Kroger action prompts prices to plummet
July 20, 2011 - By Katelyn Crain
|Plenty of morning commuters got a happy surprise on July 14 -- Kroger opened its new Lake Orion gas station with prices 40 cents cheaper than the going rate elsewhere in town. photos by K.Crain (click for larger version)|
Intern for The Review
With the varying prices of gas on M-24, could the stations be at some kind of gas war?
Between the M-24 intersections of Drahner Rd. in Oxford and Clarkston Rd. in Orion, there are seven gas stations. With so many places selling the same product within the 3.2 miles of each other, competition is high.
Just weeks ago, the new Kroger Gas Station on M-24, across from Heights, opened and heated up summer not with temperatures, but by shocking area consumers with gas priced well below what it was before they opened. They opened with gas prices ranging from $3.79 to $3.85 a gallon -- they priced theirs at $3.41 per gallon.
Their prices prompted Speedway, at the intersection of Clarkston and M-24, to match Kroger's prices. Then, the Admiral Station on M-24 -- located between both Kroger and Speedway -- also dropped their prices.
Although the three stations competed for business at the same low price, the four other neighboring stations stayed at the higher rates.
On the morning of July 14, the Kroger Gas Station raised its price to $3.79 per gallon for unleaded gas, while Admiral and Speedway remained at $3.41 per gallon. By the next day they had again lowered their price.
The reason Kroger gas prices were increased, while others stayed low, remains unknown to the public due to legal reasons. Many sources refused to comment on the price change.
However, according to an anonymous local gas station employee, as well as Michigangasprices.com, the state of Michigan average gas price is set at $3.788 per gallon of unleaded gas as of July 14.
Also, another local gas station employee that will remain anonymous has their own opinion about it. The quote has been modified to protect the employees' identity.
"I think one gas station is raising the price of their gas because no one is making money right now. So they have increased their price with hopes the other stations will increase as well," the employee said. "They need to make money in order to stay open."
Another opinion that has been expressed deals with the price of gas verses the quality of gas. In other words, people are getting a quality of gas that they are paying for, right?
"The only thing I can tell you is we buy gas on what is made on the spot market," said Mike Bagley, Advertiser Representative at Kroger Corporation. "I can't guarantee you that it would be one brand of gas one day and the same brand the next; Or even one brand one day or a different brand the next. It varies."
The instability in gas prices, as well as the quality, continues to be a puzzle that will remain unsolved. With a number of Gas station in such a close proximity, gas wars are simply bound to happen.
As of press time, prices increased at all three stations to $3.51 per gallon, still lower than the average.