Volunteers post gas prices on sandiegogasprices.com

“Arco maintains a price floor”

Kenneth Reisig belongs to a bevy of volunteers who post retail gasoline prices on sandiegogasprices.com. The resource belongs to GasBuddy Organization Inc.’s collection of websites that allow consumers to compare gas prices in cities all over the United States. “It’s not that hard to post prices,” Reisig writes in an email, “and it would be nicer if a few more people would take the little bit of time to help out.”

Reisig lives in San Carlos and keeps an eye on three gas stations at the corner of Lake Murray Boulevard and Navajo Road. “Competition plays a great role in prices,” he says. “Apparently the person [who] makes the decision to raise or lower the prices for the Exxon station goes home at a certain time on Friday night, and then Chevron will go out and lower their prices to stay lower on the weekend. The Exxon station keeps their prices where they’re at until Monday, and then they adjust to beat the Chevron station by a penny or so, so that they are the lowest. I think that, without the competition, the Exxon station would be much higher. The Arco station affects the prices also, but not as much. Arco usually runs about ten cents lower than the other two stations.”

But Reisig usually buys his gas elsewhere. Sandiegogasprices.com has a map of the lowest prices in town that allows him to find the stations he frequents at the most opportune time. “I have a Shell credit card,” he says, “where I get a 5 percent rebate. So I tend to watch the Shell stations to see what they are doing. This is where it’s nice to have San Diego gas prices around. Even though I don’t go past the Shell stations as often as the [stations] on Lake Murray and Navajo, I can get on the Internet and see what the price is before I make the drive to the Shell station.”

Without the rebate Reisig gets with his credit card, he is unlikely to find a good price at a San Diego Shell station. He probably won’t do well at Mobil or Chevron stations either. On sandiegogasprices.com’s home page, there are two revealing lists: the 15 lowest prices for regular unleaded gas in San Diego County and the 15 highest. For both lists, most prices have been posted within the previous 24 hours, with some coming in only an hour or two earlier. On the last day I looked, there was not a Shell, Chevron, or Mobil station among the lowest priced. On the highest-priced list, there were five Shell stations, three Mobils, and two Chevrons.

Across San Diego County, prices can vary over a dollar. Early last week, the lowest price for regular unleaded was $3.48 at an Arco station in Imperial Beach, while the highest was $4.69 at a Shell on the corner of Euclid Avenue and Division Street in National City.

Vicki De Mull, another gas buddy, lived in the Fallbrook area until July, when she moved to Ramona. In her view, the move took her from the most expensive gas-price area to the least expensive. “In Fallbrook and Bonsall,” De Mull tells me by phone, “I think it’s the low volume of gas sold that’s responsible for high prices. The lowest price was at an AM/PM station, and it was higher than at most of the stations in Ramona.” De Mull cites greater competition among Ramona’s stations as the reason for its low gas prices.

“I wouldn’t call it exactly a gas war,” says De Mull, who has been posting to sandiegogasprices.com for two years and says she follows a strict budget, “although the Stars station took their diesel prices real low a little over a month ago. [Sandiegogasprices.com reports on prices for diesel and premium gasoline as well as regular unleaded.] So a truck company in Chula Vista brought almost its entire fleet up here and pumped all night. The manager at Stars told me they spent over $12,000.”

A comparison of two Valero station prices, however, indicates that volume and competition aren’t the only factors governing gas prices. Early last week, the Valero in Ramona offered regular unleaded for $3.69, while the price at the Coronado Valero was $3.99. An additional cause for the difference was likely “zone pricing.” Oil companies establish zones of higher and lower prices based on numerous criteria, including average income in an area.

Jason Toews, who cofounded GasBuddy Organization, Inc., in 2000, tells me by phone from his headquarters in Minnesota that zone pricing can cause price variations of as much as 20 to 30 cents per gallon. “A lot of zone pricing is simply what the refineries think the market will bear in an area,” he says. “If it’s an affluent neighborhood, people tend to be a little less price sensitive and a little more focused on factors like a convenient location or a station having a nice car wash.”

Is the proximity of some stations to the border, I ask, likely to affect prices? I am thinking of Imperial Beach, where gas wars have kept prices lower than the rest of the county. Wouldn’t Pemex prices in Tijuana tempt at least the owners of motor homes to fill empty tanks? Toews cites hassles, such as having to go through customs, as making gas prices on the other side of a border unlikely to influence consumers.

For an external perspective on GasBuddy’s efforts in San Diego, I call Charles Langley, an oil industry analyst for the local Utility Consumers’ Action Network. “Boy, I’m glad you called,” he tells me. Langley carries a bit of resentment toward GasBuddy for commercializing an idea that he says he and his brother Robert launched as a nonprofit effort in 1996. “We had the first cheap gasoline website in the country at fueltracker.com. Last year, the webmaster, who happened to be my little brother, died unexpectedly. We were able to keep the site limping along for about six months, and then everything imploded. I’ve recently been rebuilding the website. It will be running again soon.”

Langley does agree with Toews about the heavy hand that zone pricing lays on gasoline markets. What keeps prices low in some areas, however, is a large number of independent stations, which the major companies have to compete with. According to Langley, local independents commonly get their gas from a “spot market” in Los Angeles, which is created by brokers buying up the surplus gas of refineries and “splash blending” a little ethanol into it. The process can bring the wholesale price for the independents down as much as 30 cents.

“What often happens,” Langley tells me, “is that a brand-name refinery like Unocal, Shell, Chevron will subsidize one of its dealers in a very competitive market like Ramona so that that dealer can underprice his gasoline, and they can use it to slowly strangle the independent guys to death.

“The message is that, if you, Mr. Independent Dealer, price your gas more than two cents below the nearest Arco, you will be disciplined. If you go too low, we are going to hurt you. You are vulnerable, and you better watch out. We’ve got the money to sell gas at what for you would be a ten-cents-a-gallon loss. Even Costco toes the line. If you go and look at an Arco and a Costco, the Costco will be two cents cheaper than the nearest Arco, unless there’s been a rapid price change. Sometimes you’ve got to give them a few hours to react.

“Arco maintains a price floor,” Langley continues, “and they can raise or lower that price floor at will. For Arco, which is a cash-only station, the enemy has always been these little unbranded independents, and they’d love to see them go. They just see them as ticks on the belly of the big-oil cash cow.”

Langley tells me that the Utility Consumers’ Action Network “used gas spotters for years,” even before launching fueltracker.com. When gasoline cost only $1.35 a gallon, the concern on local residents’ minds was that gas prices were 25 cents higher here than in Los Angeles. “Now, over the years, we’ve seen the gouge gap diminish to just over a few cents, which is pretty much accountable to what it costs to move the stuff through the pipeline,” says Langley.

Today, people want to use the Internet to find the best gas prices they can. By helping them do that, sandiegogasprices.com “has become a great commercial success,” says Langley. “Sandiegogasprices.com is not a nonprofit organization,” he explains. “And I’m troubled by some of the products that have been advertised on their website, such as fuel-saving devices. When people go to a cheap-gas website, it’s because they’re hurting financially. Then they see the advertisement for a pill that’s going to magically give them 40 miles per gallon.”

Such ads aren’t the only kind on the site. It also displays ads for credit-card companies — and even Nordstrom, which doesn’t seem to figure, given the site’s appeal to people who are supposedly in financial pain.

Strict financial limitations, however, do characterize the lifestyle of Dawn DuRall. She is a mother of three, and her husband is disabled. DuRall uses a minivan for errands, school pickups, and trips to the doctor. She also works full time in Point Loma. The DuRalls live in North Park. “I post prices on sandiegogasprices.com for gas stations along or near University Avenue in North Park and in Point Loma. But I’ve recently been using buses and the trolley to go to work. What I discovered when gas prices reached $3 a gallon was that it’s more economical to use public transit than drive our minivan. And we don’t have enough money right now to buy a more fuel-efficient car.”

DuRall uses the sandiegogasprices.com map to find the lowest prices she can before making a trip across town or even out of town. “For instance,” she tells me, “when we want to go to Los Angeles or Orange County, I don’t have to rely on gas just off the freeway in Tustin, where it’s real high, but can locate a station three or four blocks further away that’s more reasonable.”

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