Some gas stations in metro Atlanta have reached a tipping point.
Selling regular unleaded at $3.99 a gallon, with a tax hike of at least 2.8 cents a gallon taking effect this weekend, they face a decision: Do they eat the tax to hold the price below $4, or go past that psychological barrier?
“It’s human beings’ way of looking at stuff,” said Allen Painter, president of Rocket Fuels, owner of 12 metro Atlanta gas stations. “Even if it’s $3.99, they’re thinking $3, they’re not thinking $4. It’s like adding $1 more.”
The way gas is priced, the change is just a tenth of a penny. On Thursday, 18 gas stations were at $3.99 and nine tenths a gallon, and holding.
Painter, whose stations were selling regular unleaded between $3.85 and $3.95 a gallon, said he is wary of $4-a-gallon territory. But unless his price to buy gas falls, he said, the tax jump that goes into effect Sunday will leave him no choice. The increase comes because of a tax structure that requires an increase when gas prices rise more than 25 percent in a six-month period.
“That will push us over the $4 line,” he said.
The priciest stations and the least expensive are wary of rising prices, saying they depend on consumers spending money in their stores to make a profit — it doesn’t come at the pump.
“People only have so much discretionary money to walk around with,” said Mike Thornbrugh, public and government affairs manager for QuikTrip. “It will affect sales and affect them negatively.”
Some stations take a loss on fuel, banking on food and drink sales to stay on top of rising wholesale gas costs, said Kevin Koshy, office manager for MRM Energy, owner of 16 BP stations.
He said his company normally prices gas at 8 cents over the cost of the gas and credit card fees. Now, to stay competitive, it’s cut that margin to 4 cents, he added.
For now, stations at or near the $4 mark are the small minority. In metro Atlanta, 1 percent of the region’s stations were at $3.99 a gallon Thursday, according to the Oil Price Information Service, and just over 2 percent were at or above $3.90. The average: $3.77.
If mainstream prices cross into the $4 range, OPIS chief oil analyst Tom Kloza said he expects demand to drop.
He estimated it cost gas stations between $3.85 and $3.90 a gallon to buy gas wholesale on Thursday. Kloza expects some stations to take a short-term loss or reduced profit while hoping prices will slide so they can avoid hitting $4 a gallon.
If prices hold or rise further after the tax increase, “there’s no choice” but for retailers but to raise prices, he said.
Driver Anne Marino of Atlanta said she’s more concerned with the general price trend than with a penny difference.
“I know the difference between $3.99 and $4 is one cent,” Marino said. “It’s still not like I can find cheap gas anywhere.”
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