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Thread: Why? I would really like to know, why?

  1. #11
    Registered User PeoplesElbow's Avatar
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    Quote Originally Posted by BernieP View Post
    Not the stations so much as the distributor. Sheetz and Wa Wa have their own distribution system, they don't rely on a local business.
    The end point retailer doesn't mark up the gas much, it's the guy in the middle. I would say it's not gouging, but economy of size.
    The more fuel you move, the lower the profit on a gallon has to be.
    The end point retailer never made much on gas, at first it was the "service" portion of the station that made money.
    Now it's the retail store that makes money. Selling gas is basically a loss leader to get people to stop.
    I am not sure I can believe that because as soon as Sheetz and WaWa showed up the stations that relied on the local distributors lowered prices. I don't think if the business model was to get people into the store then pay at the pump wouldn't be so prevalent. Maybe I am different than most people but I rarely go into a station, I pay and the pump and leave.

    I know southern Maryland doesn't have a real interstate to actually base this off of but everywhere else I have lived did have a real interstate and the stations on it were always higher because they could be, think about it, it would be cheaper for the distributor to go to these stations than the ones in town and yet they are still more expensive.
    If what I say offends you then you really don't want to hear what I keep to myself.

  2. #12
    Registered User Goldenhawk's Avatar
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    Quote Originally Posted by PeoplesElbow View Post
    ...everywhere else I have lived did have a real interstate and the stations on it were always higher because they could be, think about it, it would be cheaper for the distributor to go to these stations than the ones in town and yet they are still more expensive.
    Economics 101. The interstate station managers know most people will pay more for not driving so far off-route to get to cheaper gas. It's not gouging, it's just good business savvy.

    Of course, a smart manager knows he can game the system a bit. He'll drop his prices a few cents to get more business. Or, he can raise prices a few cents because his loyal customers will still shop there, at least for a while, and he won't lose many customers for a few days.

    At some point, though, customers do notice and shift their purchasing pattern. And the other nearby stations see the new price and adjust accordingly. Soon everyone is charging roughly the same again.

    This ability for mutually-antagonistic competitors to act in unison has always fascinated me. I can't decide whether it is "monopolistic competition" or "oligopoly".
    http://academic.udayton.edu/PMIC/Chapters/chap14a.htm

  3. #13
    Registered User PeoplesElbow's Avatar
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    Quote Originally Posted by Goldenhawk View Post
    Economics 101. The interstate station managers know most people will pay more for not driving so far off-route to get to cheaper gas. It's not gouging, it's just good business savvy.

    Of course, a smart manager knows he can game the system a bit. He'll drop his prices a few cents to get more business. Or, he can raise prices a few cents because his loyal customers will still shop there, at least for a while, and he won't lose many customers for a few days.

    At some point, though, customers do notice and shift their purchasing pattern. And the other nearby stations see the new price and adjust accordingly. Soon everyone is charging roughly the same again.

    This ability for mutually-antagonistic competitors to act in unison has always fascinated me. I can't decide whether it is "monopolistic competition" or "oligopoly".
    http://academic.udayton.edu/PMIC/Chapters/chap14a.htm
    Don't really consider what the stations near the highway do as much gouging since they often have a ton of competition, the stations here in Southern MD didn't have much in way of competition before 2000. Stations near the highway are rarely as much as $0.25/gallon more than the ones farther away. Most expensive place I ever bought gas was in Death Valley, but that was understandable if you have ever been there. I was actually surprised it wasn't more.

    The first thing I noticed about Southern MD was the high gas prices, if you remember this was when gas was around $1.50/gallon so $0.25 was a big difference.
    If what I say offends you then you really don't want to hear what I keep to myself.

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