Pump Talk: Understanding Westchester's Gas Prices
What's with the price discrepancy between different gas stations—even within the same town? What causes these prices to rise and fall? We talked to station owners to find out.
So what gives? What explains the difference in gas prices?
Well, there are many factors that contribute to the fluctuating cost of oil in the U.S.—and since we don’t understand most of 'em, we’ll leave it to the business pages of the newspapers to explain 'em to you. Still, why can one gas station in Westchester charge as much as a half-dollar more than another in a nearby town? It might have to do with the Snickers Bar you didn’t buy while filling up.
Confides Wayne Jeffers, who owns 15 Citgo stations throughout Westchester and Putnam: "The more volume you do in gas, the more candy you’re going to sell at your store. Sometimes if store sales were slow, you might offer a lower, more attractive price on gas so you’ll have more customers come buy at your store, too."
But of course the sale of Snickers, Gatorade, and Marlboros (shame on you if you still indulge in that nasty habit) is not the whole story. You don’t need an MBA to guess the rest of the story: competition—and profit. If there’s more than one station in town, which one do you think is going to have more cars stop in: the one that charges $3.50 a gallon or the one that charges $3 a gallon?
"A lot of times, the customer forces you to be competitive," Jeffers says. "They may pass twenty stations every day, so they can choose and pick."
Here is your business lesson of the day: lower price = more customers = more profit.
Take John Mescino, who owns the Gulf station on Tuckahoe Road in Yonkers. He slashed the cost of regular fuel from $3.03 to $2.99 last Tuesday. "Gulf charges me a certain price. From there, I have to decide, Do I want to give it away, or make ten or twenty cents a gallon? It all depends on what you want to make. A profit of fifteen cents a gallon is very good."
Sometimes, however, it’s not quite so easy to follow that equation. Take Jeffers; last week, he would have liked to charge less than his price of $3.29 for regular, but cost of inventory prevented it. "I filled my gas stations up just before we had a dramatic price decrease over the last week. So sometimes it’s hit or miss on buying it on the right day. Pricing is an art, not a science," he said, adding that fuel costs at the station will likely fall below $3 by Labor Day.
And then there’s a factor we can all relate to—the high cost of Westchester real estate and taxes. "Westchester is a very expensive market," Jeffers notes. "You’ve got to add it all up to make sure you can pay your bills."
Put it all together, and you've got numerous (and sometimes conflicting) cost-determining factors that must be considered each morning before putting those numbers up on the stations' pricing boards.
So while fuel costs have soared in recent years, who’s been cashing in? Both Mescino and Jeffers insist it’s not they. Mescino reports profits had remained at about the same rate over the past two decades, while Jeffers believes they’ve lowered.
"Today we do more volume at a lesser cost to create the same money. It’s the guys making crude oil and the guys refining the gas who are making the money. But when prices go up, we definitely get squeezed," Jeffers says.
Join the club, guys.
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