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Gas price fluctuations stump area drivers
Bruce Matlock photo
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Published: August 31, 2008
As he was driving down U.S. 321, a sign on the side of the road caught Jim Epperson's eye.
Unleaded gasoline in Lenoir cost $3.38.
Epperson was delivering a sample to a lumber supplier. After passing several similarly priced stations, the Statesville man asked himself why the price of gas was 21 cents cheaper less than 40 miles away.
"I could understand a difference of 5 to 7 cents going from town to town," he said.
Convenience store owners in Statesville and Hickory said the driving factor they consider when setting the final price at the pump is what the guy down the street is selling his gas for.
Each market has at least one store that sets a low price, and in order to remain competitive other convenience stores follow their lead, said Jim Lawton, president of Kivett Oil, which operates Fast Phil's Convenience Stores.
"Lenoir is always cheaper," Lawton said. "Those people in Lenoir they are selling 15 cents under cost right now."
Homer Newton, who sells gas and is the former owner of Propst Superette on Springs Road in Hickory, said Wilco-Hess and Exxon often set the lower prices at their stations first.
"The first stations to set the price are the pumper stations, like Hess, because they're connected to a refinery," he said. "Box stores, like Wal-Mart and Lowes Foods, buy gas in larger volumes and get discounts, so they can also sell it cheaper."
Other factors taken into consideration are credit cards fees, operation cost and distribution.
"The credit card companies charge 2 percent of the total sales and it runs the cost of gas up," Newton said. "It charges the company, not the credit card consumer. You can't pass the cost on to the consumer, because the street sets the price. You don't want your price to be higher than the other station down the street."
Balbir Singh, owner of the Shell Station on Wilkesboro Highway in Statesville, said 70 to 80 percent of the business is done by credit or debit card, and those slips of plastic can garner fees around 2 to 6 cents a gallon.
Jerry Caton, who owns two convenience stores in Charlotte, said if there are five stores within three miles of each other, everyone tries to stay within a cent of everyone else.
"Sometimes we make 20 cents a gallon, and sometimes we make five cents," Lawton said. "I would love to add my operational cost and my profit. It's not so complicated, it's basically cut throat competition."
V.M. Mathew, the owner of Yancy's in Mountain View, said he sometimes hangs by a thread with that cutthroat competition. Sometimes he sells his gas at cost, sometimes a penny or two above cost.
"I look at what the others are doing around me and go from there. I considered getting customers to pay a different price for cash than they do for credit cards, but I thought that some customers may not like that," he said.
With gas stations on a delicate balancing act between the cost of gas, their competitors' prices and being charged to process a credit card, there's only one way to make money on gas these days, Newton said.
"If the price goes down, and you don't change it at your station immediately, that's when you might make a profit - for a few days," he said.
Taxes play their part in price
State tax: 30.15 cents per gallon
Federal tax: 18.4 cents per gallon
Total: 48.55 cents per gallon
Diesel state tax: 30.15 cents per gallon
Diesel federal tax: 24.4 cents per gallon
Total: 54.55 cents per gallon
The state gas tax is at the legal limit under state law, as set by the state legislature, and is set by the N.C. Department of Revenue. A portion of the tax is indexed to rise and fall with wholesale fuel prices. The tax is capped until June 30, 2009.
Information from Carol Gifford, public relations manager with AAA Carolinas
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