WEST NORRITON >>It’s not exactly 1973 again, but gas prices are currently at their lowest in seven years.
We’ll probably never see 39 cents a gallon one more time — just as we’ll never again see Pink Floyd perform “Dark Side of the Moon” for $6 at the Philadelphia Spectrum on a stopover on the band’s ’73 American tour.
But at the West Norriton Township Wawa in Montgomery County on Tuesday customers were gobbling up $1.99-a-gallon gas like it was a gift from the past.
“I heard the price was down to $1.99 today so why not stop in and fill up?” noted Brian Olson as he pumped gas into his 2012 Toyota Corolla , pointing out that the Sunoco station across the street in Lower Providence was undercutting Wawa by a penny, as usual.
“It depends which direction I’m going in where I buy gas, but it’s always one or the other. It’s a little easier getting in and out here though,” he said. “I saw that the 76 station (Main Street, near the Norristown border) was $2.09, so it pays to drive a couple of extra miles to save 10 cents. I’m trying to forget the highest prices I ever paid for gas a few years ago.”
That would be around $4.11 back in 2008.
Even at $2.09, 76 was still lower than Pennsylvania’s average of $2.12, which was well above the national average of $1.94 that day.
By Thursday, 76 was down to $1.99 as well, but Wawa had left them in the dust at $1.97.
Routinely on course, the Sunoco marquee across the road from the West Norriton Wawa was enticing customers with a penny less, $1.96.
Up the road in Eagleville, Turkey Hill was offering $1.97, but with their rewards cards customers could score a gallon for $1.94.
Still stuck in the $2.09 zone Thursday were Limerick Wawa; East Norriton Wawa; BP, Sumneytown Pike and Broad Street, Lansdale; and Sunoco, Nutt Road and Main Street, Phoenixville.
Lancaster and Allentown folks weren’t faring much better, with averages at $2.06 and $2.10, respectively, as our New Jersey neighbors reveled in $1.79 prices.
The competitive spirit spreading among gas station owners did not surprise Michael Green, public relations director for the American Automobile Association, which keeps regular tabs on gas prices and posts the daily national and state averages on its website, FuelGaugeReport.AAA.com.
“Gas stations are like any business, and they’re trying to pull in customers. So a $1.99 price point is definitely attractive for drivers. But for the most part, gas stations try to sell gas at the highest level that they believe customers will continue to come in and give them their business. In most parts of the country gas prices are dropping at the fastest rate since last November,” Green said.
“Gas stations are interesting because they make more of a profit selling items like soda and chips inside their convenience store than they make from gas. So if their gas is too high, you’re not going to stop there and visit the convenience store, so in that sense they’re going to lose business.”
With its large number of daily customers who dash inside for a hoagie, coffee and a pack of Tastykakes whether they’re filling their tanks or not, Wawa can easily afford to knock the bottom out of the competition.
Situated roughly between Wawa stores in East Norriton and Whitpain, Steve’s Auto Care in Blue Bell maintains a favorable business model that not only offers persuasive gas savings against the big boys, but gives a customer the advantage of getting his vehicle repaired and grabbing his Diet Pepsi and pack of cigarettes in the deal as well.
Owner Steve DelliGatti, who celebrated his 20th year in business in 2014, around the time he switched his brand affiliation from Shell to Liberty gas, agreed with Green that the profit margin for gas is razor thin.
“Everybody thinks you’re making a lot of money off of gas, but we’re making pennies on the gallon, literally,” he said. “The gas is really just a convenience for the customers. You never really make any money on that. I don’t care what gas station you go to that has a repair shop, nobody is making a living off of gas. Unless you sell a gajillion gallons a month … and you’d have to be a very lucky individual to do that. No, anywhere you go, this is where the heart of the business is,” he said, glancing from his office toward the tidy shop.
“It’s in the repairs, not out there with the gas. The convenience store is obviously a profit center, but just supplemental ... and another convenience for customers,” he added.
Two years ago, when the price of a gallon of gas hovered around $3.45, DelliGatti said he was lucky to reap about 3 cents profit.
That hadn’t changed on Thursday, when his customers were fueling up, Liberty-style, for $1.99 a gallon.
“Today I might make an extra penny, tomorrow I might have to lose two,” DelliGatti said.
Price adjustments were a frequent occurrence at the corner station that both of those aforementioned Wawas keep a close watch on, he said.
“Yesterday we were $2.01, today we’re $1.99. It’s a constant thing. We change our price when the load comes in that day,” DelliGatti explained. “Let’s say today I’m at $1.99 and a load comes in tomorrow. I’ll check the pricing for the day, and if it’s 10 cents more I have to jack it up 10 cents. And if it’s 10 cents less, I’ll bring the gas down 10 cents. It all depends on the market. Since we changed to Liberty our approach has been volume, so if I have to take the loss, I take the loss, because we make it on volume. Wawa is geared to lose money if they have to because they make it up in the store. All their locations are thrown into one geographic pot as far as profits. We do have the advantage of having the shop here.”
National and state averages of gas prices don’t mean a whole lot in the day- to-day operation, DelliGatti said.
“It doesn’t really help you to run your business. A small place like me is concerned with what’s geographically right around here. Your cost could even depend on how far you are from the terminal. If the truck has to go out 20 miles further, guess what? You’re paying more.”
Customers may not forge a loyalty to any particular brand of gas these days, but for guys like DelliGatti, business depends on creating the most beneficial partnerships.
The Plymouth Meeting native said goodbye to the famous white star of Texaco when he switched to Shell a decade ago. Then, in 2014, he broke his ties with Shell and went with Liberty because Liberty’s price was a lot easier on the wallet.
“I switched because Liberty is a lot more competitive than Shell is,” he said at the time. “Everybody wants the cheapest price, so that’s why I switched. I was able to get a better deal with Liberty than I was with Shell, and Liberty really wanted to move into the area. It was almost a marriage made in heaven.
“Shell’s a great gas; it just costs more money to make. Everybody goes to the Wawas and the private label brand gas stations, so in order for me to compete with these guys, I’m the little guy on the block. There aren’t many of us (Liberty gas stations) around. Liberty was actually started by an independent dealer like myself and he joined forces with a couple of other dealers and they formed their own gas brand. The name Liberty was basically about freedom from the majors. The oil companies are always digging into our pockets, and us little guys are really just making them money.”
Pennsylvania has some of the highest gas prices in the country due to its relatively high tax, Green noted.
“The vast majority of states are already under $2 a gallon. Pennsylvania is lagging behind when it comes to cheap gas prices, but we expect the average price of gas in the state to drop below $2 a gallon sometime in January. The oil market has been in free fall since the beginning of the year and it’s really something that no one expected. It’s at a level not seen since 2003 and that’s pushing the price of gasoline lower and lower. Whenever the price of oil goes down that generally benefits the consumers. Right now there’s more than enough supply of oil around the world to meet demand, and as long as that continues, we expect oil to remain relatively cheap.”
AAA has been alerting members about the price of gas since the oil embargo of the early 1970s, Green said.
“Our members are drivers and one of the things that bothers them more than anything else is high gas prices. Right now we’re in a great situation because most drivers are paying the cheapest prices they have since 2009.”