5 Comments Add your own

• 1. bob trojan  |  October 20th, 2008 at 7:41 pm

  Thomas, I bought gas in Belvidere tonight, at the Shell station at State and Fairgrounds for $2.79 tonight after passing the big guys on Riverside tonight at $2.93. Now this isn’t too far away, and within the RRStar’s readership area, so you should be doing more competitive comparisons!
  Get someone to call in the prices so they can add to your analysis.

• 2. Thomas V. Bona  |  October 21st, 2008 at 10:08 am

  Bob,

  There’s nothing surprising in that - remember it’s both across county lines (lower taxes in Boone) and in a generally cheaper area to do business. It’s also cheaper in general to live in a smaller city like Belvidere than in Rockford.

  I don’t see the point you’re trying to make - go to any city in the country and you’ll generally find such disparities when you go out into the surrounding areas (and cross county lines too).

  My daily analysis focuses on the average for the metro area, which includes Rockford, Belvidere, the Parks, etc. It shows where we are in the wider context. Focusing on discrepancies between gas stations within the metro area misses the point.

• 3. Bob Trojan  |  October 21st, 2008 at 11:44 am

  Thomas;
  The tax differential works out to be about 4-5 cents. With as many people living in Boone and working in RK (and vice versa) it seems to me to be a homogeneous region and not subjcted to county lines.
  I know people who deliberately drive to Beloit to buy cheaper gas.

  I guess the point is that with our approach to “regionalism” we should be more aware of big enough differences in price of gas.

  I remember the cry of the Opposition to last years sales tax referendum about higher gas prices in RK if it passed; well my examples show that it ain’t because of the difference in tax rates.

  And if the cost of doing business in RK is so much higher, than no wonder why we’re losing good paying jobs! We should insist that we lower all costs including fuel.

• 4. Thomas V. Bona  |  October 21st, 2008 at 12:33 pm

  Bob,

  Perhaps I oversimplified earlier. Look, there are a whole host of factors as to why gas prices are different from one place to the next - taxes and cost of business are only a couple of the factors. It’s a complicated business, but only seems simple because fuel prices are posted in giant signs out front.

  Look at it this way - the price of a meal changes from community to community, the price of groceries changes from store to store wildly and no one complains (we do a monthly grocery update scouting stores in Rockford and the prices differ greatly depending on the location and the day).

  It’s the market economy all around - as you well know, businesspeople will charge what they think they can get to cover their costs, make a profit, sustain their company long term and sustain customer base. If they charge too little, they go under; if they charge too much, they lose customers and eventually go under. Look at the drop in global petroleum demand in light of high oil prices - that was the market reacting, and now prices have swooned.

  If the discrepancy between gas prices in Rockford and Belvidere was such a big deal, Belvidere would be booming. But it’s such a small difference, really, that businesses and consumers would generally rather be in the bigger city and deal with the price difference.

  Who has the highest gas prices in the country? The West, New York, North Carolina, Illinois…

  Who has the lowest prices? The less populated middle of the country. If your theory holds true, why aren’t people flocking there? Because more people want to live in or near bigger cities, with access to infrastructure, amenities and higher-paying jobs … and they’ll pay the higher cost of living for that.

  I think you’re tilting at windmills, here, Bob. Why is it gas stations are expected under different laws of economics and market economy than any other business? If people think they’re making money hand over fist, why not jump into that business instead? I guarantee you it’s harder to make money than you think.

• 5. Bob Trojan  |  October 21st, 2008 at 1:05 pm

  Tilting at windmills, hmmm….that’s a new one on me!
  How do you suppose the local fast growing gas station company is doing it?
  He’s either piling on a lot of debt to buy what he’s buying, or paying for it our of cash flow from operations. Most probably it’s a combination.
  Now assuming he’s got a good cash flow, where do you think that comes from? far as I know, it comes from revenues. So if he’s got cash to acquire, he can’t be hurting too much, huh?
  Rather than keep track of pump prices in St. Louis, why hot set up a three pronged measurement: Rockford (city), Belvidere and Beloit WI. Why not track average prices for each sector for a while?
  As far as gas stations and different laws of economics, I think it’s more of “if I can charge more for my product and get it, why not”.
  Gee, isn’t that the American dream?
  How many gas stations around here are closing compared to restaurants and other businesses who need local customers and are locally owned?
  I hope I straightened that windmill!

Leave a Comment

Name Required

Email Required, hidden

Url

Comment

Security Code:

Some HTML allowed:
<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <code> <em> <i> <strike> <strong>

Trackback this post  |  Subscribe to the comments via RSS Feed