SuperAmerica = gas price volatility

[Bill V]

There was an interesting story last night on the 10:00 KARE-11 news last night here in the Twin Cities, regarding the volatility of prices in the Twin Cities and some other markets, when compared to the rest of the country. For those of you not in one of these volatile markets, we undergo the same general price trends that the rest of you do--but we do it in a very choppy, sporadic way. For example, when most of the country undergoes a gradual $.10/gallon increase during a week, we will usually have a sudden, overnight, $.20/gallon jump, then a gradual slide back down to the same price. When you look at a chart of gas prices over time, most markets have a wavy line. Ours looks more like an EKG monitor. (If you go to any of the gas-price tracking websites, you'll see what I mean.)



When KARE-11 investigated why this happens, they found one common denominator between the Twin Cities market and every other market that has such patterns--the presence of SuperAmerica and their affiliates. (In other parts of the country, they're "Speedway" or "Marathon".) In those markets--including Indianapolis, Grand Rapids MI, and others--the presence of SA and their pricing strategies cause prices to bounce all over.



Check the article link of you're interested. If you don't want to read the text summary, you can see the original story as it aired, using the link under the photo in the story. The video version shows some great charts demonstrating the differences between SA and non-SA markets.



Anyway, thought you might find it interesting...

 

[Bill Ellis]

There are no SuperAmerica stations within 100 miles of St. Louis yet we still see the same gas price effects. $.20 rise followed by several days of $.01 and $.02 decreases until next rise. I think KARE-11 was a bit simplistic in their analysis and was just looking for someone to blame.

 

[Craig Keller]

The state of Kentucky has recently filed suit against Marathon and Speedway for price gouging after hurricane Katrina. Last year, I was working for a law firm that represented several counties that were suing Ford Motor Company as 10 of their patrol cars were defective. They found out that the counties had a contract with Marathon to get their gas. They discovered that the gas had a corrosive element added in that corroded parts of the fuel filter thus causing problems with everything else. The case is still going on and I don't have any furthur info on the outcome.



Craig

 

[Nelson Atwell]

I used to work at a Speedway in Lexington, over on Georgetown Rd. Back then they were a subsidiary of US Steel. They were a poorly managed operation, and really needed to remodel the store for the employees' safety. We were in an extremely high crime area and open 24 hours, but they had no guard, no barrier between the customer and cashier, no security cameras, etc.



Marathon/Ashland Oil always had a reputation of having poor quality products. However, since I never drove a high performance vehicle, I'd just use whatever was cheapest, whether it was Speedway, Thornton's, Marathon, etc. I never had a problem, since at least the companies usually meet the minimum standards.



It not a surprise they are still cutting corners to turn a profit. They have been doing this for decades. I think they got away with it for so many years, because KY earns a lot of tax dollars from Ashland/Marathon Oil. There is a danger in biting the hand that feeds you.

 

[Tom Schindler]

Shopping only at brands you think are the brands you are buying, think again.



We have a Marathon/Ashland refinery in Canton, Ohio.



I have spend many hours working in that refinery. From the cracker to the Hydroflouric Acid facility.



At the shipping dock, there are many trucks with different names on the side, including SOCI to name one.



SOCI stands for Sun Oil Company Inc. Yep, you buy Sunoco gasoline in our area, you are buying Marathon gasoline.





Tom

 

[Gavin Allan]

There are even differences between stations for the same brand served by the same truck! Local TV station was investigating why gas in our town is always $0.06 a gallon higher than the gas in the next town 20 miles away. They filmed a tanker truck unloading at a Brand X station in our town, and then followed it to the other town and unloaded some more at another Brand X station in the other town. The same gas from the same truck was being sold at $0.06 a gallon more. Why was the company doing this? Because they can.

 

[Richard L]

We have no SA stations that I have ever seen in Texas, yet our gas prices do the same thing that you describe in the Twin Cities. I don't think there is any connection to the brand. All the gas prices around here go up and down at the same time. All gas stations are within about 2-3 cents of each other. Occasionaly one station will change it's prices a day before the one on the next block, but that's to be expected.



Gavin

Most gas stations pay a delivery charge and those that are 20 miles away from the main city will usually pay a little more per gallon. I have driven through towns that are 20-30 miles away from the larger towns or cities and their gas prices are at least 5-10 cents a gallon more than they are here in Waco and the suburbs.



Alot just depends on were the refinery is or where the gas supplier is in relation to the station getting the gas.



That is not to say that some gas station owners are charging to much for gas. That always happens then there is a shortage or a limited supply of anything.



The real problem is that we are living in a global economy and for years, it didn't matter what the price of gas was in Japan or Germany, but now it does. What Germany, France, or Japan pays for gas can effect our market prices simply because they are competing and bidding for the same engery resources we are. Are ability to provide a lower price in America is the number of refineries we have to feed our demands. While the demand far exceeds the capacity of the refineries due to seasonal gas mixtures, mainenance and other refinery bottlenecks, we have greater capacity than all the other countries.



Perhaps some kind of gas rationing would allow the fuel prices to stabilize and force American drivers into smaller more economical cars. Right now, if you can afford the gas, there is no incentive to reduce fuel consumption. Rather than making gas prices so high that the average person cannot afford the gas, reduce the demand on fuel by limiting how much you can buy.



That may sound strange, but to many military personnel living in Europe, gas rationing for military gas stations was the only game in town unless you wanted to pay double the price per gallon. I drove as much then as I do now and never had a problem with running out of gas rations, which I think were about 100 gallons per month. That's a lot of gas even for a muscle car (1965 GTO)



...Rich



...Rich

 

[Dave L]

I was driving back north from the twin cities last week. in Ham Lake which i on the north edge the price at a Holiday gas on Highway 65 was $2.19 a gallon and when i got to Mora (about 30 miles from Ham Lake) also on Highway 65 the Holiday had gas for $2.39 a gallon. explain that to me. they probably even got gas from the same tanker.

 

[Chris Taylor]

I hope you meant 3.19 and 3.39 per gallon. If not, I'm moving!!



Speedway/Marathon have always been the price leader in NW Ohio. Between them and BP, they have close to a 70% market share in this area. Marathon/Speedway, BTY, are the same company... Sunoco, which has a refinery in Toledo(along with BP), will move with them, but I have never seen them be the leader on the way up. Actually, they tend to be the leader on the way down...



And, yes, Caymen, all brands WILL sell to each other, especially if they can't meet the demand of their stations. Sunoco here in town has about a 5-10% local market share, with a refinery in Toledo. However, they deliver to stations in a 3 state area from that refinery, so if they get short in one area due to delivery or demand problems, they will buy from whoever they can to keep their stations going. All of the companies will do the same. Sunoco is not a leading player because they are not the size of the BP/Speedway/Marathons.



Now all that said, I do believe that all the oil companies are taking us for a ride... Every time the price of crude goes up, so do gas prices, but when it comes down, they claim that the crude in the works is still at the higher price. Cache 22... Pure BS.



Gas prices around here routinely jump 20-30 cents per gallon, and then slowly back down. Looks like the other areas of the country are the same. Time for more alternate energy sources? The US has always been a leader in the technology of getting things done. It's time we do it again! (Soap box off)...



Hope everyone is having a great holiday!

 

[Bill V]

Yeah, I hope you meant 3.19 and 3.39 as well--if not, I'm making a road trip to Ham Lake tonight to get a tank of gas!

 

[Tom Schindler]

I do not beleve Marathon is as big as Sunoco is.



Essentially, you can fall for that "Top tier" fuel scam, but in the end, it doesn't matter where you get your gas. It is all the same.





Tom

 

[Chris Taylor]

I agree, all the gas is about the same, and all companies will buy from each other when needed. The top tier stuff IS just a scam.



Not sure about Sunoco vs Marathon. I do know that Sunoco has a total of 5 refineries. 3 in Philly, one in Toledo and one in Tulsa. Marathon has 7 that I know of, and are really into exploration. Sunoco is a refiner only...

 

[Tom Schindler]

Sunoco has a refinery in Puerto Rico. The company I used to work for did a job there.



I know of three Marathon refineries. One in Ashland, Ky area, Detroit, MI area, and one in Canton, Oh. I have been in both the OH and KY Refineries.





Tom