10 Things gas stations won’t tell you
September 21, 2009 · Tagged with Family and Home
1. “Good luck finding the best deal.”
When it comes to gas prices, most stations are branded—meaning the name of a major oil company hangs out front—and must buy gas from their proprietary company. They can’t shop around. With a lock on sales, the oil companies charge each station a different price depending on various factors, such as the station’s competition and its location. That means a station can pay as much as 46 cents a gallon more than one down the street, and that cost gets passed along to you.
Faced with such instability, Gainesville, Fla., resident Steven King plans ahead: “If I know I’m going out of town, I try not to buy gas so I can fill up after I leave.” King says he can save 10 cents a gallon by purchasing gas on the road. You’d be similarly wise to shop around—with prices constantly in motion, the cheapest gas may not be at the same station every time.
2. “I hate it when gas prices go up.”
Stations earn on average between 10 and 15 cents on a gallon of gas. Ironically, they earn the least when prices are highest. When fuel climbs, gas stations must shrink their profit margin to remain competitive, meaning they earn less per gallon than usual. But another big cost during tough times is something they can’t do anything about—credit card fees, which add up to about 2.5 percent of all purchases. When gas is at, say, $2 a gallon, the station pays credit card companies 5 cents a gallon; when gas hits $3, that fee becomes 7.5 cents—more than half the station’s entire average profit. “Those credit card fees are miserable for the gas station business,” says Mohsen Arabshahi, who owns five Southern California gas stations.
How do station owners make up for lost revenue? “Prices go up like a rocket and come down like a feather,” says Richard Gilbert, a professor of economics at UC Berkeley. For several weeks after wholesale prices drop, stations can earn as much as 20 cents a gallon before retail prices are lowered to reflect the change.
3. “My gas isn’t better for your car; it’s just more expensive.”
Oil companies spend lots of money explaining why their gas is better than the competition’s. Chevron’s gas, for example, is fortified with “Techron,” and Amoco Ultimate is supposed to save the planet along with your engine. But today more than ever, one gallon of gas is as good as the next.
True, additives help to clean your engine, but what the companies don’t tell you is that all gas has them. Since 1994 the government has required that detergents be added to all gasoline to help prevent fuel injectors from clogging. State and local regulators keep a close watch to make sure those standards are met; a 2005 study indicated that Florida inspectors checked 45,000 samples to ensure the state’s gas supply was up to snuff, and 99 percent of the time it was. “There’s little difference between brand-name gas and any other,” says AAA spokesperson Geoff Sundstrom.
What’s more, your local Chevron station may sell gas refined by Shell or Exxon Mobil. Suppliers share pipelines, so they all use the same fuel. And the difference between the most expensive brand-name gas and the lowliest gallon of no-brand fuel? Often just a quart of detergent added to an 8,000-gallon tanker truck.