Gas price squeeze driving some stations out of business - News, Weather & Sports

Gas price squeeze driving some stations out of business

LOUISVILLE, KY (WAVE) - Tired of being called a gas gouger, an independent gas station operator responded to a WAVE 3 investigation that angered many viewers. We found neighboring gas stations that used to offer gas at similar prices now posting prices up to 57 cents per gallon higher than their nearest competition.

"We make money only inside. We do not make money on gas at all. Not a single penny," said Siva Gogineni. "All the time we have seen is paying from our pockets."

Gogineni runs one of the gas stations WAVE 3 watched over the past two months. He showed us the price quotes, something retailers are reluctant to do, when neighboring gas stations were selling gas more than 30-cents-per-gallon cheaper than him.

On November 16, Gogineni bought regular unleaded RFG fuel from the wholesaler for $2.84 per gallon. Add in 30 cents state tax, 19 cents federal tax, 11 cents for credit and rewards cards, and 5 cents for freight and markup, and the cost to him totals $3.48.

He was charging $3.39. That's a nine-cent per gallon loss, and a likely 40-cent per gallon loss for his competitors.

"It's what we call inversion, where your retail price is dramatically lower than what your cost is," said Miller Oil Company Owner Charlie Miller.

Miller is one of the wholesalers who sells gas to independent retailers. He says what WAVE 3 recorded was an unprecedented squeeze by the major chains on smaller stores by pricing gas at more than 30 cents a gallon below cost for a sustained period to try to change customer loyalty and change the market.

"They are so big, they can spread this loss out in this area through an outlying area where they are making money," said Miller. "What happens over a period of time, this individual dealer loses his customer base and eventually he's going to go out of business. That forces us out of business as a small individual business person."

Gogineni says it's working because he's going out of business next month.

"We are going out of business because of this hassle here. It's hard for us to run the store like this," Gogineni said.

Copyright 2012 WAVE News. All Rights Reserved.

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