gasoline sold in the United States is self-service.

(For an entire history of gasoline retailing, visit nacsonline.com/gasprices.)

The 1973 and 1974 gasoline shortage further fueled the drive to self-service. Long lines at gas stations prompted California to pass a law that every sta­tion had to post price signs. "People waited in line a long time and didn't know what the price was until they got to the pump. Then they had to buy gas or go to another station and wait in an­other line," said Cummings. "The price posting law made gasoline more gener­ic and that really helped self-service."

The public, on the other hand, loved the idea from the start. Because conve­nience stores could sell unbranded gas­oline from self-service pumps cheaper than the branded, full-service stations, the public flocked to convenience stores for their fill up.

"The public is interested in lower pric­es, and immediately went for self-service gasoline," said Roscoe. With gasoline typ­ically selling for 20 cents per gallon, a dis­count of 2 cents per gallon translated into a 10 percent savings. "That was significant enough to bring people in."

Pay-at-the-Pump Technology

In the beginning, one of the biggest challenges was how to integrate ease of payment into the self-service experi­ence, said Scott Negley, acting director of global product management for Dresser Wayne, a GE Energy Business.

In the mid-1980s, credit card readers were integrated into pump dispensers, the forerunners of today's pay-at-the-pump technology. Before pay-at-the-pump really took off, engineers had to figure out how to make the card readers work with a variety of different networks and point-of-sale systems. "The solu­tions had to be adaptable or configured for a wide range of systems controlling the equipment at stations," said Negley.

Roscoe jumped on pay-at-the-pump in the late 1970s. His vendor, Cubic Western, had developed a pre-paid gas card and installed card readers' similar to the technology used in rapid mass transit —into the pumps to read the cards. "We adopted their system and later moved on to credit cards," he said, adding that pay-at-the-pump made it easier for customers to fill up.

However, not every­one in the industry em­braced pay-at-the-pump. "Some people were wary of the idea because cus­tomers wouldn't go in­side the store anymore and in-store sales would drop," said Negley. "But what they found was the opposite: Sales went up because the experience inside the store was better without gas-only customers clogging up the line."

"Marketers were reluctant to put in pay-at-the-pump because they feared a loss of profits from impulse buys inside the store," added Bob Renkes, execu­tive vice president and general counsel for the Petroleum Equipment Institute. "I think those who did initially put in pay-at-the-pump didn't lose traffic in­side but probably gained it because they were providing quick and easy ac­cess at the pump."

"Buying gasoline is already a dis­tressed purchase, so anything a retailer can do to make it less stressful is good," said Negley. "Pay-at-the-pump, which Wayne introduced to the retail fueling industry in 1986, has done that."

Looking Ahead

Remote self-service dispensers trans­formed the gasoline in­dustry. Today, experts estimate 90 percent of all gasoline sold in the Unit­ed States is self-service —a number that would be even higher if Oregon and New Jersey allowed it. "It changed the conve­nience store industry forever," said Roscoe. "Back in the mid-1960s, we did $300 to $400 a day in business. Gasoline increased that number five to 10 times."

Self-service will con­tinue to be a part of gaso­line dispensers for years to come, although the method of pay­ment might change as technology al­lows for mobile phones, contactless payment and other technologies that will take the place of credit or debit cards. "The area that will continue to evolve is that of payment security," said Negley.

While gasoline still brings in cus­tomers, it has lost its starring role as a convenience store's top profit margin driver. But that doesn't mean that re­tailers can ignore this vital part of its operations.

"Self-service gasoline gave the con­venience store more margin dollars to improve facilities, to get a better loca­tion, to hire better workers," said Ros­coe. "Self-service changed the conve­nience store more than the convenience store changed gasoline stations."

Sarah Hamaker is a freelance writer based in Fairfax, Virginia. She's also a NACS Magazine and NACS Daily contributing writer.