By: Robin Ford Wallace, Reporter
“I just think
we’re getting gouged and I don’t know why.”
Thus spoke Gene
Carter at a recent interview on the subject of gasoline prices in the fair city
of which he had served multiple terms as mayor. Why, he asked, were gas prices
so much higher in Trenton than they were anywhere else around?
“Sunday I had
to go to Ringgold, so when I got off I-75 and turned down on 2-A, I started
writing down prices of gas along there,” Carter told the Sentinel. He handed
over a slip of paper showing that gas prices in the Fort Ringgold/Oglethorpe
area ran consistently 20, 30, 35 cents less per gallon than back home in
stations were even lower. “I ended up buying gas on South Broad at $3.19,” said
When Carter got
home, he Googled gas prices locally and printed out the results: Wildwood,
Rising Fawn and Sand Mountain prices were not as good as Fort Oglethorpe’s but
not as bad as Trenton’s. “There’s something wrong,” said Carter.
always so, he said; the Trenton BP used to have the best gas prices around.
Then, suddenly – maybe four or five months ago, he thought – everybody seemed
to go up at once. “Seems like they’re
all together to keep prices high,” he said.
As might be
expected, the former mayor is a loyal Trentonian and Dade Countian, and he
prefers to trade locally so that the city and county benefit from the sales
tax. But at $3.59 a gallon, who can afford loyalty?
Carter says he
doesn’t advocate a formal boycott of Trenton stations but that filling up
elsewhere is the commonsense solution. “If people would wake up and quit buying
gas here, the prices would finally come down,” he said.
The Grand Gas
bade the Sentinel to go forth and discover what could be discovered about local
gas pricing. Thus began the Sentinel’s Grand Tour of Dade gas stations, an epic
journey from mountain to valley and north to south, and here is what it reaped:
perception that gas is cheaper at the Rising Fawn and Wildwood exits is not
precisely correct. On the Sentinel’s
county sweep, which took place on Aug. 28, the lowest regular unleaded gasoline
price in Dade recorded was $3.35 per gallon, which was offered by both the
Pilot Travel Centers in the county, which are in fact located in Rising Fawn
and Wildwood; and that price was matched by the RaceWay franchise, also in
Wildwood. Furthermore, the independently owned Quick Mart in Rising Fawn was in
the same general range at $3.37 per gallon.
But so was Red
Ace in Trenton, at $3.36. Red Ace, also
independently owned, opened only in July and its prices do not yet show up on
Internet searches, but its regular unleaded prices significantly undercut those
of the other gas stations in Trenton proper during the week or two the Sentinel
researched this article.
stations are owned by Pilot Flying J, a corporate giant formed by the June 2010
merger of what were already two of the biggest fuel sellers in the nation,
Pilot Travel Centers and Flying J. That corporation is, incidentally, the one
currently embroiled in a federal investigation into a rebate-stealing scandal
that is currently plaguing Tennessee Gov. Bill Haslam, whose family business
Flying J is.
operator Sunny Desai, who runs the Rising Fawn Quick Mart across the interstate
from Pilot, described the difficulty of competing against a company so much
bigger: “They’ve got cheaper prices because they own the gas,” he said. “We buy
from the distributors.” To stay in the running, he said, he must on some days
sell gas at an actual loss.
Just as the two
Pilots priced consistently from one end of the county to the other, so did
stores owned by the other two big corporate chains represented in Dade County,
Mapco, which owns the three BPs, and The Pantry, which owns the two Kangaroo
something interesting: The Pantry is a 1,550-store chain and Mapco a branch of
massive Delek US Holdings, which owns refineries as well as trucking
facilities. But despite their greater market power, the chains sold gas at a
higher price than many of the independents. The $3.49 offered by the three
Mapco BP stations – one each at Wildwood, Rising Fawn and Trenton – was somewhere
in the middle of the Dade range, but the $3.51 charged by the two Trenton
Kangaroo stations was the highest in the county.
Gas brands do
have something to do with pricing, the station owners interviewed by the
Sentinel agreed. Though many gas stations sell generic, unbranded gas, some
offer familiar brands such as BP, Exxon and Citgo, all of which boast their own
gas treatments and have their own believers.
Liz Forshee, who with her husband, J.P., runs Forshee’s Chevron, says she
proved the superiority of the Chevron brand when, out of town, she once filled
her tank with something else. “It was unbranded at an El Cheapo store, and I
lost four miles per gallon,” she said.
Now, as to
whether all the Trenton gas vendors are “together,” as Gene Carter postulated,
conspiring to keep prices high, the short answer seems to be: No. Not the
stores receive their pricing from on high, and independent J.P. Forshee says he
sets his without thought of competition. “I set my price at a fair profit and I
try not to worry about what the rest of them does,” he said.
But at Red Ace,
which is up 136 West a ways, across from Back Valley Road, owners Seth Houts
and Cindy Shaw are competing fiercely, trying to draw customers away from the
interstate exit stations in Trenton with their lower prices, as advertised by
their “Don’t Pass This Gas” signs at the roadside.
They and all
the other independents agree – “People don’t understand,” said one after
another, and some produced invoices in proof – that station owners make little
if any money on gas. Rather, they prepay the hefty federal, state and local
sales taxes on gas when they buy from the distributor, add a few cents’ profit
for themselves – or not, depending on who’s competing next door – then hope to
God customers will come inside and buy beer or play the lottery.
Red Ace’s Seth
Houts says he’s underselling the other stations by settling for less profit per
gallon, but even at their higher markup his competitors aren’t making a
killing, either. “Even at 20 or 30 cents, 40 cents over what they’re paying for
it, the percentage is so much less on gas. They’re making 5 percent or 4
percent or something crazy,” he said. “Most places wouldn’t even carry an item
if they’re not going to mark it up 30 percent or 35 percent.”
they do make on gas sales, all the independents moaned, is further eroded by
credit and debit card fees. Card issuers charge the merchant a per-swipe fee as
well as a percentage of the sale.
accounts, what drives Dade’s higher gas prices to the consumer is what
distributors charge the station. Dade operators named a variety of distributors
they buy from – Owenby, Jet Oil, Tri State – but Seth Houts said he checked
with three when he opened Red Ace a month ago and all offered basically the
same wholesale, or “rack” price, as it’s called in the industry.
much who’s nicer on the other end of the phone and is willing to work with you
better than the price, because any of them are going to sell at about the same
price,” he said. “We’re talking half a penny.”
distributors charge more in Trenton than in the unincorporated county, and here
is his theory why: “Trenton is considered a town and not just an exit, whereas
Wildwood and Rising Fawn are just exits,” he said. “Travelers are more likely
to stop here because we have a McDonald’s, we have a Krystal.”
But all the
other independents disagreed. The entire county may pay more, they said, but
that is because of its general geographical “zone.” Distributors charge more or
less from zone to zone, they said.
Houts buys from
Mapco, which delivers several brands of gas as well as its own labels and is
used by several local stations. So the Sentinel called Mapco to ask about “zone
prices” and eventually spoke with Keith Johnson of Delek, as mentioned above
Mapco’s parent company, headquartered in Brentwood, Tenn.
Johnson said it
was not the company’s policy to comment much on prices but that obviously tax
differences from state to state affect per-gallon figures. There were in fact
different prices in different geographical zones, he said, but those were based
on that most hallowed of American institutions: The Market.
“Each market has a different supply and demand
situation which factors into pricing,” said Johnson.
Fort Oglethorpe were obviously larger markets with different supply/demand
ratios, he said. As for Houts’ town-v.-highway-exit theory, he wouldn’t
pronounce on that, except to say, “There you go back to the same question.”
Supply and demand, that is.
with Largemouth Communications, which fields the media for The Pantry, owner of
the Kangaroo stations, answered the Sentinel’s pricing questions via an emailed
“Convenience retailers set a target retail
price based on the wholesale cost of the fuel, and operating costs associated
with selling the fuel. Prices are reviewed on a daily basis. We strive to
remain competitive in every market.”
emailed back to ask if a local boycott of the Trenton stations would cut any
ice with The Pantry, or whether the stations depended more on interstate
traffic and would even notice.
As of press
time, Yates had not answered.