DES MOINES, Iowa – Rising prices at the pump are making it even more important for convenience store operators in Iowa to capture in-store purchases.

Metro-area fuel prices hit a high of $3.35 a gallon for regular unleaded gasoline late last week, which tied the all-time high reached last summer, according to AAA and the Oil Price Information Service, the Des Moines Register reports.

And on Monday, national prices topped $3.50 per gallon for the first time ever, according to both AAA ($3.503) and the U.S. Energy Information Administration ($3.508). But while gas prices are high, profit margins are narrow and growing smaller for convenience store owners. With predictions of $4-a-gallon gas this summer, inside store sales become even more important, owners said.

Kum & Go has introduced a new premium coffee called Java Ridge, continues to offer a free Des Moines Register with a fuel purchase, and has an extensive selection of fountain and energy drinks, he said.

Convenience stores sell about 80 percent of all fuel sold in the United States, according to NACS.

Overall, convenience store sales reached $577.4 billion in 2007, but profits slid $1.4 billion, due mainly to higher credit card fees store owners pay for an increasing number of credit card transactions at the pump, said the newspaper noted, citing NACS data.

Customers are buying fewer gallons of gas each time they fill up, but they are coming back more often. That gives Kum & Go, which operates 435 store in 12 states, additional opportunities to sell more in the store.

Prepared food sales – including signature pizzas and doughnuts – increased 9.5 percent for the first nine months of fiscal 2008, and groceries and other merchandise 8.5 percent, said Bill Walljasper, Casey's senior vice president and chief financial officer.

David Bishop, managing partner at Chicago-based Balvor, said the products convenience stores typically sell are "highly routine purchases" that consumers will buy even in a depressed economy.

Things like cigarettes, soft drinks and beer "are products consumers have come to enjoy and use frequently," Bishop said. Studies have shown that consumers are willing to cut back on their charitable giving or contributions to 401(k) savings plans more quickly than they are in cutting back on items they would buy at a convenience store, he said.

"The things they would buy at a convenience store are for immediate gratification," Bishop said.