Convenience Stores Strive to Deal Responsibly With This Week's Gasoline Price Spike
ALBANY, NY (08/31/2017) (readMedia)-- New York convenience store operators are doing their best to keep pump prices competitive despite having no control over Hurricane Harvey-related events that have caused their wholesale costs to spike dramatically this week.
"In recent days, convenience stores have experienced supplier price increases totaling 30 to 50 cents a gallon," said Jim Calvin, President of the New York Association of Convenience Stores. "Reluctantly, they are responding to this sudden convulsion in the marketplace by passing along the higher costs. They're as alarmed about it as their customers are."
Swamped by Harvey's flood waters along the Gulf Coast, the nation's two largest refineries are off line, and other oil infrastructure is down. The Colonial Pipeline, which transports Houston output to New York Harbor terminals, is shut down indefinitely. Tropical Storm Irma is moving toward the Caribbean. And Wall Street commodity speculators are driving up gasoline prices. All these factors are crimping supply and creating fear that the situation will worsen.
"We understand the financial and psychological distress this kind of price volatility can cause consumers," said Calvin. "Screaming at the store manager or recklessly accusing a particular location of 'price gouging' on social media may be great ways to vent frustration, but it's not going to change the reality of the situation. For a while, we're all going to be saddled with significantly higher gas prices. Let's hope it's short-term."
Should a consumer suspect a gasoline retailer is overcharging, the marketplace has a solution – competition. Those who overprice lose business to those who price competitively. The best and simplest recourse is to buy from the lower-priced one.
Some consumers wonder why pump prices have gone up at a particular convenience store even though they did not receive a new shipment of gasoline. In most cases, the answer is replacement cost.
"With prices moving higher, a 15-gallon fill-up is painful for the consumer," said Calvin. "Imagine buying 10,000 gallons at a time. The next load is coming tomorrow, 20 percent more expensive than the last one, and we need to pay for it before they put it in our underground tanks. We need to generate sufficient cash from current sales to cover the higher priced product that will replace the inventory we're selling. Otherwise, we'd be constantly using debt to finance wholesale gasoline purchases."
"Convenience stores are often convenient scapegoats for the escalating cost of motor fuel," Calvin said. "But the reality is that they have no control over events along the Texas Gulf Coast that are causing the surge in wholesale costs they have had to pass along in the form of higher prices at the pump."
"The bottom line is that if you trusted your local convenience store operator to sell you gas at a fair price last week, there's no reason not to trust him or her to do so this week," said Calvin. "Our members will continue to strive to act as responsible community businesses in order to minimize the pain for our customers."
Headquartered in Albany, the New York Association of Convenience Stores is a private, not-for-profit trade organization representing neighborhood mini-marts and convenience stores statewide.
For additional background on the ins and outs of motor fuel retailing, you can view the National Association of Convenience Stores' 2016 Retail Fuels Report: