Economy, storms, foreign oil all skew price at the pumps
Melissa Haneline
The Post and Courier
Cynthia Minson, attendant at Dodge's Store on Savannah Highway, waves in yet another motorist to the gas pumps Thursday October 9, 2008. The line for $2.89/gallon gas wrapped around the building.
Melissa Haneline
The Post and Courier
Motorists waited in line at Dodge's Chicken Store on Savannah Highway to take advantage of some of the cheapest gas prices in the area. Many factors determine the price at the pump.
For a snapshot of just how nutty local gas prices have become in the last couple of days, take a peek at what's happened on Savannah Highway, south of Charleston.
At the Dodge's Chicken Store and filling station in Red Top, it's $2.89 a gallon, a price so low it has triggered back-ups of 40 cars at a time and 30-minute waits.
Less than a mile away at the Kangaroo Express, the price is 40 cents more, at $3.29 a gallon. Meanwhile, the high-grade pumps were dry Thursday afternoon at a Pilot station in Summerville.
What gives?
Experts say the state is seeing the effects of a multi-pronged collision in which falling oil prices overseas, the failing economy at home and an easing of supply problems after the Gulf of Mexico hurricanes are combining to play havoc at the pumps.
Prices are swinging — mostly downward — so wildly that fuel station chains on a daily basis are trying to figure out what the local market will bear.
The only silver lining for the average driver is that the plunge is coming at the same time the national economic crunch has forced people off the road.
"I wouldn't call it a glut, but there's clearly less demand," said Carol Gifford of AAA Carolinas. "Prices are not falling for good reasons," she said, "it's a by-product of the economy."
Also, the interruption in the nation's refinery schedules caused by this summer's hurricane scares is improving — in favor of the consumer — as more gas is put into the national fuel stream.
"We're still not at full supply," said Michael Fields, executive director of the S.C. Petroleum Marketers Association, but the supply is better today than it has been at any point in the last four weeks, he said.
But why are the prices so different between stations less than a mile apart? Multiple factors are at play, officials contend, starting with how retail chains get their gas.
One big determinate is the written contract sellers have with suppliers. It might have been written long ago, reflecting an older price, or written recently, when wholesale prices were much higher.
Another factor is that local neighborhood gas station prices can get set based on a common tactic among the retail chains.
Local representatives are known to drive around town recording the competition's prices. They then telephone or e-mail those figures into the national headquarters where a competitive price adjustment is made and posted by the afternoon.
The tactic is akin to what the airlines do in starting a price war and it's why two or three stations near the same intersection set their prices so close together.
But why is the Dodge's Chicken price so much cheaper than those nearby? Officials at the headquarters in Mississippi were not available Thursday to discuss price strategies, but the Red Top store manager said
the answer is simple.
"It's un-American," said manager Libby Hanson, who said the better question is not why her store's prices are so low, it's why the other stores are priced so high.
Caryl Walters of Hollywood didn't care about the reason behind the price drop, or about waiting 30 minutes Thursday to fill up. What mattered most to her was that filling her Toyota RAV4 was less painful.
"All I know is that it won't cost as much to fill this sucker up as it did a week ago," she said.
To follow local fuel prices, go to Charleston.net/gasprices
Reach Schuyler Kropf at 937-5551, or skropf@postandcourier.com.
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Comments
This article has 14 comment(s)
Posted by MCornerGirl on October 10, 2008 at 12:51 a.m. (Suggest removal)
"It's un-American," said manager Libby Hanson, who said the better question is not why her store's prices are so low, it's why the other stores are priced so high.
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Well said! I think that Manager Libby Hanson needs a raise! A lot more of these gas stations should follow her lead!
Posted by SomeTruthPlease on October 10, 2008 at 2:46 a.m. (Suggest removal)
Amen, MCornerGirl...I agree completely...if Dodge's is still making money (which is clearly the issue), everyone else is making TONS of money...which in this day and time, is exactly what Ms. Hanson was saying..it's "unAmerican"...not to mention disgusting, and nothing short of evil. Everyone is hurting, homelessness abounds, people are forfeiting vacations, etc., because of it. I went to the post office yesterday, in my jammies, and decided to pop into Fred's for toilet paper...clearly not my better judgment, but it sure beat driving all the way home to change. That's so I can continue to put money in the SOB's pockets over here in Goose Creek.
Posted by NativeSon on October 10, 2008 at 4:30 a.m. (Suggest removal)
And OPEC is planning to meet in November to discuss reducing oil supply because they are not rich enough!
Posted by Slick50 on October 10, 2008 at 5:26 a.m. (Suggest removal)
Am I tired from lack of sleep or did this story start repeating itself?
Posted by sig on October 10, 2008 at 5:37 a.m. (Suggest removal)
If you look at the world market on gas and oil, gas is selling for $2.02. The average mark up for transportation etc is 50 cents per gallon. So we should be paying $2.52.
So why are we still paying over $3.00 per gallon anywhere? Because the CEO's need to pad their pockets before they ask for a government bailout.
But I guess our leaders do not consider this as price gouging!
Posted by pygmon on October 10, 2008 at 6:05 a.m. (Suggest removal)
sig: Remember, they say "we don't make any money on the gas". They also "don't make any money" on the $1.49 16oz Diet Mountain Dew or the $1.29 2oz Snickers Bar. ;-)
My father used to own a gas station...an old Gate station...a gas ONLY station with two drink machines and two snack machines. I suppose the reason we were able to afford 6 waterfront acres on Johns Island was from all the cash those vending machines made...you know, since there's no profit in gas. :-)
Posted by sig on October 10, 2008 at 6:44 a.m. (Suggest removal)
to pygmon. Good post. Those quarters, nickels and dimes from the vending machines add up.
Posted by cvillescgirl on October 10, 2008 at 7:25 a.m. (Suggest removal)
I rode by this store twice on Thursday. Both time's there was a line down Hwy 17. I did not even need or want gas, I like to stop at this store to get lunch(very good food) and a drink. The cashiers were outside blocking anyone from getting into the parking lot in front of the people in line for gas. So they were not worried about the people who did not want gas. I had to ride further down Hwy 17 to get to a store for a drink and some lunch.
Posted by UrGatorbait on October 10, 2008 at 7:33 a.m. (Suggest removal)
Because sig if you pay attention, we are still paying for oil purchased for I believe August/July for delivery to refineries. In that time a big ol' storm struck Texas, shutting some refineries down, there by slowing production. Next, with the economy tanking and our bumbling boobs in DC bailing out anyone, they are spurring on a recession/depression. The market hasn't bottomed yet and the world markets are nose diving. So that means, less gas is being consumed. Less consumed, less refined under the new prices for crude oil. So we are going to wait a few months, maybe. Then factor in the oil producing countries are going to cut production...The fun is only just starting.
You people gripe at the government to do something, then moan when they do. Let the markets work, the government has proved it can't do anything right. Some here still demand a "right" to cheap gas. It's no wonder we are in the condition we are in.
Posted by RTC on October 10, 2008 at 8:41 a.m. (Suggest removal)
Someone e-mailed me an article yesterday showing where gas prices have dropped significantly in Georgetown. One gas station had gas as low as 2.57 a gallon.
This is all a big game, and I for one, don't enjoy playing it.
Posted by iceman1978 on October 10, 2008 at 9:55 a.m. (Suggest removal)
There will always be a lag between the drop in oil prices and the price we pay at the pump. The reason for this is because the oil currently going through the refineries and the distribution apparatus is oil that was purchased at the higher price.
But I see what you're saying. The increases at the pump always seem to happen closer together at a jump in oil.
Posted by Girleygirl on October 10, 2008 at 10:28 a.m. (Suggest removal)
The pilot on the corner of College Park Rd by Main st was selling gas for $3.09 a gallon yesterday.
Posted by carolinagal on October 10, 2008 at 10:42 a.m. (Suggest removal)
west ashley walmart was 3.09 this morning. no line
Posted by southbel on October 10, 2008 at 11:17 a.m. (Suggest removal)
Early, you are absolutely correct. Right now, we are paying some of the highest gas prices in the nation, here in South Carolina. This is certainly an anamoly. Normally in South Carolina we track right below the national average. However, the explanation given was that the hurricane impeded the supply and it takes "a while" for the gas to reach us since the gas runs at only 3-5 mph through the pipeline, thus causing this microcosmic gas price increase.
Hmmm...well this turns into one of those high school math problems, lol! Let's see, based on how far the gas had to travel to get here, at 3-5 mph, I could have walked it here by now!! Clearly, they have artifically inflated the gas, and it's time to lower it now. I did notice this morning, since this story broke, that stations are "magically" starting to lower prices.