credit: The New York Times / Sandy Huffaker
As just about everyone whose body temperature is above room temperature knows by now, gasoline prices have gone through the roof. You pretty much expect to see even higher prices each time you pass a gas station.
Most of us wonder who it is that is profiting from these spiraling prices. Many of us expect to see gas shortages, long gas lines, and gas rationing pretty soon. At the same time, station owners are crying poverty, claiming they make only pennies on each gallon of gas sold.
Then would someone please explain the prices in the above photo, from this New York Times article published May 24, 2008 ? We are hesitant to use the term “price gouging”, but there doesn’t seem to be any plausible explanation for the price differential between the “credit” and “full serve” pricing at this Union 76 station in La Jolla, California (The Union 76 brand is owned by ConocoPhillips). While not clear from the photo, we believe that the “credit price” implies self-service. In fact, why in the world would the credit card price be lower than paying cash, in the first place, self-service or not ? And why would gas at the full service pump be up to $1.20 a gallon more expensive ? Something stinks in La Jolla, and we don’t think it’s the MTBE in the gas. Do supermarkets that have self-service checkout lanes charge $1.00 more per item if you pay at a register with a real live honest-to-goodness cashier ?
Here in the Northeast U.S., gas stations generally set a single price for gasoline, regardless of whether you pay with cash or credit card. If a station differentiates between self-service and full-service (which is a misnomer anyway), it is generally a few cents a gallon.
While we’re on the subject of “full service”, when was the last time a gas station offered to check your tire pressure, oil level, coolant level, etc., or wash your windshield ? Full service my foot. We doubt most of the gas jockeys working at these stations would know how to open your hood, much less find your dipstick. Most of the time, you’re lucky if they can find where to insert the gas nozzle, and if they speak English. We wouldn’t pay one cent more for their supposed “full service”.
ExxonMobil just announced that they will be selling all of their company-owned gas stations to their distributors or to other buyers, because there’s no money in the retailing end of the business. Well, when you can make record-setting obscene profit by refining the product, we suppose you might loose interest in the lower profit parts of the business. (It’s sort of like why bank robbers never demand coins, preferring the paper money instead.) Maybe ExxonMobil should use the price model that Union 76 is using at the above station. If they could add up to $1.20 profit per gallon to their sales, we suspect that owning the stations suddenly becomes very profitable indeed !
Getting back to our original question of “What’s wrong with this picture?” we think there are many things wrong on many levels. Why is gasoline $4.00 or $5.00 a gallon, and climbing? Why hasn’t the United States done more to lessen our dependence on foreign oil? Why is this country in love with gas-guzzling vehicles? (although that is starting to change). Why are the big oil companies allowed to rake in record profits, while much of America is hurting from the spiraling cost of energy? Why aren’t we seeing more government mandates or inducements to effect energy conservation, such as carpooling, discounts on mass transit fares, tax breaks to employers who encourage telecommuting, restrictions on the use of non-essential lighting, etc? (When there’s a water shortage, restrictions are put in place on non-essential water use. We think the same should be done regarding non-essential energy use, especially by commercial users.) How about giving free bicycles or scooters (or tax breaks) to city-dwellers (or anyone) who pledge to go car-free at least one day a week?
Oh, and does anybody actually opt for the “full serve” pumps at this, or any other Union 76 station ?
– Routing By Rumor
P.S. – Another suspicious thing about the prices displayed in the above photo is that all the prices are in the form $ xx9.9 ! While it is customary for gas retailers to always tack on that 9/10 of a cent, it looks like some retailers, this station included, have adopted the practice of tacking on 9.9 cents to everything. We guess the next logical step is to go to the $ x99.9 pricing model, where all grades of gas will sell for $4.99, $5.99, $6.99 a gallon, etc. Why bother raising the price by 10 cents or 20 cents every couple of days. Just start raising it in one-dollar-a-gallon increments.