Is there price gouging on gas?

[Bud]

Yesterday we went to the St. Louis area to watch our grandson play in a baseball tourney. I bought gas there at Circle K for $3.79 a gallon. When we returned to Nashville after the game, the price at Circle K here was $4.49, a difference of 77 cents per gallon. Even factoring in the 20 cents per gallon higher gas tax in Illinois and the 6.5% sales tax, it still doesn't come close to making up the  77 cents. Same company.  Two days previously, I went to Circle K in Mt. Vernon and bought gas for 22 cents per gallon less than what it was in Nashville.

 

Yes, I'm old and grouchy, but it's obvious to me that we are getting gouged by Circle K in Nashville. Apologists for the petroleum companies always have an excuse for these differences. The interesting thing is all of the gas stations in Nashville charge the same price and move their prices in lockstep with each other. You might think there would be some competition but there isn't. 

 

YMMV

 

 

[RPG]

One thing that never seems to be brought up is inflation. The US Government prints paper each day, with literally nothing to back it up. (Gold, Silver, Pork Bellies, etc.)

 

It stands to reason that the more "money" that's put into circulation, the less value all of the money must have, which results in inflation, or rather "deflation" of the value in currency. 

 

 

 

[Bud]

True, but how does that relate to such a large disparity in price for the same product from the same corporation?

[Hosstage]

6 minutes ago, Bud said:

True, but how does that relate to such a large disparity in price for the same product from the same corporation?

It's a regional issue.

[John Ranalletta]

10 hours ago, Bud said:

Yesterday we went to the St. Louis area to watch our grandson play in a baseball tourney. I bought gas there at Circle K for $3.79 a gallon. When we returned to Nashville after the game, the price at Circle K here was $4.49, a difference of 77 cents per gallon. Even factoring in the 20 cents per gallon higher gas tax in Illinois and the 6.5% sales tax, it still doesn't come close to making up the  77 cents. Same company.  Two days previously, I went to Circle K in Mt. Vernon and bought gas for 22 cents per gallon less than what it was in Nashville.

 

Yes, I'm old and grouchy, but it's obvious to me that we are getting gouged by Circle K in Nashville. Apologists for the petroleum companies always have an excuse for these differences. The interesting thing is all of the gas stations in Nashville charge the same price and move their prices in lockstep with each other. You might think there would be some competition but there isn't. 

 

YMMV

 

 

 

In my experience, gas is almost almost cheaper the nearer one is to a barge-able river.  Lots of petro is barged.  For years, I'd work in Louisville and almost always found gas cheaper there than in Indy.

Today:  Left is Louisville where a client had a fuel barge op.  Right is Indy in my zip.

 

 

[dduelin]

Who knows why and why care about a single station? Maybe they had 500 gallons left in the tanks and the station manager's boss said jack up the price to slow sales and keep from running dry? Maybe the store manager quit and stuck it too his ex-employer on the way out the door. Maybe it was an employee mistake made right 30 minutes after you saw the price.

 

If all the Circle K's in Nashville or all of Tennessee were at $4.49 that would be news.

[szurszewski]

3 hours ago, dduelin said:

If all the Circle K's in Nashville

I suspect the one he's talking about are all the Circle Ks in Nashville. Illinois.

[Joe Frickin' Friday]

20 hours ago, Bud said:

Yesterday we went to the St. Louis area to watch our grandson play in a baseball tourney. I bought gas there at Circle K for $3.79 a gallon. When we returned to Nashville after the game, the price at Circle K here was $4.49, a difference of 77 cents per gallon. Even factoring in the 20 cents per gallon higher gas tax in Illinois and the 6.5% sales tax, it still doesn't come close to making up the  77 cents. Same company.  Two days previously, I went to Circle K in Mt. Vernon and bought gas for 22 cents per gallon less than what it was in Nashville.

 

By my math, the difference is 70 cents per gallon.  (4.49-3.79).  Out of $4.49, 6.5% sales tax is about 27 cents; that plus the gas tax accounts for 47 cents of the difference.  That leaves just 23 cents of difference to account for - about 5 percent - and as others have pointed out, this can be chalked up to regional/geographic issues.

 

20 hours ago, Bud said:

The interesting thing is all of the gas stations in Nashville charge the same price and move their prices in lockstep with each other. You might think there would be some competition but there isn't. 

 

Not sure why you take the price synchrony as a sign of non-competition.  If you're suggesting collusion among gas station owners in an effort to boost profits, that's illegal and could land those owners in jail.  It's possible such collusion happens in industries with only one or two competitors, but when you've got a couple dozen players, it's only a matter of time before somebody talks to the authorities.

 

 

5 hours ago, szurszewski said:

I suspect the one he's talking about are all the Circle Ks in Nashville. Illinois.

 

This kind of confusion happens from time to time.

 

[John Ranalletta]

Setting retail gas price is an art and a science.  I had a bunch of very large C-store clients.  The practice may have changed since then but I don't think so.

 

Considerations:

 

• "What am I paying for fuel en route?"
• "What did I pay for what's left in the tanks?"
• "What are my competition charging?"  Store managers at my clients were required to physically canvass other sellers in their market and report those prices to their support center.  Of course, this could be done via the web, but that'd be price fixing.  Perhaps, GasBuddy has replaced this practice.
• "How are my pump prices impacting in-store sales?"  If my prices are higher than competitors, not only do I lose gas margins, but the more profitable in-store sales of drinks, food, etc. are impacted.  If my pump prices are too low, increased traffic at the pumps jams up the lot and discourages customers from entering the lot or finding a place to park to make in-store purchases. 

C-stores only sell fuel to sell food and drink.  Ever see a convenience store without pumps? Likely, there are some, but not many.

[szurszewski]

1 hour ago, John Ranalletta said:

Store managers at my clients were required to physically canvass other sellers in their market and report those prices to their support center.  Of course, this could be done via the web, but that'd be price fixing.  Perhaps, GasBuddy has replaced this practice.

My kid’s best friend’s mom worked at a chevron until fairly recently, and they were still doing this- though I think they did use gas buddy and sort of spot checked the info. 
 

1 hour ago, John Ranalletta said:

Ever see a convenience store without pumps? Likely, there are some, but not many.

Out here in the PNW it’s actually pretty common. 7elevens only recently started adding pumps to some locations (most still don’t have them) and there is an Oregon chain called Plaid Pantry that is very dense out here - I don’t think any of them have fuel. 
 

It used to be very uncommon to see a gas station without a convenience store though.

[szurszewski]

3 hours ago, Joe Frickin' Friday said:

This kind of confusion happens from time to time.

Someone I know once told me there were 27 Nashvilles in the US - turns out that wasn’t quite accurate and there were, ONLY, like, 13. ;)

 

or so the google told me at the time. 

[Joe Frickin' Friday]

8 minutes ago, szurszewski said:

Someone I know once told me there were 27 Nashvilles in the US - turns out that wasn’t quite accurate and there were, ONLY, like, 13. ;)

 

 

Wikipedia lists 23 Nashvilles, including one in Ontario:

 

https://en.wikipedia.org/wiki/Nashville_(disambiguation)

 

Quote

• Nashville, Arkansas
• Nashville, California
• Nashville, Georgia
• Nashville, Illinois
• Nashville, Indiana
• Nashville, Hancock County, Indiana
• Nashville, Iowa
• Nashville, Kansas
• Nashville Plantation, Maine
• Nashville, Michigan
• Nashville Center, Minnesota
• Nashville Township, Minnesota
• Nashville, Missouri
• Nashville, Nebraska
• Nashville Historic District (Nashua, New Hampshire)
• Nashville, New York
• Nashville, North Carolina
• Nashville, Ohio
• Nashville, Ontario
• Nashville, Oregon
• Nashville, Texas, also known as Nashville-on-the-Brazos
• Nashville, Wisconsin, a town
• Nashville (community), Wisconsin, an unincorporated community

 

[szurszewski]

2 hours ago, Joe Frickin' Friday said:

 

Wikipedia lists 23 Nashvilles, including one in Ontario:

 

https://en.wikipedia.org/wiki/Nashville_(disambiguation)

 

 

Well, I, uh, I’m sure nine of those are new since we had that conversation in 2016 - and I don’t think the one in Canada should count…so…

 

here’s the one in Oregon - that looks new, right?  

[Skywagon]

Nashville Texas is no more...shut down about a century ago.  The marker of where it was has served as target practice.

 

[BadAdam]

Yes.  In California, we pay a hidden tax that basically is oil company profits.  

 

https://energyathaas.wordpress.com/2020/02/10/californias-mystery-gasoline-surcharge-strikes-back/

[Red]

The story said "might" be oil company moving into distribution.  Could also be the cost of retailing gasoline has such slim margins that most gas stations make more money on soda and chips than the do gasoline.  Take a drive and count how many gas stations do NOT have a food sales component.   Could be gas stations have chosen to increase their profit margins on fuel and not rely on junk food to stay in business.  I have a theory that CA gas prices also influence prices in neighboring states.  Nevada for instance.  I'm sure the gas in Reno comes from CA and the gas in Winnemucca and Elko comes from UT.  Reno prices easily 20 to 30 cents higher.

[Bud]

Yesterday I drove to Mt. Vernon to see about a new knee. Gas at Circle K in Mt. Vernon, ILLINOIS was 20 cents per gallon cheaper than at the Circle K in Nashville, ILLINOIS.

 

25 miles further away from the refinery. I find it hard to believe they are making up the difference in sodas. I believe they could sell the gas for the same price here but choose to keep it higher on purpose as all stations in Nashville, Illinois are charging the same price. Must be hard to prove price fixing. But that doesn't keep it from happening.

 

Insider trading is also illegal, does that mean it doesn't happen?

[Bud]

On 3/28/2022 at 8:18 PM, dduelin said:

Who knows why and why care about a single station? Maybe they had 500 gallons left in the tanks and the station manager's boss said jack up the price to slow sales and keep from running dry? Maybe the store manager quit and stuck it too his ex-employer on the way out the door. Maybe it was an employee mistake made right 30 minutes after you saw the price.

 

If all the Circle K's in Nashville or all of Tennessee were at $4.49 that would be news.

It wasn't just Circle K. I only mentioned them to show a direct comparison. The stations in St. Louis were in  mostly  in lock step with each other. 

[John Ranalletta]

47 minutes ago, Bud said:

It wasn't just Circle K. I only mentioned them to show a direct comparison. The stations in St. Louis were in  mostly  in lock step with each other. 

 

Looks like a volume issue IMO.  Price of living in smaller community.  Likely retailer needs higher price to offset lower volume.  Just a guess. If I'm a Nashville station and customer says, "Gas is 20 cents cheaper in Mt. Vernon", I'd say, "You'd better go get some."

 

 

 

[John Ranalletta]

53 minutes ago, Bud said:

It wasn't just Circle K. I only mentioned them to show a direct comparison. The stations in St. Louis were in  mostly  in lock step with each other. 

 

BTW, this might be an interesting application of John Nash's equilibrium theory as I understand it.  The problem might be too many stations in Nashville to share the total fuel spend. If there were fewer stations, each station would enjoy more revenue/profit and might offer fuel for less; however, at what point does fewer retailers constitute a near monopoly wherein Nashville stations could price gas at even higher prices?

[Red]

How gas is priced web link.  I hope it works.

 

https://www.youtube.com/embed/BomQxCG5VG4?rel=0&autoplay=1

[ESokoloff]

9 hours ago, Red said:

How gas is priced web link.  I hope it works.

 

https://www.youtube.com/embed/BomQxCG5VG4?rel=0&autoplay=1

I’m thinking it didn’t work as you intended. 

Here is what you posted (still a good life lesson IMHO)  

 

[Red]

I"ll try it one more time.  https://www.benzinga.com/news/earnings/19/01/13005538/when-fuel-prices-are-moving-up-and-down-who-is-making-money