Caught Over a Barrel
A lot of unseen factors contribute to how prices vary from one station to the next, from block to block, neighborhood to neighborhood, state to state. Taxes, location, lease or rent, brands, transportation costs, wages, additives, more than you want to know.
Lomedico's cost on a gallon starts with the "tank wagon" price -- what he pays Sunoco when its truck fills his tanks. Included in that charge to him -- which he won't divulge -- are a federal tax of 18.4 cents per gallon and a Virginia tax of 17.5 cents (in Maryland, the state tax is 23.5 cents; D.C.'s tax is 20 cents).
He leases his station from Sunoco, another expense. Plus the localities' fees: Northern Virginia stations pay a 2 percent "metro tax" to help fund mass transit. Credit card purchases add another burden: About half of all sales are charged, and retailer fees run about 3 percent on each transaction -- almost a dollar for every $30 fill-up.
Then there's windshield wash at the pumps, paper towels in the bathroom and other incidentals that add up, says Lomedico. "And then somebody drives off without paying!"
"It is not uncommon for a guy to work for 6 to 8 cents profit" per gallon, says Harry Murphy, spokesman for the Washington, Maryland and Delaware Service Station Association, a trade group based in Bowie. That's about a dollar profit per fill-up. "It's getting brutal out there."
But the final calculation in gas prices is competition. "If you get a price increase, you can't go out there and put it on the pole until you've looked across the street and see what he does," says Murphy.
Add to that pricing equation the ripple effect of discount gas at independent stations that sometimes can price cheaper by buying off-brand on the "spot market" for less.
And warehouse sellers like Wal-Mart and Costco often sell gas below cost as a loss leader to attract business inside. "I don't think I could sell gas for $1.74 if I was in Haymarket next to a Sheetz or a Wal-Mart," says Lomedico, who calculates that the penny a gallon he sacrifices is made up in volume sales plus more business for his repair bays and snack shop.
After gas prices in the area went up three cents last Wednesday, Lomedico upped his price to $1.779/10. For a couple of hours, the Citgo beat him at $1.769/10, then matched him.
"That won't last," says Lomedico, determined to stay cheaper. "I got a lot of numbers I can put up on that pole."
Bypassing the Pump
"Join the resistance!" starts the message imploring angry Americans to boycott gasoline. Don't buy gas for a day! A week! Whatever!
When gas prices get dicey, consumers start blaming. Out come the angry posts on Internet newsgroups calling for people to stop buying gas for a day or stop buying from Exxon and Mobil stations to send a message to ExxonMobil Corp., the oil giant with the biggest sales.
"The only way we are going to see the price of gas come down is if we hit someone in the pocketbook by not purchasing their gas!" says one online activist.
But these "Great Gas Out" chain messages ("Send this to 30 of your friends and together 3 million of us will lower the price of gas!") turn out to be half-tanked rally cries.
The rah-rah rhetoric to fight the Evil Oil Empire has never worked since it started appearing in 1999, says Barbara Mikkelson, who with husband David founded Snopes.com, an online resource for debunking urban legends. Americans are addicted to gasoline. If they boycott the gas station on Tuesday, they'll be there filling up on Wednesday.
© 2004 The Washington Post Company