Local gas stations reap benefits - Price hikes create more business and competition among convenience stores.

www.easterneronline.com By Brian Triplett March 06, 2003

In the wake of mounting tensions in North Korea and a possible war with Iraq, gas prices have skyrocketed across the nation. By this summer, unleaded gas could cost $2 or more per gallon.

The managers of the local gas stations in Cheney cite a number of reasons for the high prices including, but not limited to, the possibility of going to war, an oil production shortage in Venezuela and being competitive with businesses in Spokane.

Chris Ray of Ray’s Gull pointed out that because of production problems and a country-wide strike, it will take Venezuela about three months “to get up to capacity to what they were shipping.”

The United States is the number one importer of oil from Venezuela, so this creates a problem for car owners.

The Conoco A-n-D and Cheney Station (formerly Gary’s Chevron) may charge more for their gas, but they receive the most business from students and university employees due to their locations.

A-n-D Manager Don Moravec chalks this up to “supply and demand.” According to local A-n-D statistics, Conoco doesn’t purchase any oil from the Middle East, but their wholesale prices are affected by the current production problems in South America because approximately 30 percent of their supply comes from Venezuela.

Moravec said the rest of their oil supply comes from the U.S. and Canada. According to Moravec, A-n-D is part of a five-store chain operating in Washington and Idaho. The chain’s owner sets the prices, which are based on what other competing stations are charging. When asked how gas purchases at his location have been affected by the price increases, Moravec said sales are “about 25-30 percent less. It’s hard to compare to last year because we were selling it [regular unleaded gas] at $.99 this time last year.”

Charlie Fulbright, manager of Cheney Station, explained the Cheney Station has to set prices “a certain margin above our cost.”

“We made special arrangements with Chevron to keep the same price as Spokane,” Fulbright said. “So many people come out of Spokane that we wanted our price to be the same as Spokane.”

Although their gas costs eight to 10 cents more than what some of their competitors are charging, Fulbright emphasizes that what students get in exchange is better variety and service.

Cheney Station is open 24 hours and features auto repair, a car wash, and U-Haul rental services in addition to a selection of products comparable to “a lot of grocery stores.”

While selection is important, some customers just hunt for the best price. Ray’s and the recently opened Xllent Gas & Grocery have the lowest gas prices in Cheney.

Chris and Christy Ray of Ray’s have been in business for almost 12 years. Two years ago, Gull bought their station, but they lease the property from the corporation. Ray’s is currently the oldest operating gas station in Cheney and a favorite among local residents.

The Rays said more people from Eastern have been going to their station ever since they lowered prices to compete with Xllent Gas & Grocery. “Xllent Gas has been good for our business,” Ray said.

In addition to being more competitive, the Rays have seen the benefits for their customers. According to Christy Ray, they have been receiving fewer bad checks and customers can afford to buy more things when they stop in. When it can cost as much as $70 to fill up a Chevy Suburban, anything that helps save customers money is good for inside sales, which can be vital to a station’s success.

Ray believes gas prices are going to continue to rise for at least three months. He sees a direct relationship between wartime conditions and the U.S. economy.

“After every war, there is a huge change in the Stock Market and gas prices drop considerably. Right now, the same thing is happening. If we do go to war, that will probably help the economy. After the war, within three weeks prices will start dropping,” Ray said.

According to Ray, there has been some justifiable fear among consumers. He sees similarities between concerns in the farming community about increases in operating expenses and the public’s reluctance to buy as much gas as they used to. He wanted to stress he believes in being fair to customers. He also wanted to allay any concerns the public might have that gas stations are being unethical in their pricing strategies.

“People think that you can buy a lot of gas when it’s cheap and then overcharge them when prices go up… but we don’t do that. You’re not going to load up on fuel to gouge the public.”

Owner Dave Singh of Xllent Gas & Grocery has seen no significant changes in his sales since everyone else’s prices went up.

“College students don’t come around this side of town,” Singh said. This makes no sense to Singh because of their low “all around prices” on everything from milk, bread and eggs to beer and cigarettes. The Xllent Gas & Grocery is part of a small family-owned chain based out of Spokane. Singh said that Xllent Gas & Grocery tries “to be good friends to the neighborhood.”

Singh said his store is able to offer lower gas prices partly because they sell unbranded gasoline instead of having a franchise from one of the major corporations.

The other reason he cited is “being family-owned. If you’re paying somebody else $9 an hour to manage your store, there is no way you can afford to keep prices so low.”

Both Ray and Singh think that more people from Eastern would shop at their stores if they were closer to Betz Road. College students tend to prefer convenience and being on the route they take to school over hunting for the best prices. Ray also suggested some students probably use gas cards where their parents foot the bill.

With no hope of economic relief in sight at least until the situation in Iraq is resolved, students may be forced to forego convenience and personal preferences and start going where their money goes the farthest. If this happens, eventually small locally owned businesses such as Ray’s, Xllent Gas & Grocery and the Cheney Trading Company will triumph over the major chain stores.