Link: 10 Things Gas Stations Won’t Tell You
October 16th, 2009 at 10:25am Thomas V. Bona
Found a great article this week while researching my Road Ranger story.
It’s called “10 Things Gas Stations Won’t Tell You” and is pretty enlightening on some issues of pricing, gasoline quality, credit cards and the price of soda vs. coffee.
My favorite is “I hate it when gas prices are going up”:
Stations earn on average between 10 and 15 cents on a gallon?of?gas. Ironically, they earn the least when prices are highest. When fuel climbs, gas stations must shrink their profit margin to remain competitive, meaning they earn less per gallon than usual. But another big cost during tough times is something they can’t do anything about—credit?card?fees, which add up to about 2.5 percent of all purchases. When gas is at, say, $2 a gallon, the station pays credit?card?companies 5 cents a gallon; when gas hits $3, that fee becomes 7.5 cents—more than half the station’s entire average profit. “Those credit card fees are miserable for the gas station business,” says Mohsen Arabshahi, who owns five Southern California gas stations.
How do station?owners make up for lost revenue? “Prices go up like a rocket and come down like a feather,” says Richard Gilbert, a professor of economics at UC?Berkeley. For several weeks after wholesale prices drop, stations can earn as much as 20 cents a gallon before retail prices are lowered to reflect the change.
What catches your eye?
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1 Comment Add your own
1. Aaron | November 16th, 2009 at 9:21 pm
What catches my eye (but dosen’t surprise me or anyone else who watches) is
For several weeks after wholesale prices drop, stations can earn as much as 20 cents a gallon before retail prices are lowered to reflect the change.
At the same time, as a phychologist (in training), I get why they do it. Not only does it allow for time to make up lost profit, they get to lower proces 3-5 times for every time they go up, which creates more general positive thought than if they did the opposite. Research has shown that people tend to remember positives more than negatives in this sort of situation, so the stations pattern of behavior is simply taking as best advantage of a situation as possible.
The most control people can have is going to a station that has cut it’s prices first, or holding out when they know gas prices are dropping as long as possible before refilling. The stations that do so can still make their profit by selling more gas then they would otherwise, making it at least a break even in terms of gas profit and likely increasing instore profit, where much of the money is actually made.
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