Source: Sherman Publications

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Gas on sale? Low or high prices no conspiracy

by David Fleet

September 21, 2011

On Tuesday afternoon, Grand Blanc resident Rob Wolfbrandt made a stop at the BP Station on M-15 near Hegel Road for gas.

"Taking advantage of the $3.32 per gallon gasoline," he said.

Wolfbrandt like other area commuters noticed a wide spectrum of fuel prices along M-15, ranging from $3.59 per gallon at Marathon at Grange Hall Road in Ortonville to $3.37 per gallon at BP in Goodrich to $3.53 at Speedway near I-69 in Davison.

The fluctuation in prices of basically the same unleaded gasoline is not all that uncommon, said Mark Griffin, president of the Michigan Petroleum Association, which represents more than 1,500 dealers statewide.

"There is some difference in price between brands, as much as 8 cents," he said. "Some products, like Marathon and Shell, have a unique additive package that's different and that, too, may impact the price. All major brands of stations are owned independently, with the exception of Speedway, which is owned by Marathon—they are all private-owned companies. Gasoline is typically sold at a loss or break-even point—it's a loss leader, so the profit is made selling food stuff in the store."

In the case of Tuesday's 22 cent differential in the Goodrich area—gas was just on sale, Griffin added.

"Gas may be on sale in some communities that day—it's really that simple. Customers who buy gas everyday want to come up with some conspiracy—really, it's not the case. We at the MPA agree gas is too high. If customers are spending at the pump they are not so eager to spend in the store where the money is made. We just can't control the global price. When it goes up, the price goes up."

Griffin said 60 to 70 percent of the customers pay at the pump rather than go inside to pay.

"Retailers can't afford to lose too much. Consider on Tuesday the break- even point was $3.55 per gallon that day. The lower they sell gas, the more inside sales occur."

Griffin said that only 20 percent of gasoline sold in Michigan is produced in the state.

"About 80 percent of fuel that comes into Michigan arrives via a pipeline from Chicago or on a barge to Saginaw Bay. The dealers pull fuel from pretty much the same terminals. Any terminal too far away would cost too much to ship into the station. Many gas customers will drive out of their way to save a nickel a gallon. But keep in mind there's a cost to get there."