How Much Power Do Local Owners Have Over Gas Prices?

11:59 PM, Feb 20, 2012   |    comments
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Winston-Salem -- We've all heard rising gas prices blamed on all types of stuff -- unrest in the Middle-east, natural disasters, etc.

But what about the local gas station owners?

News 2 looked into why stations charge different prices so often when they've already paid for the gas they are selling.

We tried to talk to about a dozen gas stations and two corporate offices. They either declined to comment or said they were not in the authority to speak.

We finally found a manager at a Winston-Salem station who agreed to an interview.

Sam Attallah explained local gas station owners have very little power.

On an average day, he has to check what his competition is charging on his way to work.

Once there, he has to call into a corporate conference call where Sunoco representatives discuss market prices, stock market changes along with his information about his local competitors.

Basically, gas station owners don't price gas to recover what they paid for their gas, but what it would cost to buy more.

"That's why we have to measure contents in tanks every day," said Attallah. "That's why we have to measure how much we sell every day, and depending on what the franchise, Sunoco in this case, feels the pricing has been recovered for that contract or not, they determine whether we have to charge more of less the next day for the same supply of gas."

News 2 also spoke to a less partial observer - an economics professor at Wake Forest University.

Sherry Jarrell explained that we can't think of gas as we do other retail products. There's not much competition in the larger global market and the gas industry is heavily taxed.

"The state and federal government actually make more money about six or seven times more money on a gallon than a local gas station," Jarrell said. "So they can't respond to their prices as readily as you'd think they'd be able to for a normal good."

WFMY News 2

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