Ask John Sartory how much his Texaco station is charging for gasoline these days, and he hesitates.
"It changes so much, I've got to go out and look at the damn pole," he said with a laugh yesterday, shortly after he cut the cash price of self-service unleaded gas at his station on Greenbelt Road in Berwyn Heights by 4 cents, to $1.179 a gallon.
Since war broke out in the Persian Gulf two weeks ago, local gas prices have fallen more than 6 cents a gallon, the American Automobile Association said yesterday. The average price of a self-serve unleaded gallon in the Washington area is $1.213, according to AAA's Potomac branch.
That's down 2.7 cents in the last week and more than 22 cents since the average price peaked at $1.435 a gallon on Dec. 6. Taking into account the 5.1-cent-a-gallon increase in the federal gasoline tax Dec. 1, local gas prices are now within about 8 cents of the price on Aug. 2, when Iraq invaded Kuwait and sent oil and gas prices spiraling.
Nationally, the average price is $1.225 a gallon, AAA said.
With the price of crude oil tumbling by one-third -- close to pre-invasion levels -- many experts believe gas prices will continue to fall a little more. Indeed, many gas station owners say, they are fighting a war of their own -- an old-fashioned gas war, as stations compete among themselves by cutting prices to regain volume lost in recent months.
"In all the years I've been in the business, I've never seen people out there fighting for the gallonage like this," said Wilson Beach, owner of Beach's Oakcrest Chevron on Marlboro Pike in District Heights. "You can ride up and down these streets and sometimes see the price change as much as two times in one day."
"It's a very sensitive market right now. All the dealers are fighting for the volume," said Charles Chahel, owner of a Mobil station on Maple Avenue in Vienna. "People are really shopping around these days for the lowest price on the street."
Even critics of the oil industry who complained that oil companies were not cutting gas prices quickly enough at a time when most of the concerns just posted mammoth fourth-quarter profits have been silenced by the recent rapid price drop.
"I think the prices coming down are welcome," said Ed Rothschild, energy policy director for Citizen Action, a Washington consumer advocacy group. "I think there's still a few more cents to go."
According to AAA's survey, the average price of self-serve unleaded gasoline in Maryland was $1.198 a gallon; in the District, the average was $1.209; and in Virginia, where gasoline taxes are higher, the average was $1.23 a gallon.
Gas prices began falling several weeks before the Persian Gulf War broke out, helped along by declining prices of crude oil, the chief ingredient in gasoline. When crude prices tumbled the day after fighting began, oil companies generally began slashing their wholesale gasoline prices to dealers even further.
Service station owners and managers, who set their own prices based on the wholesale cost, their own operating expenses and the competitive situation in the neighborhood, say they generally pass wholesale price cuts directly on to customers.
But while the lower prices are good news for motorists, many service station owners say the price wars are squeezing their operating and profit margins, which they say already were cut to the bone in an effort to stay competitive during the price increases last fall.
Chahel, for instance, said his unleaded price of $1.199 is about 7 cents more a gallon than he is paying for the fuel, a margin similar to many local stations. Out of that, however, comes the cost of labor, rent, utilities and other operating expenses, plus profit. "The margins are very, very low right now," Chahel said.
Many dealers say they are making virtually no profit from their gasoline sales and are relying instead on traffic generated by gas sales to provide customers for more profitable merchandise and services.
And while dealers make somewhat better margins off of higher grades of gasoline, sales of those grades have dropped sharply since prices increased last fall and customers switched from more expensive premium and "super" grades to cheaper, low-octane fuel.
Many customers also switched from highly profitable full-service pumps, where prices are marked up 50 cents or more a gallon, to cheaper self-serve gas.
Even though prices on all grades have come down, many dealers say, most customers have not switched back to premium or full-serve gas, further squeezing profits.