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Pick a direction, any direction, and the price of gasoline always seems to be lower in towns around Pratt than in Pratt.
Finding out why the price is higher or at least seems to be higher is not easy. And in spite of what some may think, Pratt is not always higher.
The big answer is that no one seems to know exactly why gas is higher here then in other towns. At least no one is willing to admit they know why it’s higher.
Several factors determine the price of gas. Prices are affected by supply and demand. The higher the demand for gas, the higher the price climbs. The demand happens to be high in the Pratt area.
“Your neck of the woods is notorious for being out of product (gas),” said Tom Palace, executive director for Petroleum Marketers and Convenience Store Association of Kansas.
But that doesn’t explain why the price is higher here. While the demand is high it isn’t any thing like it is in bigger cities. Volume is another key factor in setting price. The more customers in a store the more income they get.
“Volume is a big, big issue for every dealer in the state,” Palace said.
An example of why there is a difference in gas prices is available right in Pratt. While parent companies dictate the price of gas for convenience stores, a locally owned dealer tends to be a few cents higher and it’s done on purpose.
The price of gas at Paso Junction is usually higher for a simple reason, profit.
“I’m just trying to make a living and a profit,” said Richard Ring, manager of Paso Junction and Paso Petroleum.
Ring figures his price by combining his fuel cost plus his credit card expense and adding from three cents to five cents a gallon. Ring and all the other fuel businesses in town know each other’s prices. They all have to deal with the fluctuating market prices but being an independent Ring has to make profit on his fuel.
“I guess they don’t need to make money on fuel and I do,” Ring said.
The volume issue is a key for gas prices. Convenience stores don’t make much money on gas, they make money when people come into the store to pay for the gas and then buy all those snacks, drinks and various items. For example, the profit on a $1 soft drink might be as much as 80 cents, said Ed Barrett, St. John branch manager for Hampel Oil.
Pick a direction, any direction, and the price of gasoline always seems to be lower in towns around Pratt than in Pratt.
Finding out why the price is higher or at least seems to be higher is not easy. And in spite of what some may think, Pratt is not always higher.
The big answer is that no one seems to know exactly why gas is higher here then in other towns. At least no one is willing to admit they know why it’s higher.
Several factors determine the price of gas. Prices are affected by supply and demand. The higher the demand for gas, the higher the price climbs. The demand happens to be high in the Pratt area.
“Your neck of the woods is notorious for being out of product (gas),” said Tom Palace, executive director for Petroleum Marketers and Convenience Store Association of Kansas.
But that doesn’t explain why the price is higher here. While the demand is high it isn’t any thing like it is in bigger cities. Volume is another key factor in setting price. The more customers in a store the more income they get.
“Volume is a big, big issue for every dealer in the state,” Palace said.
An example of why there is a difference in gas prices is available right in Pratt. While parent companies dictate the price of gas for convenience stores, a locally owned dealer tends to be a few cents higher and it’s done on purpose.
The price of gas at Paso Junction is usually higher for a simple reason, profit.
“I’m just trying to make a living and a profit,” said Richard Ring, manager of Paso Junction and Paso Petroleum.
Ring figures his price by combining his fuel cost plus his credit card expense and adding from three cents to five cents a gallon. Ring and all the other fuel businesses in town know each other’s prices. They all have to deal with the fluctuating market prices but being an independent Ring has to make profit on his fuel.
“I guess they don’t need to make money on fuel and I do,” Ring said.
The volume issue is a key for gas prices. Convenience stores don’t make much money on gas, they make money when people come into the store to pay for the gas and then buy all those snacks, drinks and various items. For example, the profit on a $1 soft drink might be as much as 80 cents, said Ed Barrett, St. John branch manager for Hampel Oil.
A cup of coffee might make more profit than a whole tank of gas. It’s the sale of beer, cigarettes and food items that drive profits, Barrett said.
But that still doesn’t explain why the gas price seems to be higher in Pratt.
While Ring makes a profit from inside sales too he doesn’t have the high volume traffic like a convenience store in Wichita that historically has at least some stores with lower prices than Pratt.
Another element that affects prices is the market price in gas and oil. Just because the price goes up or down, as it does every day, doesn’t mean that the price at the pump is going to change instantly. When fuel is purchased the price will either go up or down and Ring watches trends rather than daily jumps to determine when to change prices.
“You can’t climb the ladder every time the price changes,” Ring said.
Buying fuel is a guessing game. Sometimes the purchase is caught on the high end sometimes it is on the low end of a price shift. It’s tough to know when to buy it’s a gut feeling, Ring said.
Another factor that increases the cost of gas is freight. It costs six cents a gallon to bring fuel from Wichita to Pratt. Location is also a factor. Kingman tends to be lower than Pratt because they have to compete with Wichita prices, Ring said.
Some convenience stores buy already processed gas by the shipload and that saves them money.
Paso Junction is not immune to the prices at other stores. If they make big jumps or drops in price, usually because of changes in market prices, then Paso will change too.
Since gas prices shot up habits have changed and drivers are using less gas. Nation wide gas demand is down 18 percent to 19 percent and that affects prices.
In recent weeks the price of a barrel of oil and the price of gasoline have dropped dramatically.
“We’ve never seen anything like this,” Palace said.
While the gas price has dropped an upswing in prices is in the future. How much an increase and when is hard to predict but it’s coming.
“I guarantee it will come back,” Palace.
While the gas price in Pratt is higher than surrounding communities sometimes that is not a consistent condition. No matter how much people might think Pratt is always higher than everyone it’s just not the case.
“Rest assured we are not always higher than all the towns around,” Ring said. For a six-month period Pratt was lower than the U.S. average and Kingman.
Price setting information for chain stores is hard to acquire. A call to the Kwik Shop corporate headquarters resulted in a representative saying no one is allowed to discuss pricing policies.
