Expert explains ‘price volatility’ at West Michigan gas stations

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GRAND RAPIDS, Mich. — Colder temperatures are heading our way, and while some are sad to see the summer weather go, there’s one thing to look forward to:  gas prices should start to drop soon.

However, locally a lot of people have seen just the opposite happen in the last week.

There’s not just one straightforward answer to why this is happening; instead there are several factors that determine gas prices. Ultimately, each individual gas station, whether they belong to BP or Mobil, will decide their price.

Everyone with a car needs to fill up to get themselves or their family from point A to point B, but you may not know know why prices are fluctuating several times a day.

“It’s beyond madness right now. Last week it was $3.19, now it’s $3.50. Wow,” said Crystal Hobson, a regular customer at BP.

Hobson, like thousands of others, depends on the price being reasonable so she can get her kids to school and herself to work.

“I usually can put in $20, and get half a tank; now I put in $20 and I’m just reaching a quarter tank,” she said.

There’s nothing surprising about gas prices going up, but as of Sept. 15 they should be falling because federal regulations allow winter blend gas to be allowed back into gas pumps.

“So at this time of year we see gas prices go down and it’s for a couple of reasons. We have cheaper gas being put into the market, and we have much less of a demand during the fall driving season,” said Gregg Laskoski of Gasbuddy.com.

Laskoski says West Michigan isn't seeing that price drop yet.

“Michigan and the entire Great Lakes region have more price volatility than any other place in the United States. You often have dominant retail chains that lead the pricing and lead competitors to increase and decrease prices,” he said.

Every gas station owner is playing a gambling game with several different factors of every minute of every day when they set gas prices.

“Well basically gas prices fluctuate every single day, so every day we get a different price. Some of the factors are holidays, and seasons. Another thing that plays out is the competitors,” said Vik Singh, the owner of the BP gas station on Division and Hall.

Singh said he’s always looking to Marathon and Speedway to see where they set their prices. He changes accordingly, sometimes up to three or four times a day.

“Gas is sold on pennies on the dollar. There’s not much money in it. We make our money inside. Gas is the number one thing we need to pull people in,” said Singh.

Laskoski says dominant gas station chains try to aggressively make up for lost profit on goods in their stores.

“They are hoping what they are losing on gas prices they are getting on beer, chips, soda,” he said.

The lowest price in Grand Rapids as of Tuesday evening is $3.38. You can find that price at Eastern gas station. They say they set it that low because they have old pumps without credit card machines on them.

They also try to stay at the low end of pricing because it brings in more customers.

There’s a 17 cent price differential between the lowest price and the highest price in Grand Rapids as of Tuesday night.

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8 comments

  • John Stegmeier

    Interesting, but I don’t think it really explained the rise we saw. I saw the price in Greenville go from 3.06 to 3.49, it had been below 3.10 for a couple days. That is almost a 15% rise. One gas station kept the price down for a couple more hours, but it soon followed suit. The important questions that your article did not address are; Who actually owns the gas in the tanks? and Who distributes the gas to the stations. We are well aware that the stations set their own price and that the station typically has a very low profit on the gas. The individual stations have little power to vary their price if they get the gas from the same distributor, especially if the distributor owns the gas until it is pumped to the consumers vehicle. I have heard that, and it would be a better explanation as to why the prices of various gas stations change simultaneously.

  • Rod Bessey

    Experts my ass! They are either dumber than the hose that gas comes out of or the biggest liars in the profession. Every week there’s an excuse, somebody drops a quart of oil at Meijers and bam, 25 cents a gallon increase.

  • Gas Geek

    Generally, the retailer owns the gasoline – he has to pay cash for it when it’s delivered. Because of that, if there’s even a hint of a coming wholesale price increase, the retailer will increase the price of what he owns in order to pay for the next delivery. It’s also worth noting that we’re near the end of a fiscal quarter. Why does this matter? The vast majority of gasoline sold in Michigan comes from one refinery – the Marathon Petroleum refinery in Detroit. Individual brands add their own additive package, but the basic gasoline pretty much all comes from one place. This gives Marathon Petroleum a huge influence. Given the way retailers have to pay for the next shipment, simply cautioning that prices out of the refinery might go up will push retail prices higher. Equally as important: Marathon Petroleum also owns the Speedway chain. The Speedway chain’s pricing has a huge influence on other retailers’ pricing. Now, this is just speculation, but could it be possible that Speedway’s profits aren’t quite to this quarter’s goal? Pushing retail margins up, even for a few days, might be just enough to allow the company to make its profit goals and guarantee the executives’ bonuses. Speedway, of course, won’t ever talk about this, and any open discussion of how prices are set is considered illegal price-fixing.

  • Mark Reiman

    Yes, there was no answer to the 30 to 40 cents a gallon rise overnight….and I find it hard to believe every station owner followed suit because his neighbors station went up…this is out & out price gouging. Maybe this is something TV 17 or other station can do their ratings gathering “INVESTIGATIVE REPORTING” on. Every time a report hits the media about ” LOWER GAS PRICES”, stations in my town pop up 30 cents a gallon. Seems every Thursday the pop up just before the weekend or because some still get paid on Thursday’s. I worked at a station in 1975…that owner made sure we did NOT go up until after we closed and before a night drop of 10,000 gallons or more of NEW gas at a higher price was delivered. Now it is done by a computer at the home office of whatever brand and boom!!!! you have a new, higher price anytime 24 hours a day.

  • Rick Smith

    If the gas stations make all their money selling stuff in the stores then why wouldn’t they keep lower gas price you would have a lot more customers in your stores. The whole industry from top to bottom is crooked! The spike in wholesale gas prices Friday that caused Mondays 40 cent plus increase was not warranted at all just plain greed no excuses!!!

  • maj1123

    Hogwash, It’s just price gouging. I lived in GR my entire life except once, 4 years ago when I moved to SC for a year and now I’m back in SC. The price of gas here is always lower than Michigan but just this last week was running only a few pennies cheaper at around 3.15 per gallon. Yesterday, when gas was spiking in Michigan, it was hitting $3.03 here on the coast. I don’t care how many pennies on the dollar a station makes, Michigan has some of the highest fuel taxes. And I just had to fly up there last week for a doctor appointment and it occurred to me on the way from Detroit to Grand Rapids, just how crappy the roads are. I love Michigan, it was, is & always will be “home” but the only thing raising gas prices around there is the media. If the media starts announcing gas prices will go down, they go down, if the local weatherman or anchorwoman makes the comment, “fill up your tank, gas prices are going up” they go up. Almost like the media is giving the stations the ok to raise the prices. I’m not a political person and I don’t care to argue with anyone on this topic.This is just my opinion based on me living there 44 years out of 46.