More Gas Price Discussion

[Guest Hal Davis (MODEL A HAL)]

There has been a lot of discussion of gas prices on here lately. I thought I would chime in with what ours is going for and tell about an iteresting phenomenon.<P>On the edge of town, on I-95, one exit has two lesser known brand gas stations that have been hovering around $1.30/gal for the last several weeks. Two exits down, there is a Walmart with a gas station and three convenience stores (the owners of which are all foriegn and related). Walmart's gas is $1.21/gal. Right across the street at the foreign owned Texaco, it is $1.35/gal. His kin folks on the other side of the interstate are also $1.35. Guess where the crowd is? Yep, Walmart. An interesting tidbit is that this exit is the airport exit. These guys are cashing in on tourists and businessmen filling up their rental cars before returning them.<P>I live in a rural area 30 miles outside of Savannah, GA. To avoid the traffic, I sometimes drive 30 miles in the other direction to Statesboro to do my shopping. Their Exxon gas was $1.23/gal last Saturday. I filled up while I was there.

[Guest]

That is easy enough to explain. For more on this exact Wal Mart topic check out my post on the previous thread on gas prices. I am in the gas business and can tell you exactly what is happening. Wal Mart is probably selling below cost, with the motive of putting one or all of the stations you refered to out of business. If they succeed at this I will assure you that their prices will go up. The operators of the other stations have two choices (both unnatractive). They can sell below cost to keep the traffic up inside their store where they can make some sales on other items, or they can keep their gas priced higher than Wal Mart and all of their customers go to Wal Mart and they won't sell anything inside their store. Also they are probably "dealers" in the stations which means the station is owned by a Major oil company. This means that the cost of their gas is higher than Wal Mart (actually the stations at most Wal Marts are owned by Murphy Oil Co). As for the operators being related and "fixing" prices that is certainly possible, either way it doesn't really matter because people will just go to Wal Mart. I explained on another post that this is not good for gas prices long term. It is a very complicated subject for anybody who knows about the business and sometimes difficult to explain to others who do not. I am not trying to insult anybody's intelligence but is not as simple as many people think it is. I am sure that there are many people on this forum who have similar in depth knowledge of many subjects of which I am ignorant of. I don't really like to type and am not very good at it. I would however try to answer specific questions if you have any.

[Guest Hal Davis (MODEL A HAL)]

I am, by no means, an expert, but it just seems odd to me that the three stations on this particular exit, which are all ran by the same family, consistantly have higher gas prices than even other stations of the same brand gasoline. Before prices went up, these three stations were consistantly $.10/gal higher. Now they are only about $.06/gal higher. <P>We have the same thing going on on the south side of town. There is a small town on the interstate about 5 miles south of the Savannah outskirts. There are several gas stations on this exit. All are about the same price and in line with others around town. The stations at the first Savannah exit are consistantly $.10/gal higher. There are a lot of hotels on this exit, and it is the first exit to get into Savannah if you are coming from the south. I don't mean to argue, but I can't imagine gasoline wholesale prices varying by that much in so little distance, so it doesn't seem like the retail prices should vary that much either.<P>As far as the Walmart is concerned. You are correct. It is Murray USA. Whether they are selling for a loss, I don't know. It's always a possibility. <P>I prefer to by brand name gas, but I stay away from those stations I mentioned. There are other stations around that sell brand name gas for the same or a couple of cents higher than the off brand stuff. I seek them out.<P>There is an IGA grocery store about 5 miles from my house that sells Chevron. Their prices are usually pretty good. They must be privately owned, because when everyone's prices are jumping by 5 and 10 cents, they are usually 3-4 days behind in the trend. The bad thing is they are also 3-4 days behind when the prices start going down. Oh well, it pays to shop around.

[Guest]

I can answer some of the questions you raise. When retailers of gas price their gas they check the competition usaully within a very small geographic area of their store. The stations on the exit in Savanah you refer to probably only are concerned about the competition right at their exit. As far as this exit being near a lot of hotels and the first exit and being .10 higher, it sounds like a high traffic area. I am sure you have heard the term "whatever the market will bear" Evidently there is enough demand at this exit that they can ask that price and recieve it. In regard to the IGA/Chevron and them being slow to raise prices and slow to lower them when the market changes, this is because they are probably not a real high volume location and are using their "in ground cost" to determine their retail price. This means that they price off what the gas in their storage tanks cost them. If they paid $1.00 gal. to fill their tanks then the wholesale price goes to $1.05 they still have gas in their tanks that cost them $1.00 and probably don't even know that the price has gone up. On the other hand the stations that sell a lot of gas must fill their tanks more often and see the increase in cost quicker, and therefore raise their retail when they get a new load of gas at the higher price. Another factor is that large oil companies and convenience store chains usually use "replacement cost" (what a gallon would cost them to replace the gas in their tanks that they are selling) to figure their "true cost". This means that they monitor the wholesale cost of gas daily and use this cost in part to determine what they will sell it for. All this means is that they will respond quicker to fluctuations in the gas market on the cost side. As for branded VS unbranded gas I can tell you that they are virtually the same gas. As a matter of fact it all comes from the same pipeline and some major oil companies add an additive to it when they put it in their storage tanks. I have heard customers for years tell me that they like certain gas brands over others and I really want to burst into laughter knowing what I know about gas supplies and distribution channels. Many times an unbranded station will have branded gas in the tanks because that was cheaper than unbranded gas that day at the pipeline. You can put branded gas in unbranded stations, but not unbranded in branded stations. I almost always buy unbranded gas and have NEVER had a problem with a car related to "bad gas". The bigger consideration for me is the age of the station and the storage tanks. Most problems come from old tanks that leak and allow water to get in the gas or sediment to collect.

[Guest Hal Davis (MODEL A HAL)]

Thanks, 72. That is pretty much what I thought regarding the IGA as well as "what the market will bear" on the airport exit.<P>As far as brand name gas is concerned, I have heard that all the brands were the same, and believe it to be true to some extent. BUT... I will cite two cases that tend to dispute this.<P>We had a Mustang and a relative had a Crown vic with the same engine. We almost always put Chevron or Amoco gas in ours. He always put the cheapest generic gas he could find. After about a year, he had running problems and had to have his injectors cleaned. Ours ran fine until the day we got rid of it 12 years later.<P>Same Mustang. Put a tank of Citgo gas in it one day. About a day later, the catalytic converter sounded like it had rocks inside and was rattling to beat the band. This kept up for several days and went away. I didn't think too much more about it. A few months later, I put another tank of Citgo gas in it. Same deal. I then realized that the problem went away when I filled up with the Amoco again. I don't know what it was, but it sure seemed that Citgo affected the beads in my converter. I never used it again.

[Guest]

There might be an explanation for the difference in the two cars with the same motors. Chevron puts an additive in their gas called "Techron" I don't know but i think it might be a detergent or fuel injector cleaner type chemical. Amoco also puts an additive in their gas. I don't really recall what they call it or what it is, but it might be a detergent or similar to "Techron". As I said in my previous post some of the Oil Companies put an additive in the gas after it leaves the pipeline. I don't think Citgo puts an additive in their gas. I don't know why it would burn different and cause converter problems in your car. PS: It looks like we are having our own little personal discusion here. I am surprised but not dissapointed that nobody has joined in, with gas prices being such a hot topic.

[ply33]

Even if we are not posting to this thread, I can assure you that at least some of us are following it.

[Guest Hal Davis (MODEL A HAL)]

I'll bet there are a lot of folks out there that read but never post. That's OK. There is a lot that can be learned by doing that.<P>72, The injector cleaning additives were my theory, as well. I wish I could explain the Citgo phenomenon. If I had not experienced it myself, I would probably not believe it. I can't say it was their fault, really. Just a bad combination. I do know that Ford had a recall on those converters. I did not know anything about it at the time, but we took it in for an ignition switch recall. While they had it, they swapped out the catalytic converter assembly (actually an "H" shaped dual exhaust pipe assembly with four converters and a crossover pipe). Having remembered the rattling problem several years earlier, I was glad they did. Surprised, actually. The car probably had 80K miles on it.

[Guest]

Wholesale gas prices have went down a little since yesterday when Iraq ended their oil "embargo" on exports to the U.S. our company dropped prices at several stores today.

[rocketraider]

About the time BP and Amoco merged, I noticed a distinct difference in Amoco fuels. My Custom Cruiser had always run happily on 87 octane. Then all of a sudden it developed a near constant ping on 87 Amoco. It rattles some on 89. It wants premium now, and the fuel milage dropped by nearly 30% about the same time. This was not gradual- it was like from one tank to the next, so I'm reasonably sure it's not a mechanical problem. I can run 89 Texaco or Shell in it and get normal milage and no ping. But there's no Texaco or Shell stations here, and it does the same on Citgo and Exxon as it does on current Amoco.<P>Nothing I own has ever run worth a hoot on BP. Got caught short once with a nearly empty tank on the Regency, which ran nicely on 93 Amoco, and there was nothing open but a BP. On 93 BP, I thought every valve in that car was gonna come out.

[Guest Hal Davis (MODEL A HAL)]

rocketraider,<P>I knew Gulf and BP merged. I was not aware that BP and Amoco had merged.

[rocketraider]

Yup- me Amoco gas card bill is now payable to BP Amoco. Thought Gulf merged with Chevron about 15 years ago? I remember that when that happened, all the Gulf stations here closed, they sent me a Chevron card, and the closest Chevron was 12 miles away. So I started using Amoco almost exclusively. Sure wish there was a Shell station close by though.

[Guest]

Their have been a lot of mergers in the oil co. lately. Texaco and Shell merged. The Texaco brand will be phased out and killed soon and I think it is a shame. BP and Amoco merged. The Amoco brand will go away and BP will sell Amoco Ultimate in their stations. Sunoco bought Coastal and will kill the Coastal brand. Soon there will be only a few major oil companies and there will be less competition and higher prices.

[rocketraider]

Wasn't the Sherman Anti-Trust Act designed to eliminate stuff like that happening? Shows ya how much this country pays attention to its own laws.<P>My experience has been that most laws are designed more to raise revenue than to address a genuine ill of society. All you've got to do is watch the local police work a shopping center parking lot on weekend nights, rounding up kids hanging out and writing $100 trespassing tickets by the dozens, while the crack dealers and whores work motels and get away with it. Says a lot about law enforcement.<P>And the oil companies will get away with it too.

[Guest Hal Davis (MODEL A HAL)]

The BP/Gulf Merger I was speaking of was maybe 4-5 years ago. At least I thought it was Gulf. I could be mistaken. I know that BP took over one of the other brand stations around here. Before that, BP was not real common here. Now they are on every corner.<P>76 took over several stations around here, too, maybe a year or two ago. I don't recall what brand these stations were before that. I must be getting old.