JUST ASK! Why does gas cost more in Keizer?

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Ask us a question about just about anything and we’ll find the answer.

This week’s featured question:

Why are the gas stations in Keizer charging so much for gas per gallon?  The majority of the stations in Salem are at least 20 cents per gallon cheaper. – Terri P., Keizer

Dear Terri,

Through key interviews and some serious digging into property and business records, we have a workable theory.

We started off at Gasbuddy.com, comparing prices within Salem and Keizer. This site takes submissions from the public as to gas prices at local stations. All the prices had been updated within 24 hours of this writing.

At that particular time, gas prices were holding steady throughout Keizer at $2.87. We spotted gas in Salem as low as $2.77 and as high as $2.95.

We talked with Norm Wargnier, who owned an Arco station where Sherwin-Williams is now located on River Road, and currently owns a Shell station in south Keizer. He’s been in the gasoline business for more than 50 years.

He noted that gas stations have no control over the prices of their suppliers. Oil is traded on the commodities market and can be volatile, which trickles down to the pump.

He noted many of Salem’s high-traffic gas stations are owned by large companies, while most in Keizer are owner-operated.

We picked the stations listed as cheaper on Gasbuddy.com, then researched their ownership.

Out of six ARCO stations listed on Gasbuddy.com, four are controlled by a subsidiary of BP, the largest corporation in the United Kingdom and the world’s fourth-largest energy company. Two are Oregon-owned.

ARCO also doesn’t accept credit cards, only debit, which reduces the fees it must pay per transaction.

It may be that companies with more resources can afford to sell their gas for less – hence why both Safeway and Fred Meyer gas locations were also listed as having lower prices than Keizer stations. A larger company may be willing to accept a financial loss, but smaller owner-operated businesses don’t have the same luxury, Wargnier said.

Furthermore, along two key streets – Lancaster Drive and South Commercial St. – most of the stations listed are controlled by BP and Convenience Retailers LLC. The Truax Corporation, a company out of Corvallis that owns numerous gas stations, including until recently the two Smoker Friendly/76 locations in Keizer, controls the remaining gas stations on these streets. (However, Gasbuddy.com is not an exhaustive listing of local gas stations.)

Because these are high-traffic areas with more customers than Keizer gas stations, Wargnier said, sometimes they can afford to charge less.

And economic theory suggests that having lower-cost competition across the street could force a station manager’s hand to lower their own price.
Wargnier insisted he’s “not ripping people off,” and other gas station managers have told us off the record that stations in Keizer keep their prices in line with what the 76 stations are doing.

You can e-mail us (kt@keizertimes.com), call us at 503-390-1051, or post on our Facebook wall, leave a comment on MySpace or tweet us on Twitter.

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