Wednesday, December 17, 2003
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Wednesday, December 17, 2003 |
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Many question higher gas prices in Fayette By JOHN THOMPSON Peachtree City convenience store owner Mike Hyde has nearly seen it all in his 30 years in business. Last week, Hyde, who owns the Pit Stop chain of convenience stores, had heard some grumbling about gas prices in Fayette County and did a road trip to Clayton County. When he came back, he immediately told his managers to drop the price from $1.34 to $1.29 to get more in line with the overall market. “Sometimes you just get lulled into sleep with the local market and you have to check other locations. Plus, our cost price on gasoline had also dropped on Friday,” he said. Hyde said some folks tend to think that price-fixing is going on, but offered a rhetorical question in response. “If that’s true, why would we ever lower prices? It’s been as high as $1.49 this year, and it didn’t create an economic depression in the county, so why am I now selling it for 20 cents a gallon cheaper?” he said. The Ga. Highway 85 corridor through Riverdale has always had the cheapest gas on the Southside, said Ellis Crook, who operates several businesses, including a convenience store, in Senoia. Crook monitors the prices in his area and tries to make sure that he stays competitive, but both Crook and Hyde talked about the many variables in setting their gas prices. Hyde said he generally lets the managers at his five stores set their prices, based upon their viewing of prices when they go to the bank. But setting prices also involves the adding of the various government taxes, along with the cost. “We’re lucky to make a nickel a gallon,” Hyde said. So, how do many stores, such as Racetrac and QuickTrip sell gas at a much lower price? “It’s all about volume. If Racetrac can make their margin two months out of the year on gas, they don’t care what they sell it for the other 10 months,” he said. Selling gasoline in Fayette County also comes with some unique restrictions. “There are just some severe liabilities on the advertising we can do in this county,” he said. If you travel Ga. Highway 74 to Interstate 85, you’ll notice the large signs advertising gas prices. But in Peachtree City and Fayetteville, the size of signs are much smaller. “You can only have a 35 sq. ft. sign in Peachtree City, and you want to advertise more than just gas prices,” he said. Hyde is well-acquainted with the sign law and high gas prices in the county. When he initially got into the convenience store business in the late 1970s in Peachtree City, businesses were not allowed to post gas prices on signs because of the sign ordinance. “I took that law to court, and we eventually won the case in the Georgia Supreme Court. They said the law was a violation of free speech,” he said. In addition to operating his convenience stores, Hyde also acts as a wholesale distributor for Citgo and Phillips 66, so he’s keenly aware of the volatility of the petroleum market, and said you will generally have price laggards and leaders in the market. “We used to have a retailer that was consistently the highest in the area. But they’ve (Amoco) gone down in price, since you don’t see their name as prominently on signs anymore,” he said. Crook has been on the retail end of the business for 50 years, and tries to make a dime a gallon on gas at his one location, but sometimes it’s difficult to compete with some of the “big boys” like Racetrac and Costco. But as Hyde points out, the local independent guys offer convenience that the Costcos of the world can’t do. “Many of our stores are open 24 hours a day, seven days a week. That’s why they’re called convenience stores,” he said. Although some people may gripe about the prices, the Atlanta metro area still has one of the lowest prices in the country. Last Monday, the national average, according to the Energy Information Administration was $1.47 for unleaded gas. On the west coast, consumers were paying an average of $1.63 a gallon. What does Hyde see in the future for the county’s gas retailers? “It’s really getting harder for many of the moms and pops to deal with this volatile and competitive market. If you buy it for $1.23, but have to sell it for $1.22, it’s tough to make it.”
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