I Believe Consumers Can Affect Gas Prices

Winter is typically the time of year when we use the least amount of gas.  Travel is down because people aren’t doing the amount of vacation travel that happens over the summer, meaning that gas consumption is down.  Since demand is lower, this usually means that the winter sees the lowest gas prices of the year.

Not this year, so far!

I’ve noticed a trend that gas prices start climbing in advance of the summer season earlier and earlier each year.  It used to be that prices would start rising in April and peak around Memorial Day, then level off and start sliding down a bit after the Fourth of July.  The earlier part of those trends moved back a couple of weeks, and this year is no exception.

Gas prices here in Michigan started a pretty big upward trend around the middle of January.  Our normal station bottomed out around $3.29, and over the last month has gone up sixty cents!  That’s right, prices earlier this week stood at $3.89.

Even though we don’t typically spend a lot on gas since I have a very short commute to work (6 miles total each day) and my wife stays at home, limiting her mileage, I still keep an eye on gas prices, and I get very annoyed when I see stations raising their prices to the degree that they have.  I simply have no tolerance for prices jumping up 5-10% at a time (notice that when they do fall, it’s never more than 1-2% at a time?).  Last week, I filled up at $3.49 and when I drove home, the station price was at $3.79.

Virtually nobody else gets away with price flucuations like this.  Imagine if the government were to raise your taxes and adjust those to this degree.  Chaos!  Imagine if your grocery bill went from $75 to $90 over the course of a week for the same basket of items.  No way!  What if the new car you looked at last week for $30,000 was now stickered at $33,000 and the dealer just said ‘Eh, what are you going to do?’  I don’t think so!  And the best one of all, what if your boss came to you and said, here’s a 20% raise.  Enjoy it, but we’ll probably take it away.

Not in a million years!

None of those things happen but the gas prices going up and down and all over the map is somehow supposed to be perfectly acceptable.  It drives me crazy and is one of my hot buttons.  If I see the price go up and up, the first thing I’ll do when I get home is announce today’s price increase.  Then, I’ll go check Facebook or Gas Buddy forums and find…nothing.

Apparently, I’m the only one outraged these days.  Or am I?

It made me stop and wonder, is there any way that we can affect gas prices?

Don’t buy gas on Tuesday

Back when gas was first going through its big run-up a few years ago, people actually were outraged, and at least once a week, I’d get an e-mail proclaiming ‘DO NOT BUY GAS ON TUESDAY!’ Or whatever day happened to hit someone’s hot button.  The rationale is that a day of no sales would drop demand so quickly that prices would have to drop.

I’ve always thought that these were completely absurd.  First, people need gas and are just going to go get gas when they need it, more often than not.  Following this strategy would mean that people would have to fill up earlier than they might otherwise (not likely) or that they’d chance running out of gas (don’t think so).  Besides, nobody did it!  I’d drive by gas stations on so-called ‘Do not buy gas’ days and I’d see as many cars filing up as any other day.

Stop Driving

People say that one way to push down the prices are to drive down demand.  Do this by driving less.  Again, this one sounds great in principle, but it’s probably not going to happen.  When people write stuff like that, they must assume that millions of people get in their cars every day and aimlessly drive around for miles at a time.  If this were the case, then we could all at once cut out these unnecessary trips and gas prices would fall.

Unfortunately, that’s not the case.  While some of our driving could be curbed, the fact is most driving is tied to activities like going to work, going to school, going to the grocery store to buy food for your family, or other trips that simply can’t be cut off.  Delayed? Maybe, but not cut off.

Drive with better gas mileage in mind

Every time gases cross a mark (if they get to $4, just watch these e-mails start), you’ll get e-mails and blog posts talking about how we need to drive to improve our fuel economy.  Don’t gun it.  Coast up to stop lights rather than brake, so that you can perhaps not have to come to a stop, reducing your usage.  Drive 60MPH instead of 70MPH.  We’ve all heard them, but the fact is that people drive as they drive, and any changes like this are only temporary.  You’re not going to turn a speeding, tailgaiting jerk into a Sunday driver just by sending an e-mail.  Not enough to affect gas prices anyways.

Buy more fuel efficient cars

We’ve been improving the fuel economy on the average car for years, but still gas prices have not fallen.  Besides, reports now show that consumers are buying more full size pickup trucks than ever before, so while some focus on economy, by and large, I just don’t think this is a priority.  You’re not going to see the roads in the United States resemble those in Europe (filled with compact cars) anytime soon.  Again, good in theory, but a non-starter from a ‘can we really impact prices’ level?

My Idea: Stay Out Of The Gas Stations

Here’s an idea I’ve been throwing around in my head as the only possible way that I can think of that might actually impact gas stations.  Stay out of the stations!

Note, I didn’t say don’t go to gas stations.  I said stay out of them.  As I outlined above, you still need to buy gas, so continue to do so. But, where I’m going is to buy gas and then leave.

See, it’s a well known fact that gas stations make a majority of their money not from actually selling gas, but they make it from the convenience stores attached to said gas stations.  No gas station is every built these days without a big store attached.  Inside you can find your snacks, your soda, your coffee.  You can get newspapers and magazines.  Need washer fluid or some extra motor oil?  No problem.  Gum, candy, lottery tickets.  You bet.  Even beer and wine at many stations depending on what state you’re in.

It’s all very convenient, but what if we cut off that profit source?

See, gas station owners are well known for saying that they have no control over prices.  The prices are set by the distributors or parent company, especially for company owned gas stations.  I’ll focus on Speedway (or Speedy America depending on where you live) as an example, because they own all of their gas stations.  Speedway is the biggest culprit for raising gas prices with big gaps.  They don’t even pretend to wait for the next batch of gas to come in. They will see that the wholesale prices are going up and they’ll order all stations to do an immediate increase.

Don’t tell me that these stations aren’t making money.

What happens then is that gas stations surrounding Speedway will raise their prices as well.  At least where we live, Speedway is the first to raise prices 90% of the time.  Count on it.

Yet, every time I go in Speedway for any reason, I have to wait in line.  Not for people to pay for gas, but for people buying hot dogs and chips and all the other stuff I mentioned above.  What happens if those people all stopped going in?  What if people went to McDonalds to get their coffee? Or to the drugstore to get their newspaper?  Or…well, you get my point.

See, stations owners might have no control over gas, but I don’t think they actually do much about it when the prices go up.  If customers complain, they shake their heads and say that there is nothing they can do, but do you really think they get on the phone and argue the price increases?  No.

Do you think they might if they saw their convenience store profits cut in half?  I think maybe.

Do you think Speedway, if they saw their coffee sitting their going bad on the warmer instead of being sold, would be as quick to raise prices if customers stopped going into their stores when they decided upon a 30 cent increase for no particular reason?

I’m not going to say yes with absolute certainty, but I’m thinking it could have an effect.

See, if gas stations owners aren’t making money on gas, they really don’t care.  But if you hit them where it hurts, in the store, I believe they would actually take notice.

So, what do you say?  Can we start a movement to speak with our wallets and take the gas station convenience stores off of our shopping list when prices keep spiking up?  Or is my thought another waste of time just like ‘Do Not Buy Gas On’ days?

16 thoughts on “I Believe Consumers Can Affect Gas Prices”

  1. While I agree with many of your points and would love to see something like this happen, I simply think it’s not likely on a large scale. Our prices are sitting at $3.59 and they were below $3 about six weeks ago. I read some sort of explanation behind the sudden spike, but its crazy if you ask me.

    • I agree on both fronts. It’s annoying and there probably isn’t a lot we can do. But, you never know, right?

  2. This is what happens when you let an organization like OPEC speculate on the oil demand. I used to know a gas station owner and they really do make very little. It is not a lucrative business, but one that can last due to the demand for gas. Everyone on the back of the line makes the money. If you take your money out of their stores, they still don’t have control over the gas price. It is set by speculators based on the oil price and demand trends, not how much demand there is for coffee and convenience items. The only way to reduce gas prices is to reduce demand, which is something that will not happen full scale. The prices have risen early because they wanted to do it. They want the “high” season to last longer. Until you take the control of the oil out of OPEC’s hands, you suffer the wrath of massively fluctuating oil prices.

  3. Gas prices seem alot like the stock market. Any sort of fear of a storm or disruption causes an increase, whether or not it actually occurs is not the point. I am a fountain soda addict, so I do go into the convenience stores for that. What I see is mainly people buying energy drinks, cigarettes, and lottery tickets. It would take twice as long to stand in line at the grocery to buy them,even though that would also be less expensive. People are all about the instant gratification, so I don’t see a boycott of convenience stores as a very successful idea, although it is a good idea to think about. We love our cars in the US and unless gas goes up and stays past $5/gallon or some radical improvement in public transportation happens, I don’t see anything changing with gas consumption. I’m hoping by the time I need to buy my next car, electric options will be more readily available. I would love that idea.

  4. I see it as supply and demand. The whole sale price for oil has been increasing because our supplies are down. What bothers me is that if the wholesale price ticks up a nickel so does the retail price despite the fact the gas station has a full tank. The funny part is the price does not drop when the wholesale price drops as fast. When I replaced my last car I went with a very efficient car (hybrid).

    • That’s exactly my frustration. Costco actually will not raise their price until they get a new shipment of gas, at which point the price is tied to that gas. I wish other stations and companies were as ethical.

  5. I think that it’s unlikely that your decision to buy or not buy things at a gas station is going to affect the price of gas. If you look at the major components of gas prices, something like 65% is crude oil, 14% is refinement, and 13% is taxes. This leaves about 8% left over for everything else including transportation and finally station markup. There just isn’t enough room left for station owners to maneuver.

    I’m sure that some places mark up more than others. I live right next to a rip-off gas station, but the majority are barely making a profit.

    • It’s not at all about punishing the stations, it’s about having the stations use their voice to get those at the higher up level to notice. Especially at stations that are company owned.

  6. My car only gets 12 mpg, so I’ve been dying with these gas prices. Today it was $3.75! I wish we could organize something to stick it to the man, but I doubt it will ever happen. As far as the mileage on cars, they’ve had cars with 40 mpg since the late 70’s. They’ve had the technology for years, but they make too much money on gas to use it. Maybe I’m just a conspiracist, but Gas is just outright REDICULOUS!!

  7. While it would be nice to think that we could influence prices this way, it simply is not possible in this country. The market is world wide and supply and demand dictates pricing. The United States is now a net exporter of gasoline since companies can get better prices in foreign countries. Now you introduce the relative prices of currencies.

    Here is a graph of the exports:

    The only way to help yourself when it comes to high gas prices is to reduce your own personal demand or become an owner by investing in oil company stock.

  8. Demand will only affect gas prices a little because the oil market is much more complicated than movie hot dogs or coffee. Refineries which go offline and instability in oil producing nations are issues which most consumer goods don’t experience. Until there are viable alternatives to gas powered cars like hybrid and all electric vehicles we are all at the whims of the market.

  9. To be honest, I don’t think I’ve ever purchased anything in quite awhile other than gas at the gas station. I feel like the items are overpriced, just like at the convenience store. They pretty much are convenience stores with gas. I just buy gas, usually pay at the pump because I am a very impatient person and then go.

  10. These idea to help decrease gas prices if everyone participates. But too bad, some are just not that supportive enough and would rather go on their own way.

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