Since we’ve been talking about the price of fuel lately, and cash versus credit, etc., I thought I’d share something I just saw a few minutes ago, while driving
The 76 station that’s near my house has only one set of prices. $3.39/regular, $3.49/mid-grade, $3.59/premium
The next part is where it gets "interesting . . .
The 76 station at the very next major intersection . . . and I live in Los Angeles, so that next major intersection is very close . . . has 2 sets of prices, cash and credit.
cash $3.03/regular, $3.13/mid-grade, $3.23 premium
credit $3.09/regular, $3.19/mid-grade, $3.29/premium
You could pay the credit “penalty” at the cheaper station and fill up premium cheaper than regular at the more expensive station
I should note that the cheaper station has more pumps, and almost certainly has more customers . . . because it’s a more major intersection
There’s probably other variables which I’m unaware of, or don’t understand
I just thought I’d share this
Now, maybe you guys have your own similar stories you’d like to share, concerning the interesting gasoline pricing strategy in your own neck of the woods . . . .
Here there are two Shell stations, one is immediately off the fwy exit, the other one is behind a Chevron station. The “closer” one is always 10-20 cents more per gallon and it is still in business.
When I’m traveling, I rarely look at the gas prices. I’ll glance at the pump when I’m filling up out of curiosity but that’s about it. I’m more concerned with the location so I don’t waste a lot of time or risk my security, the general appearance of the place so it looks like they do a good business, decent snack items/coffee, and decent rest rooms. On our recent trip to Boston, DC and NY, I think I paid anywhere from $3.50 to $4. At home though, I look at the prices posted but it wouldn’t make me go to a different station than I normally go to. Way back during the gas shortages, this guy always did his darndest to make sure we has gas for commuting every day and I’m not about to jump ship for a few cents per gallon now.
Let’s say you get a tanker truck delivery, and the price is X. You sell it for X+10%. Tomorrow, the price of fuel drops .12/gallon and your competition gets his tanker delivery at the new price. He sells it at his cost+10%, he is now priced .13 lower than you are. But you can’t lower your price to match his, because then you will be making less than half of what you need per gallon to stay in business. Or you could lower your price and hope you make it up in volume. And you could add cash/credit pricing as an incentive to help your cash flow. Or you could use your price as only one part of your marketing strategy. How about convenience, wait times, lighting, etc.? Lots of variables in play here.
There’s an ARCO station near my house that has low priced gas, but I often wonder why people will spend 5 minutes waiting to jockey into an available pump and then buy gas at a station that doesn’t have a card reader in every pump and then make an almost impossible left turn out of there.
The examples I posted are over 30 cents a gallon difference
I’d say that is significant, especially when you consider they’re both 76 and literally down the road from each other. Separated by at most 1/2 mile
Sure, that second gas station is much cheaper, but it’s a little bit further from my house. Come to think of it, I’d just have to swing by after hitting the grocery store. It’s just across the street from the grocery store, and I go there every saturday, anyways
Might be worth trying it once, just to see if there are massive lines of cars waiting to get gas.
I only use stations that have card readers at the pump. My neighbor liked to gas up at a small station near where they went to church. He had to go in and the attendant would go in the back room to run the card. One day he received a call from VISA wanting to know if he was in Calif. buying a computer. The card company backed out several charges he did not make and issued new cards.
“the attendant would go in the back room to run the card”
I would have told him to scan it right in front of my face, or I take it my business elsewhere
Of course you expect the waiter at your restaurant to take your card and scan it at the cash register before returning it to you, but the gas station is another matter entirely
Thieves have been known to put additional card readers on the pumps, directly in front of the original. You would have to know what it’s supposed to look like, to spot the difference. I guess the idea is the thief is intercepting your data, and now your card is compromised
What’s disappointing is that these guys are almost never caught
What’s really disturbing is that some people just refuse to do an honest day’s work. They live to mess up other people’s lives
Let's say you get a tanker truck delivery, and the price is X. You sell it for X+10%. Tomorrow, the price of fuel drops .12/gallon and your competition gets his tanker delivery at the new price. He sells it at his cost+10%, he is now priced .13 lower than you are. But you can't lower your price to match his, because then you will be making less than half of what you need per gallon to stay in business.
Bull. “Sunk costs are sunk costs” is one of the cardinal rules of business. Look at it the other way–if gas prices tripled overnight, would you continue to sell your $3.20 at that price, booking a nice 8% profit? I think not!
You see this all the time in used cars wheeling and dealing–folks will hold on to a car, even when offered market value, because of “what I have invested.” That’s muddy thinking! Whatever money you lost by overpaying for the car (or gasoline)–you’ve already lost. Take the best market-correct offer and be done with it!
When I see a business with high prices, bad service, little business…and it stays around…I think “front.” I think that especially if the business in question is a bar, restaurant, or self-serve car wash.
The only thing I can think of in regards to those 76 stations is that they’re franchises run by separate owners who set their own prices.
Just like 2 Chevy dealers in the same town are free to set their own prices on the same new car with one being cheaper or more expensive than the other depending upon the dealer’s overhead or on a sheer whim.
It’s changed a bit recently, but one oddity around here for a long time was that Ethanol cost 20 cents a gallon more than regular gasoline. Eventually it evolved to 2 cents a gallon less than regular gasoline which brings up the point of why bother.
My neighbor owns a gold mind for a store with gas pumps. It is constantly expanding and made him a millionaire several times over. How ? Location, location, location. Good thread.
Many gas stations in Central MD use cash/credit pricing. The is an even larger differential for location. One town between work and home has very low prices - about 30 cents less per gallon. It’s socialist pricing. Those in less affluent areas get the lowest prices.
I somehow doubt a gas station is stuck by paying a middle man (the tanker truck) to deliver the gas at some fluctuating rate, causing them to lose profit if it drops a few cents the following day. He’s likely under the same umbrella as the station brand, and is paid a standard wage that wont come close to putting profits in the red should the gas price fluctuate. The credit card prices are higher because it costs the gas station a percentage every time one is used. Its offered at a convenience to us - but Ive usually only seen that pricing in more rural areas where the business might be slow and really effect profits. Busy suburbs and cities it shouldnt really matter as much. The real question we should be asking here is why gas prices were nearly double only a few years back? Ive read its because america has ramped up domestic production. I call BS. And also, all the products that increased their prices - like a gallon of milk - because of gas prices have not seemed to come down.
That’s not socialist pricing, it’s capitalism at its finest. You charge what the market will bear. There are drivers for whom the price of a gallon of gas isn’t a factor in where they fill up. Is it conveniently located with a good espresso stand and close to the kid’s school and well-lit and clean and do they have my favorite donut?
On the other hand people in a less fortunate neighborhood have to think harder about where to spend their money, and for those that still buy their gas $5 at a time the differences in prices are more important.
Asemaster is correct that this represents Free Market Pricing–at least to the extent that it is possible for gasoline retailers to vary their pricing. Hopefully jtsanders was being facetious when he referred to “socialist” pricing.