EZ Go Gas (Lincoln)

krill

krill

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Completely random question, but it's been bubbling in my head every since these two stations opened in Lincoln (84th & Leighton, 27th & O).

How are they able to consistently undercut every other gas station in the city? For instance, right now they are selling 87 octane for 2.12, which is 14 cents less than even Sam's club. Do they pretty much sell fuel at break even, or even a narrow loss, then make their money on the convenience store and car washes?

I've never really understood the economics of selling gas.

 
I would say "yes"...

My aunt and uncle owned a small gas station in my hometown, 1500 people. Customers always asked when they would install pay at the pump, they responded by saying "when we are tired of paying the bills". They counted on the sales that go with the gas and the emergency groceries (aka. $6.00 gallon of milk that expires in 3 days)

Edit: They also talked about the danger in speculating gas prices by selling cheap now because you think you will buy back lower. I used to do this with copper at my old job. It can work for you, but usually works against you if you don't have a cushion.

 
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I don't understand the economics of selling gas either. We have a couple U-Fill It stations in town and they are always 5 to 10 cents cheaper than anybody else. They don't have crap for convenience store sales either. All I can figure is they are willing to operate on a lot tighter margin. Their buildings and pumps are junk.

Or maybe they water down the gas.....

 
Ive known a lot of people who have owned C-stores. They do not make money on gas. Its all about everything else.

 
Being very familiary with a number of different sized gas station operators (Mom and pop stops to large chain C store operations from being in the banking industry), I can say that in my experience, most gas stations until the last few years operated on about a 5 to 10 cent margin depending on the local competitive market. In the past several years though, margins at stations have increased considerably to as much as 20 or even 30 cents a gallon. So, I would say that even though there is an 14 cent variance, the EZ go may still have sufficient margin for some profit but would also need some good C store sales and exceptionally low overhead costs to be sustainably profitable longer term. Whole sale prices can vary widely week to week in the fuel markets as well as supplies move up and down and so on (often not publicized widely so you might not ever hear of the swings in the wholesale fuel prices). You would expect in a large city market that prices would be pretty close across the competition as well but consumers are less price sensitive (a dime a gal is not such a large sum when you only buy 10 gallon as many people have become trained to not fill up because the total cost exceeds their funding). In other words, many drivers simply cannot afford to fill clear up, opting to put in $20 worth and not simply pumping until full and topping off as in the good old days. Just my thoughts and experience.

 
84HuskerLaw said:
Being very familiary with a number of different sized gas station operators (Mom and pop stops to large chain C store operations from being in the banking industry), I can say that in my experience, most gas stations until the last few years operated on about a 5 to 10 cent margin depending on the local competitive market. In the past several years though, margins at stations have increased considerably to as much as 20 or even 30 cents a gallon. So, I would say that even though there is an 14 cent variance, the EZ go may still have sufficient margin for some profit but would also need some good C store sales and exceptionally low overhead costs to be sustainably profitable longer term. Whole sale prices can vary widely week to week in the fuel markets as well as supplies move up and down and so on (often not publicized widely so you might not ever hear of the swings in the wholesale fuel prices). You would expect in a large city market that prices would be pretty close across the competition as well but consumers are less price sensitive (a dime a gal is not such a large sum when you only buy 10 gallon as many people have become trained to not fill up because the total cost exceeds their funding). In other words, many drivers simply cannot afford to fill clear up, opting to put in $20 worth and not simply pumping until full and topping off as in the good old days. Just my thoughts and experience.
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All this is true.

I deal with fuel haulers on a daily basis and Casey's drivers will flat out tell you that the stores make all there money off of food sales and such.

Just a hint for those that live close to a pipeline loading terminal such as Magellan or Conoco, south of Lincoln. If you drive by and there are trucks backed up everywhere and the place is busy as hell, go get gas. When it is like that, it usually means that prices will be going up the next day. The market price locks in at 6pm and stations will usually change there prices either that night or very first thing in the morning.

 
I must be the only one that really doesn't pay that much attention to the difference in prices between stations. Now, 14 cents is quite a bit and I would probably notice that. However, I know people who will drive across town because one station is 3-4 cents cheaper and they will make a big deal about it in conversations. OK. If I put 20 gallons in my tank, that 4 cents equals 80 cents. Really? I guess I have more important things to worry about and my time is worth more than driving all the way across town for 80 cents.

 
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