LAFAYETTE, Ind. (WLFI) – For the last seven months, News 18 has been tracking gas prices both in Lafayette and around the viewing area.
We wanted to know the answers to the same questions that you probably do. Where’s the cheapest place to get gas? Is there a best day to buy? How much profit do gas stations really make?
In a News 18 three part series, we’ll try to answer those questions and more. Solving the puzzle at the pump, so you can save money just in time for the summer driving season.
For gas station owners, the sign out front displaying the day’s price is “everything,” said Scot Imus, the executive director of the Indiana Petroleum Marketers & Convenience Store Association.
“There’s some people that will drive across town for a penny,” agrees Rick McClure, executive vice president of the Indiana-based McClure Oil Corporation.
It may sound crazy, but over the long haul that penny may be about all you save.
In an exclusive News 18 investigation, we’ve tracked the prices on GasBuddy twice a day since September at 10 gas stations around Lafayette and West Lafayette, plus 10 stations at other cities in the region: Monticello, Rensselaer, Crawfordsville, Lebanon and four around Indianapolis.
Over seven months, the cheapest station we tracked in the Lafayette region was the Super Test at State Road 38 and Sagamore Parkway with an average price of $3.31 for a gallon of regular.
The Marathon at Ninth and Ferry was the most expensive at $3.38.
Still, the difference is only seven pennies or just over two percentage points.
In other words, if you bought 10 gallons of gas each and every week, it would save you a grand total of $36 dollars, the price of 11 gallons of gas or just over one weekly trip.
“I am not surprised by that at all. Under normal conditions, would expect a fairly small difference among the stations,” said Purdue Agricultural Economist Wally Tyner.
The range is only slightly larger when you get out of town.
The average at the Family Express in Monticello is the cheapest of all the stations we tracked at $3.30. The Family Express at the Rensselaer exit on Interstate 65 was the highest at $3.43, a difference of 13 cents.
The other 18 stations fall somewhere in the middle.
Why is it close?
In three words: competition, competition, competition.
“Our company-wide philosophy is we do not want to be out of the market on gasoline. At a minimum, we can be matching the competition,” said Brian Johnson, the vice president of finance for Casey’s General Store.
“You can’t be too high in your marketplace or you might as well tell your employees to go home for the day,” adds Imus.
But that competitive edge is not because gasoline is a money maker. In reality, it’s the opposite. Margins on gas are very poor.
According to corporate year-end reports, three publicly traded companies averaged less than 16 cents for every gallon pumped nationwide last year.
- Casey’s General Store – 15.2 cents
- Murphy USA – 13 cents
- Speedway – 14.4 cents
Indiana’s margins are even lower.
According to the Oil Price Information Service, the state had the fourth worst margins in the U.S. in 2013 at 13.6 cents a gallon in a year when the national average was 20.2 cents. It’s a far cry from North Dakota’s leading average margin of 34 cents.
Those slim figures don’t even include credit card fees or delivery costs.
“It’s not uncommon at all in Indiana for stations to sell below cost,” said Imus.
“It happens fairly regularly but obviously it can’t last for long,” said McClure.
The only reason gas stations are able to stay in business is by selling more than gasoline.
“Seventy-eight percent of our gross profits come from inside the store,” said Johnson.
Casey’s General Store isn’t alone.
Imus said the rule of thumb for gas stations is that 70 percent of profits come from inside sales.
While Murphy USA’s profits from non-gas sales is 47 percent, Speedway is at 65 percent and the 36 locations of McClure’s vary from 50 to 70 percent depending on location.
McClure said highway locations tend to be closer to a 50-50 split, which more residential locations are closer to 70-30.
“It is critical to be competitive on gas prices because we need that customer to come to our store to buy a cup of coffee, to buy a donut, to buy a slice of pizza,” said Johnson. That’s the essential for our business model.”
Tune in to News 18 Wednesday at 6 p.m. and 11 p.m. for part two.
Here is the list of 20 stations that News 18 tracked from Sept. 18, 2013 to April 17, 2014 with the average price in parenthesis.
- Casey’s General Store – State Road 25 and Beck Lane ($3.32)
- Family Express – 3350 U.S. 52 South ($3.33)
- Marathon – 900 Ferry St. ($3.38)
- Mobil – State Road 26 and Park East Boulevard ($3.35)
- Super Pantry – Cougill Lane and Veterans Memorial Parkway ($3.34)
- Super Test – Sagamore Parkway and State Road 38 ($3.31)
- Admiral – Sagamore Parkway and Genoa Dr. ($3.31)
- BP – Sagamore Parkway and Yeager Rd. ($3.35)
- Speedway – 265 E. State St. near Tapawingo Dr. ($3.33)
- Speedway – Sagamore Parkway and Win Hentschel Boulevard ($3.34)
- Murphy USA – 1831 U.S. 231 South ($3.32)
- Pilot – Near I-74 Exit 39 ($3.33)
- BP – Main St. and Washington St. ($3.35)
- Family Express – Sixth and Broadway St. ($3.30)
- Family Express – State Road 114 and I-65 Exit 215 ($3.43)
- McClure – I-65 Exit 140 ($3.37)
- Northwest – BP Rickers – I-465 and 86th Street ($3.40)
- Northeast – Marathon – 96th St. and Hague Rd. ($3.40)
- West – Thornton’s – 6880 W. Washington St. ($3.34)
- South – Mr. Fuel – State Road 37 and I-465 Exit 4 ($3.37)