The founder of Short Stop Food Marts, Neal possesses a perspective on the volatile nature of gas prices few men can boast. With 51 stores under his rein, he has an intimate knowledge of the ebb and flow at the pumps; and with more than three decades of retail experience, he has a very simple message for consumers who see red when they trade wads of green for precious gasoline: There’s no gouging on his watch.
Neal recently opened his books to Up and Coming Weekly to show just how little profit his Short Stop convenience stores are making on inflated gas prices. Neal’s own records show that during the month of July, the Short Stop franchise sold approximately 2 million gallons of gasoline to consumers — yet made a profit of just 2.5 cents per gallon.
“The general public, if you ask how them how much we make per gallon, I have heard in the neighborhood of 30 cents per gallon,” said Neal, speaking from his Arsenal Avenue office. “I don’t ever remember making 30 cents per gallon. The retailers, generally speaking, are reputable businessmen in the community and they are not out to gouge anyone.”
When Hurricane Ike swept through the Gulf of Mexico in early September, threatening this nation’s oil supply, retailers across the nation raised prices sharply — some charging as much as $6 a gallon. Here in North Carolina, Gov. Mike Easley declared a state of “abnormal market disruption” and signed an order allowing Attorney General Roy Cooper to enforce the state’s anti-gouging law.
The Consumer Protection Division of the attorney general’s office issued 26 subpoenas demanding information from gas stations in Cumberland, Buncombe, Craven, Guilford, McDowell, Mecklenburg, Montgomery, Anson, Ashe, Cherokee, Stanley, Transylvania and Yadkin counties asking them to explain why their prices were so high — these retailers reportedly sold gas for as high as $5.35 a gallon. Cooper’s office has received more than 4,300 complaints of gouging since Sept 12. The Circle B in Fayetteville was among those subpoenaed, reportedly selling regular gas for $5.49 following the hurricane.
Neal refused to call out his competitor for gouging, saying the store’s owner may have simply “panicked.”
Neal says that generally, when he gets a price increase from one of his fuel suppliers, he receives it in the form of a fax. On the day that Hurricane Ike hit, he received a fax from one of the companies showing the next load would cost $4.80 a gallon, plus 52 cents for road tax.
“So, if we’d bought that product and put it in our locations and then in a few days didn’t sell that product, we would have had to drop our prices to meet the competition, otherwise, we would have sat there with a price out of the market,” said Neal. “And that’s generally the way the market works around Fayetteville.
“We price according to the competition,” said Neal. “Locally, I noticed there was one competitor that went out of the market. He, being a small independent man, probably panicked. I know of one retailer from another city who got the same letter (from the fuel supplier) who said ‘I’m not going to buy it.’ He put bags on his pumps and just went home. He said he wasn’t going to ask his customers to pay that kind of price.”
Neal said he and most other local retailers “sweated it out,” waiting for the prices to go down — which they eventually did.
Neal said another factor adding to the hike in gas prices is the consumer, who he says also goes into a “panic” mode when there is a gas crunch.
“People panicked and you had lines all over town,” said Neal. “In fact, the day that I had to go out of town, they were backed up in the streets buying and topping off. That creates a problem.”
The demand got so high, in fact, that The Pantry posted signs at its 1,600-plus gas stations in 11 Southeastern states asking customers to pump only 10 gallons of gas each.
Neal says that he’s just as upset as the consumer over the seemingly arbitrary price hikes in gasoline, but he says don’t blame the local retailer; instead, cast your eyes toward the real culprit: Big Oil.
“About five years ago, when they (the oil companies) were buying each other out they eliminated all their competition,” said Neal. “So they can pretty much do what they want to. You haven’t got 12 fighting for the market share — you’ve got six, so they can do pretty much what they want to as far as pricing.”
Neal says you also have to look at other factors affecting the cost of gas, such as the state and federal taxes on fuel. The nationwide average tax on gasoline is 47 cents per gallon. The federal tax on gasoline is 18.4 cents per gallon. The average state gasoline excise tax is about 18.2 cents per gallon. Other taxes add 10.4 cents per gallon to the average tax on gasoline. These other taxes include applicable sales taxes, gross receipts taxes, oil inspection fees, underground storage tank fees and other miscellaneous environmental fees. Adding these taxes and fees to the state excise taxes results in a volume-weighted average state tax of 28.6 cents per gallon. North Carolina has the 15th highest gas tax in the nation at 48 cents a gallon; California is first at 64 cents, while our neighbor, South Carolina, ranks 47th at 35 cents a gallon.
And then there are the credit card fees. Neal said VISA and MasterCard tack on approximately a 2 percent fee per gallon of gas.
“So, if you got a $4 price for fuel, we have to give 8 cents a gallon to the credit card company,” said Neal.
As far as the pricing among individual retailers, Neal explained that at each Short Stop, supervisors, or “runners,” travel the area to see what the competitors are charging, then report back to the home office.
“We have to meet competition,” said Neal. “When it gets in a crunch, the shortage is chaotic and people don’t shop for gas — they’ll pay whatever is put on the pump. But that’s a situation where we (the retailers) have to live here and we’re going to have these customers for a long, long time. So we don’t want to make them mad … We try to do what is reasonable.”