Thursday, August 9, 2007

Fair is fair. Especially after my going after the mass market yesterday.

For years, in fact as far back as I can remember, there has been the suspicion that gas prices in Bend were artificially high. Occasionally there would be a gas war, which only seemed to confirm it. I remember passing through Madras and realizing that prices were considerably cheaper.

There was some mumbo jumbo about 'transit points' or something.

Now, I do believe that gas stations make very little money, but still...they were playing a very dangerous game that is now going to come back and bite them.

Fred Meyer opens a gas station and suddenly prices drop .35, at a time of year when prices usually go up.

What I really hate about this is that it seems to confirm every stereotype about greedy locals; it seems to confirm that the mass market serves a purpose in keeping prices down.

I know, that whenever I had a monopoly, I was very careful not to charge more than the standard market price. Sometimes it didn't matter -- if the mass market got involved, they often would go below cost as loss leaders, because what attracted them to the product was its 'hotness'.

So, even though I would be bending over backward to be fair, I would still look bad.

In the case of the gas prices, however, it's very hard to see that the local gas prices weren't gouging us for years.

Oh on a perhaps related note: the gas station I have always gone to, on the corner of 8th and Greenwood, has been shuttered. Hmmmmm....

1 comment:

Anonymous said...


I don't know if you were ever in the gas biz, but as a kid I worked pump for a private, and later worked for a major in oil field services, .e.g. traveling to calgary, houston, and louisiana.

One of the things they had us do as kids is drive all over and record the price that everyone else was selling. Generally what we did is price one cent below the lowest guy in town. My experience is that everyone else was doing the same.

The wholesale price of fuel is very high and margins have always been less than a nickel a gallon, but 20,000 gallons a week is a thousand bucks. Note that said while the little guy used to have a good life on a $1k/mo, today these quick-mart gas places are about selling smokes, beer, ... The fuel is to get you in the store.

FM, Costco, ... same get you coming to the store.

With regards to Madras versus Bend, Madra like Redmond has farmers, Bend is the land of the rich, thus you can charge more, again its all about what the other guy is charging. Given that there are few independents anymore, and this is because nobody could afford to replace the tank ( DEQ ), all is corporate now.

Everybody still does drive-bys of the competition, again up in Madras farmers use more fuel, and thus people are coming in and filling tanks and barrel's, in Bend its a lot of $10 topping off coming through. What do you expect from a resort town?

We have passed peak-oil, expect $12/gallon fuel. Europe its 3-4 Euro for a liter, which is about $12/gallon. Each home has no more than one car, and kids don't have cars, unless they're rich kids.

The day of MONSTER rigs flying through Bend is going to be gone very soon.