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Re: Gas Price Gouging



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Consider the following:

  • Gas stations post the price of their product to the tenth of a cent on a huge sign in the front of their parking lot.

 

  • Consumers will often drive miles to reduce the price of a fill-up by less than $1.

 

  • Virtually all oil majors have divested ownership of almost all gas stations in the US and Western Europe because the return on invested capital is below their cost of capital. These are almost all franchises now (though regulated under a specialized franchise-like law).

 

  • The vast majority of new gas retailing capacity that is being built in the US is not traditional gas stations, but either putting pumps in front of Wal-Marts / grocery stores or QuikTrip / WaWa / Sheetz-type locations that use fuel purchases as a way to get consumers onto their lot so that they can buy higher margin items in the store.

 

Does this sound like an industry that has the ability to price-gouge at the level of retail gas, or does it sound more like one that is so bad at marketing that they’ve trained consumers to shop on nothing but price?



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