Current Events > I've always wondered, does anyone know how gas stations like, actually work?

(+) Yeah! (+)

from a pricing standpoint

we've all been there, driving around and seeing 20 different gas stations, mostly different brands, all on the same drive. all of which have the same price, maybe give or take a cent.

i live in a small town and have four gas stations, two pairs across from each other but each pair on the opposite side of town

each one has the exact same price. all four are different brands; casey's general store, clark's gas stations, cenex, and marathon oil

is there some divine gas overlord who sends an email out at 1am saying "your prices will all be this tomorrow" at which point they update the signage overnight usually when nobody is around?

i want to know what it's like as an actual gas station owner/manager who deals with the day-to-day price changes.

i mean, you'd think there would be one station out there once in a while running some kind of promotion where it's like "5c cheaper than the guy across the street this week only!" - i feel like that would drive shitloads of business

they are linked to a system, yes, and they decide what % they want to mark it up via their Point of Sale (POS) system (cash register/inventory software).

I would assume the prices are the same because your town is small. I live in Los Angeles, and the prices per station can vary pretty wildly depending on what part of the city you're in, what brand it is and how close to the freeway the station is.

PatrickMahomes posted...

is there some divine gas overlord who sends an email out at 1am saying "your prices will all be this tomorrow" at which point they update the signage overnight usually when nobody is around?

Mostly, at least for the chains. Store managers usually need to submit a price survey 2 or 3 times a day for a couple of competitive locations around. I'm guessing they have some analysis program or people crunching them and they can call back to a location at any time and tell them to change the prices.

It's a little weird overall because it is pretty much never about the cost of the fuel that is in the ground, but based around the cost of the next fuel they will need to buy.

The owner of each gas station in the U.S. is registered and signed-on to a daily message board that is run by CEO bigwigs of Chevron, Exxon, Phillips66, Shell, Valero, and BP. And every day the bigwigs make a new topic on the message board "lower prices $.02 today - give the rabble some hope"

But this year things have been a bit different - after prices were $1.99/gallon or lower during the pandemic, the message board went a different route - and starting in February there was only 1 topic created:

"Initiate Order 66."

And the rest is history - prices went up to $4.69/gallon.

PatrickMahomes posted...

i mean, you'd think there would be one station out there once in a while running some kind of promotion where it's like "5c cheaper than the guy across the street this week only!" - i feel like that would drive shitloads of business

this happened in the 70s. they called it the "gas wars"

gas was so cheap the stations were using it a loss-leader to get business

Robot2600 posted...

this happened in the 70s. they called it the "gas wars"

gas was so cheap the stations were using it a loss-leader to get business

if it's me then i do it right now. rather than operating at a loss, you will be operating at a slightly less favorable profit margin in the short term, but make up for it by the massive increase in traffic and subsequent decrease in traffic going to competition

The place I worked, Shell owned the pumps, the guy I worked for owned the store. He'd receive messages about where to set the gasoline prices, his profits on gas sales were laughable, something like 0.005% and the rest all went to Shell, he had zero control over pricing.

Gas stations without a name like Mobile, Exxon, etc, likely profit off of their own set prices, but i'm not entirely sure.

Wholesale distributor sells gas to all stations in the area at the same price, and each franchised station must add a margin to the price that the franchise requires per unit volume of fuel sold.

State laws usually mandate that gas stations must not undercut each other, so the stations with cheaper franchise fees have to raise their price to match or at least be fairly close.