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DEL.ICIO.USSmall stations feel gas pinch
The Atlanta Journal-Constitution
Ray Cole has business records that date back to the 1970s.
Just for the heck of it, he pulled out a few Wednesday to show me how times have changed. One from 1970 showed that a customer paid $2.68 for four quarts of oil and $50.50 for four recapped tires. And get this: someone bought 10.7 gallons of gas for a whopping $3.85.
Times definitely have changed. Especially at the pump, and that’s what brought the Badie Tour to Cole’s Service Station, a fixture in Lilburn for decades. There, coffee and conversation are free. If you’re a senior slowed by age, and the folks at Cole’s know it, an attendant will pump your gas for you, even if you pull into the self-service lane.
Cole had warned me that it might be slow Wednesday morning. He was right. About five customers rolled through, all regulars who’ve traded there for years.
“I’ve never seen it this slow, and I’ve been in the business 33 years,” he told me. “There’s no work, no construction, and that affects all the businesses.”
Last week, a PBS news segment on gas prices featured Lisa Margonelli, an energy expert and fellow at the New America Foundation, a nonprofit public policy institute. She lives in the San Francisco Bay area where, she told me Tuesday, gas has already hit the $4 mark.
Over the phone, she gave me a truncated history of gas stations and the economics of the business. Retail profit margins selling gas are generally thin, she told me. In today’s market, it averages 3 to 4 cents a gallon. And when gas prices are high like they are now, independents and small operators get squeezed the most.
“They can’t let the pump run dry, and they can’t put themselves in a position where they keep the tanks full,” Margonelli said. “The guessing game is intense.”
Cole knows this.
Nightly, he’s faxed a sheet that lists the wholesale price for gasoline. It could be up 4 cents a gallon one day, then 2 cents lower the next. The trick for him is to place an order at the right time. On Wednesday, he placed an order for about 8,500 gallons that cost more than $30,000.
“It’s like the stock market,” said Cole, whose profits run about 2 to 3 cents a gallon. “You try to predict the time to buy it the cheapest. Most times, you don’t.”
Be it high gas prices or tolerable ones, Cole always seems to weather the storm. Long-standing relationships with individual customers and businesses, coupled with on-site auto repairs, help keep the station afloat. In-store stock helps, too - soft drinks, honey buns, headache powders and such. Then there’s the free coffee.
“My customers are everyday people,” he told me. “They like certain things and I try to keep it handy for them.”
Some of the everyday people gathered around the coffee pot Wednesday. I met Charles Allen and L.J. Hoopaugh. We talked about Allen’s love for deer hunting, Hoopaugh’s 50-year career in distribution with Sears and gas prices that are likely here to stay.
“The cost of everything is up, but the people’s income isn’t,” mused Allen, a retired electrician. “All of this is probably a good wake-up call for a lot of people.”
Rick Badie’s column appears on Sundays, Tuesdays and Thursdays. Contact him at 770-263-3875 or e-mail: rbadie@ajc.com.
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Comments
By One Man's View
April 17, 2008 8:38 AM | Link to this
As one of Badie’s interviewees says. “All of this is a wake-up call.” I agree, but I wonder if we would be talking about the same thing. A lot of people think that prices of products are just some natural phenomenom or due to an invisible hand. I don’t.
Prices and wages are due to the exercise of power and manipulation. Wages are down in this country because the typical person does not have the power to get more on his own and is very reluctance to join forces with others to squeeze out more. Unions do and did exist for a reason. But I don’t like the Jimmy Hoffa types either.
The entire oil and gas market is one of unconscionable manipulation by sultans and oil companies. There are no natural reasons for the tripling of crude prices. There are no “free market” reasons. It’s just the sheer exercise of power and control. And they’ve got their guy in the White House.
So what is the wake-up call? For me, it is the realization that the little man in this nation is getting punched right in the face by the powerful. Apparently, all we do is get up and say hit me again. The solutions are mostly political. Keep electing those who are the lackies for the rich ( as we overwhelmingly do in GC), and keep getting punched in the face. Or vote for, or urge to run, those who have a clue about the disparities in this nation and will hit the ground running to do something about it.
By LT5000
April 17, 2008 12:27 PM | Link to this
Uh One Man’s View,
You do know that the Federal and Local Governments account for about 50 cents per gallon just for taxes.
Oil company refining and profit are about 20% of the cost of a gallon of gasoline.
Those are the people you should be complaining about. Not the companies that explore, collect and refine the oil into gasoline. They deserve the profit certainly not the government.
Our problem is that America hasn’t built a new refinery for 20 odd years and the world demand is increasing. The economics law of Supply and Demand are at play here.
We still pay a lot less than the Europeans, so we should be happy.
Add another useless Badie column to the pile, which grows larger week by week.
LT5000
By roska
April 17, 2008 12:33 PM | Link to this
Gas/oil is high because there’s a lot of global demand and because Americans (like lemmings) keep buying huge gas hog trucks and SUVs.
Want to sock it to the oil companies? Get a car that gets 30MPG minimum and watch demand drop.
Every day I see the same people sitting at a dead stop in Snellville in their Ford Excursion which gets 8 miles per gallon. There’s nobody else in the car so, yeah, they really need that huge gas sucking car don’t they?
By LT5000
April 17, 2008 12:35 PM | Link to this
Badie,
I should also point out the the New America Foundation, the one Badie is breathlessly panting over is a Left Wing think tank from Washington DC.
Undoubtedly the reason Badie bought a new pair of kneepads and eagerly quotes them for his “article”.
Here is one of their articles, in case you think they are an Objective Group.
C’mon Badie, Do your homework. Don’t just repeat the pablum someone spoon fed you on a TV show.
Aren’t you supposed to be a Journalist? Even if you do work for the AJC, you could still try to meet the minimum standards expected for a journalist.
LT5000
http://www.washingtonpost.com/wp-dyn/content/article/2006/12/01/AR2006120101475.html
By One Man's View
April 17, 2008 2:04 PM | Link to this
World demand could not possibly have increased anywhere near the percentage increase in the price of a gal of gas over the last two yrs. Actually demand has been decreasing in recent months.
As far as I know, local and fed gas taxes have not increased recently. I would like to point out that “America” does not build refineries. Global corps do, however. Have the costs of extracting oil for the sultans increased dramatically? I think not. I still say power to manipulate markets accounts for this relative short term run-up of prices.
I do agree that the American love affair with gas guzzlers plays right into the hands of the oil companies.
By LT5000
April 17, 2008 2:34 PM | Link to this
one man’s view,
China and India. Their consumption has increased exponentially in the last decade.
You are a real genius. Try to think before you post. At least read.
Just because you don’t believe it doesn’t mean it isn’t true. Do you base are your decisions on whether you believe it or not?
http://www.businessweek.com/magazine/content/0536/b3949086mz015.htm
Mext.
The National Petrochemicals and Refiners Association says that the last new refinery built in the United States was Marathan Ashland’s Garyville, La., plant—and it was completed in 1976.
I did not insinuate that the US government builds oil refineries. That’s a canard from the beginning.
The facts are that one has not been built in the US for 29 years, due to political pressure. However, demand has increased 45%. Supply/Demand.
Stop by the local Book Nook and pick up an economics book. It will do you a world of good.
LT5000
By Carbon Footprint
April 17, 2008 4:37 PM | Link to this
Lt5000 doesn’t comment enough times on this blog. Please blog more, LT5000. It’s not fair that you hold back so much of you. We love you LT, oh yes we do….
To sum up, Lt5000 needs to blog much, much more on this site because we love all of what is blogged.
More LT5000, please.
By LT5000
April 17, 2008 4:53 PM | Link to this
Carbon? Are you really Al Gore in disguise?
Some people just can’t handle facts.
LT5000
By One Man's View
April 17, 2008 6:23 PM | Link to this
Mr LT, it’s not that you blog so much, but for some reason you cannot resist namecalling or the like when someone has a different viewpoint than you. Do you have to work out your personal anxieties on these blogs?
I would comment on your rebuttal. The growing demand in the Third World over the last decade does not account for the 70 percent price increase in just the last two years of gas at the pump and the nearly 200 % increase in crude oil prices. You seem to make the assumption that TNC’s have some concern for America. They don’t. But it’s not due to political pressure. It may be due to the lack of political pressure. And that is not in a textbook.
By FinanceBuzz
April 17, 2008 6:37 PM | Link to this
One Man’s View,
Yep. It is all a grand conspiracy. The laws of economics just stopped working in 2007 or 2008 I suppose. I suppose that China is not demanding a greater share of the world’s oil, thus driving the price up. I guess that the weak dollar which makes imports cost more as well, has no impact, no matter how large or small. I suppose the virtually constant threat of further unrest in the Middle East, thus unsettling the global oil supply, has no impact on an oil market where risk plays a crucial role in pricing. I suppose that the fact that the last refinery built in the U.S. was in the 70s has no impact on the overall level of supply of gasoline, which impacts pricing. Nope. It’s all a grand conspiracy by “Big Oil” and…of course, the boogeyman of all things wrong with the U.S…..George W. Bush. Tell me One Man’s View, if you get out of bed and stub your toe on the bed in the dark, is that George W. Bush’s fault too?
By MJK
April 17, 2008 7:55 PM | Link to this
Alright…Rick’s column about the struggles of a small businessman have FINALLY deteriorated into a Pro- versus Anti-Bush sarcasm-fest. Its just a shame it took 10 posts since I had 6 in the betting pool.
Gas prices have spiked for any number of reasons but government regulation has worked in the favor of the energy industry over the years, oftentimes when it was necessary to help out an industry that is critical to the economy, and big oil has been riding the gravy train for the past few years. To say it hasn’t is disingenuous.
Still, don’t blame W. He’s not responsible for the billions of dollars in subsidies the oil industry gets each year or the tariffs put in place on imported ethanol. Its time Congress righted the ship a bit and moved those subsidies to industries currently in peril. Like Pharma (just kidding).
If you look at oil industry margins and compare them to other manufacturing sectors they aren’t necessarily out of whack. Its just that we don’t fill up our cars with widgets every week we notice it more. Also, the lack of property, plant, and equipment investment is problematic. I get that the argument is that those funds are used for exploration rather than capital investment in refineries, but be honest the decision to forgo building refineries aren’t driven by political pressure. Its profit. Nothing wrong with profit, but its not because Ted Kennedy is threatening Exxon.
By One Man's View
April 18, 2008 4:20 AM | Link to this
Laws of Economics - an interesting concept. I think I understand Maxwell’s Equations for electromagnetic phenomena. I don’t really understand Einstein’s relativity, but I acknowledge its legitimacy. Then we come to economics. There are general concepts with lots of disagreement among economists. Most economists work for the rich or their bodies. Its not surprising that they paint an entirely different picture than more independent types. I’ve got a law of economics. Economics is the study of what entity does what to whom concerning distribution of resources and gets away with it.
By Katie
April 18, 2008 10:06 AM | Link to this
If gas station owners want to make more money, they need to open up convenient stores. Convenient stores make more money off of their grocery items than they do gas. Don’t believe me? Ask any QT station. Profits come from auto shops and grocery items rather than for gas alone. You will also have more customers come through who may not only need gas.
By Bear
April 18, 2008 10:52 AM | Link to this
Katie, they CANT open convienience stores because of the inconvienient truth. Dont you watch tv? Dont you read? They cant open convienience stores. Hello, the inconvienient truth would stop them. It always does.
‘muff spread
By Lee
April 18, 2008 1:08 PM | Link to this
In 1999, I bought gas at $.79 per gal. In 2008, I’m paying $3.39.
I don’t think worldwide demand, the cost of production, or taxes has increased 430% in the past nine years. So what is it?
First and foremost is the disastrous foreign policy of the Bush administration. America has the proverbial wolf by the ears in Iraq and sooner or later, everybody knows that we are going to have to let go. Does our borrowing trillion$ to occupy a foriegn land have any effect on the value of the dollar? You bet it does.
When people look at America’s debt load and monetary structure, do they get nervous? Oh hell yeah.
After hurricane Katrina, when some our our refineries went off line and the price of gas spiked, big oil noticed an interesting phenomina. America did not significantly reduce their consumption during this period even when prices broke the psychological $3.00 barrier.
As for the average consumer, you might as well bend over and say BOHICA.
(Bend over, here it comes again.)
By LT5000
April 18, 2008 1:15 PM | Link to this
Lee,
the price of crude in 1999 was about $25 per barrel. Now it is $110.
There is you 400+ percent.
By Katie
April 18, 2008 1:21 PM | Link to this
We can drill our own oil on our own soil and not give the camel jockies a cent for theirs. Oops, did I say that? Ooops and/or my bad.
By Political Foreskin
April 18, 2008 1:25 PM | Link to this
LT you get everything wrong. In 1973 I bought a gallon for 88 cents in Detroit, during the oil crisis then. That’s over 4 dollars today, during this crisis.
We survived then, and we’ll survive now. Maybe if you’d stop scratching yourself you’d pick up a book and read or pay attention to the world around you, but until then, try the salve, Cups.
By LT5000
April 18, 2008 2:19 PM | Link to this
Foreskin (How apt),
I think you just made my point.
Perhaps you forgot to figure in inflation adjusted prices.
Supply and Demand, Supply and Demand.
LT5000
By Political Foreskin
April 18, 2008 2:53 PM | Link to this
Whenever a liberal gun control fruitcake like LT5000 suggests that handguns are too dangerous, I always reply, “Where are all the bodies? If handguns are so bad, then show me the bodies!”
He never has an answer.
‘muff said.
By LT5000
April 18, 2008 3:31 PM | Link to this
Foreskin,
I said that? Then I guess I better turn in my CCW permit.
LT5000
By Stone
April 18, 2008 3:56 PM | Link to this
Ignore him LT5000, he’s a wannabe comedian with too much time on his hands. If he’s not calling people names he’s posting gibberish no one understands. Ignore him and hopefully he’ll go away.
By Political Foreskin
April 19, 2008 8:15 AM | Link to this
Well!
By Miller
April 19, 2008 11:04 AM | Link to this
Lt5000, you know that political foreskin was riffing with you and you riffed back admirably and the whole thing was entertaining. Stone didn’t get it, but that’s okay, Stone has an important contribution to make here, and he’s free to make it, unmolested by any troll.
By Stone
April 19, 2008 5:50 PM | Link to this
Oh how cute, Miller you must be foreskin’s special little friend taking up for him. Sweet!
By Chad
April 22, 2008 12:57 PM | Link to this
I don’t believe the station’s profit is 2-3 cent per gallon. Is that supposed to make us feel sorry for them? What other business runs on less than a 1% profit margin?
By Jeff
April 22, 2008 7:13 PM | Link to this
LT 5000 needs to get off this blog and pay more attention to the news. The supply is there and is not causing the increase in the price of oil. It’s the falling dollar. What is causing the falling dollar? Our own greed and stupidity is causing the fall. There is a lot of manipulation in the US including Oil and Gas Companies, Banks, Mortgage Companies, etc. The list is endless. It’s also our own greed that is killing the dollar. LT5000 only believes what Bush and the companies tells him.
By hop
April 23, 2008 5:52 PM | Link to this
the real reason we have high gas prices is NOT the oil companies,but the high demand for oil in emerging markets e.g.china and india.
i know many poeple like to treat the oil companioes as whipping boys but they are just a middle man in the process and they have no say involving price.
the other reason is the lunatic fringe envirommentalist who have taken over the socialist/dems party who have stopped the exploration of oil/gas in alaska,off the coast of california,florida to name a few.
the USA has much oil/gas,but thanks to hilliary,obama and their elk, the drilling for oil in our country has been significantly curtailed.
we have 230 year supply of coal that can be today converted to fuel,but the dems and wacko environmentalists say no.
when are we ever going to wake up and start asking the right questions,such as why are we not drilling for oil where there are huge deposits in and around the america.
fossil fuel will be with us for a long time and if you don’t believe that you are in for a rude awakening.
wake up america before the dollar reaches zero value because we import so much oil from the idiot in colombia.
By Tom
April 23, 2008 6:45 PM | Link to this
hop, it’s greed and the falling dollar. Are we running out of rice? Quit repeating Republican propaganda. George Bush has used the Republican way to help our greed damage this country.