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View Diary: Every day I drive by a gas station (40 comments)

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  •  Que theme to The Twilight Zone (3+ / 0-)
    Recommended by:
    VClib, HappyinNM, Sharon Wraight

    Gas stations without a mini-mart or something else to sell are at a big disadvantage. The gas station is the hook to get people to buy high mark-up pop and candy at the mini-mart. Those stations can function fine with very little gas profit if it gets more faces into the store. The stand-a-lone gas station, or even one without a desirable selection of goods, is at a huge disadvantage and has to eek out a working profit from the sale of fuel.

    A conservative is a man with two perfectly good legs who, however, has never learned how to walk forward. Franklin D. Roosevelt

    by notrouble on Thu Jan 03, 2013 at 10:31:40 PM PST

    •  I don't see how that argument works. (1+ / 0-)
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      If gas Is the hook that gets mini mart shoppers, wouldn't higher gas prices drive mini market customers away?

      Where is the hook if gas prices are so high?

      Not only that, wouldn't consumers assume higher gas prices means higher gum and chip prices.

      And lastly, why even have a gas station at all if mini marts is where the money is.

      •  They have to have higher prices (1+ / 0-)
        Recommended by:
        Sharon Wraight
        For years I could never understand how these gas stations could be profitable.  They don't tend to have large mini marts or garages for auto repairs to offset their high gas prices.
        because without the mini-mart sales they have to make their profit off of gas.

        With a popular mini-mart they can make nearly nothing on gas if the lower price drives faces into the store. The mark-up on pop and candy is good.

        A conservative is a man with two perfectly good legs who, however, has never learned how to walk forward. Franklin D. Roosevelt

        by notrouble on Thu Jan 03, 2013 at 11:05:02 PM PST

        [ Parent ]

        •  That still doesn't make sense. (0+ / 0-)

          I can't prove it because I can't seem to find any official information on profit margins for gas stations.

          The energy department says this, which I don't think I've ever heard before regarding any other consumer product.

          "The Energy Commission cannot estimate profit margins based on average retail prices and observed wholesale market prices. This is because detailed data on refining and distribution costs, costs paid by approximately 10,000 retail locations, hundreds of wholesale marketers, jobbers, and distributors is not available."

          That's truly interesting.

          •  Not that it truly indicates (0+ / 0-)

            the cost of gasoline, but in Oklahoma City, at least, gas prices are tagged to wholesale prices and stations are not allowed to charge less than 5¢ over wholesale price. That means every gas station is guaranteed a 5¢ per gallon "profit" for gasoline.  This was established so businesses couldn't use gasoline as a loss leader to draw people to their stores. I'm not sure how the verification and accounting works on this as I don't own or work at a gas station. I only discovered this little piece of information after 9/11.

            Until 9/11, there was no upper limit that gas stations could charge for gasoline, only a bottom limit.  After 9/11, when gas prices shot to $6.00+ a gallon, and people (myself included) protested the radical price jump, a vague upper limit was established. It was actually more of a price-gouge comparison - if the price exceeded a percentage of the wholesale price or was noticeably in excess of other gas stations, the station could be fined for price gouging.

            That meant that gas stations could no longer charge excessively more than other gas stations because any gas station charging substantially more than other stations had to prove they weren't gouging the customer.

            What that translates to in reality is that many gas stations now could collude in their prices so they can all charge gouge-level rates - as long as everyone is doing it.  It only takes one station to refuse to play to bust it, though, so the local stations have been reluctant to test it out. The fine for being caught price-gouging is rather steep.

            All knowledge is worth having. Check out OctopodiCon to support steampunk learning and fun. Also, on DKos, check out the Itzl Alert Network.

            by Noddy on Fri Jan 04, 2013 at 05:55:52 AM PST

            [ Parent ]

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