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Tuesday, April 12, 2011

 

Gas Stations Battle Each Other for Lowest Prices

 
 
York County gas stations battle for lowest prices
 
CHRISTINA KAUFFMAN
The York Dispatch
Updated: 04/12/2011 12:53:27 PM EDT

 

(Bill Kalina Photos)

 

The cornerstone of retail economics is the principle that one must sell goods or services at a greater price than he or she has paid for them.

The psychology of gas prices, though, makes business a little more complicated for area gas stations and convenience stores, several of which haven't been following that basic tenet for a couple of weeks.

Around York County, gas sellers are engaged in price wars with competitors, selling gas for several cents less per gallon than they're paying on the New York Mercantile Exchange to replace it.

And though regular unleaded is edging closer to $4 per gallon, nobody's ready to cry uncle.

Rutter's Farm Stores and Sheetz Convenience Stores throughout York County are among those vying for customers, selling gas as low as $3.36 per gallon.

According to AAA Fuel Gauge Report, the average price in the York area was $3.67 on Monday, up from $3.57 a week ago and $3.44 a month ago.

Battlegrounds:Rutter's president Scott Hartman said he has about 10 stores, from North Hills Road in Springettsbury Township to Hanover, in battle with Sheetz. He characterized the standoff as a David-and-Goliath-style showdown, with Rutter's playing on home turf.

"We're the small guy," Hartman said. "They've several times more stores than we do, but if a competitor lowers prices and we don't stand toe-to-toe, we lose our customers. That's the nature of the business."

He said most people prefer to go to Rutter's, a York-based business, if the price is comparable.

Neither he nor Sheetz spokeswoman Monica Jones could say who started the fight or when it will stop.

They both said they'll hold their

ground for as long as the other.

"We're just matching the competitor," Jones said. "As long as the competition stays in the price range, we'll be there until the end."

Both businesses are taking a loss on thousands of gallons of gas per day, but Jones said gas has never been a convenience store's "bread and butter."

"Gasoline has always been an inside-sales driver," she said. "We want people to come inside and buy food and drink."

Customers benefit:Consumers are taking advantage.

"Let 'em fight," said Bill Eberly of West Manchester Township. "You know the prices must be jacked up if they're willing to let it go for less."

Eberly, refueling his Ford Thunderbird, said he's going to take advantage of the gas war until the end.

"I'm saving 20 cents per gallon," he said. "That's a few bucks every time I fill up."

Though some people might be hesitant to characterize $3.40 per gallon as a bargain, it's all relative when they could be paying even more.

"A couple of larger marketers are trying to build volume at their locations, so they're pricing aggressively," said Bob Astor, wholesale fuels business manager with Shipley Fuels Marketing. "In this current market, that's very good for the consumer."

York-based Shipley Energy operates Tom's Convenience Stores, which aren't engaged in battle.

The lower prices at competitors have translated into a loss of volume sold at Tom's stores, he said.

"Certainly our customers would prefer that we were involved in that ... at those very competitive prices," he said. "It makes it very challenging. Folks in York County will drive out of their way to take advantage of that type of savings."

National analysts are predicting the price will hit $4 for the summer driving season, which starts around Memorial Day.

Astor said it would be likely for prices to reach that mark, especially if turmoil in the Middle East continues.


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