In my decades long work history, I spent three years working at gas stations. I worked my way up from part time cashier to assistant manager before I decided that wasn’t the lifestyle for me. For one thing, I was constantly surrounded by snack food and for someone who is a snack junkie – my butt just kept getting bigger and bigger.
This is a bad thing.
Yesterday morning I took Mom in for her stress test. As I drove by the gas station closest to the house, I noticed the price per gallon was $2.91. Even though the price was sucky (I don’t think we should be paying anything more than 2.00 – oil companies are having record years in terms of profits and they’re acquiring those on the backs of hard working Americans), I knew I had to fill up my tank. So I said to Mom, I’ll have to fill up when I come back to pick you up. So I drop her off at 8:45am and toddle home to do laundry, deal with the herd (the dogs) and do my thing.
I left the house to pick Mom up at 12:30, three hours and forty-five minutes later. I had every intention of stopping at the gas station to fill up…until I saw the price had risen to 3.19. So let’s do some math.
The rice rose .28 cents in less than four hours. Wow, don’t you wish you could get a .28 raise every four hours that you worked? I know I do!
So now it is time for some truth about gas prices and how it really works in the industry.
1. There is a 30 day supply of gasoline, already processed and ready to use, at any one time in the United States.
2. This is not the ‘national reserve’ that you hear President C- talk about from time to time. That is another ‘pot’ of gas and it to is 30 days supply. The National Reserve is to be used in case of emergency.
3. Oil companies stockpile oil way in advance. I don’t know how much they keep on hand, but I would hazard a guess that it is a substantial amount. Remember the edict, buy low, sell high. (This will come in handy later)
4. The gasoline that you put in your car today, was not refined yesterday. Chances are it was refined roughly 25 – 30 days earlier.
5. When the daily price of barrels of oil ebb and flow, it *should* have no immediate impact at the pumps. Why is that? Because it takes roughly three weeks to buy crude oil, refine it, ship it etc. Remember – what you put in your car wasn’t made yesterday – it was made weeks ago.
6. Most gas stations are franchises – the owner / manager of said station BUYS the franchise rights to have a Big Dollar Gas Company station.
7. In most (okay, almost all) gas stations, the price is determined by the MANAGER/OWNER. Surely you didn’t think someone from Big Dollar Gas called all the stations and jacked up the price did you?
8. The consequence of the Owner/Manager setting the price is they can pay x dollars for a gallon and charge xy to you. For example: if the gas station owner is buying gasoline at 2.75 per gallon, they could set the price at 2.79 and make a good profit. With most stations, its about quantity of gas sold, not a large profit per tank.
9. To be competitive, in my day, station owners would survey other stations. This means they’d hop in the car with a notepad and run around to all stations within 2 miles and check their rates. A smart station owner would then set their price .01 LESS than their competators. This is no longer the case – now it seems to be every man/woman for themselves.
So what have we learned? That most gas stations are price gouging the consumer. This time last year gasoline prices were 2.41 per gallon and they’re predicting 4.00 in late spring. So, how long until you have to decide whether to put gas in the car or buy enough food to put on the table? Write the Attorney General of your state and start asking the hard questions.