According to NACS, convenience stores often lose money selling gas — they have pumps because that’s what lures the customers in to buy Slim Jims and Gatorade. The stores need to make 12 cents a gallon to break even, and they often don’t. The gas they paid $3.52 a gallon for went out the door at $3.65, and then credit card transactions cost ‘em 6 cents a fill-up, facility expenses are 3 cents and direct store operating expenses another 6.
Some 63 percent of consumers — us — buy gas purely on price. Do we know, or care, which brand of gas has nitrogen in it
? Nah. “Customer loyalty is fickle,” they say. You don’t say? Of course, there was a lot more loyalty when the local “service station” actually was a service station, and it was ol’ Joe who had a personal relationship with you and fixed your car.
In the NACS survey, 79 percent said they would take a left turn to find gas that 5 cents a gallon cheaper. Seventy-one percent would drive five minutes out of their way for that gas bonanza, and 47 percent would actually drive 10 minutes to save that 5 cents. The math on this doesn’t really work out. Ten minutes of driving at 45 mph covers 7.5 miles and (with 30 mpg and $4 a gallon gas) uses a quarter of a gallon. So you’re spending a buck to save 50 cents on a 10-gallon fill-up. But it’s the principle of the thing, right?
As gas hits $4 a gallon almost everywhere, this aberrant behavior is likely to continue, or get worse. We’re not even in the “summer driving season” yet, and it’s sure to get worse. Tom Kloza, chief oil analyst at the Oil Price Information Service
says Wall Street futures trading in oil is at an all-time high, and refiners are about to switch to more expensive smog-lowering blends. “This is the time the industry gives itself a do-it-yourself colonoscopy,” he said. “The system is purged of gas that becomes illegal to sell, and switches to gas that’s more expensive to make.”
Kloza showed off a chart of wholesale gas prices, with the Northeast and Western states in the red zone ($3.08 to $3.52 wholesale). You’ll get a relative bargain in Wyoming, Utah, Colorado and Montana — $2.69 to $2.97. State taxes are also a factor — they’re highest in New York (67.4 cents), California and Hawaii (though strangely much lower in New Jersey, which requires station attendants to pump gas).
Kloza sees a bit of a backing off from the “vicious price spike” in late February. “But prices promise to be very volatile this month,” he said, noting that it would be very usual for per-barrel costs to hit their peak this early in the year.
Still, Kloza isn’t in the $5 a gallon camp. The Web is alive
with stories about that magical high, but he thinks gas will peak at $3.75 to $4.25 this summer. Any higher, and oil companies will be tempting what he calls “demand destruction,” meaning that you and I will get around on public transit, walk, ride bikes or, who knows, even drive an electric car. “There are consequences to high oil prices,” he says. There sure are, and we’re all living them.
In the aforementioned earlier story
on high gas prices, some readers seemed to think I was trying to deflect blame from President Obama, when in fact my point was that no president, of whatever party, has much effect on oil prices. Our leverage isn't big enough. Here's some cogent video analysis from the Young Turks on that very subject: