Wal-Mart's gas scam

[mikea]

Given that we're airplane folks, I'm surprised no one has brought up the ultimate in elastic pricing, the airline seat! Those can vary in cost from one minute to the next, depending on more factors than I can even consider! I've always found it rather Byzantine and don't particularly like it, but it isn't illegal! Heck, it would be legal for a gas station to charge a gas price based on how expensive your car is, how long it's been since you last filled up with them, what your average purchase is, and how much gas you have left in the tank! It just wouldn't be very practical!

Around here, we have a number of grocery stores that are tying fuel discounts to the amount you've spent on groceries using their loyalty cards. One will give you a penny off per gallon for every $10 you buy in groceries, up to something like $1.50 off per gallon, and the discounts are cumulative over time. They max it at 15 gallons, so their maximum cost would be $22.50, after you've spent $1500 on groceries. Their max cost is 1.5% of your grocery purchase.

Jewel, huh? I dunno why I haven't noticed that but I don't shop there often enough. I was just told about that.

Airline seats have time-limited value like theater or concert tickets. The value goes to zero after the plane leaves or the show starts. You can make a case that the value should vary during the time before. Hot tickets on Broadway are $1000 or more, but you can get some for half of list price the day of the show.

The reality is that time is the value. At any given minute they're saying "how much would you pay?" and consumers are answering by buying. Examples: The snowmobile in my garage is worth $600. We get 48" of snow and I'll take offers starting at $5,000. There may be a lot of interest in my rowboat during a flood. If you need to get to a business meeting you pay $1500 for one of the few seats left while the family next to you got seats 3 months ago for $149. It's not a scam. It's business, Michael.

 

[gkainz]

The snowmobile in my garage is worth $600. We get 48" of snow and I'll take offers starting at $5,000.

Now that the snow's gone, let's talk about your $100 snowmobile. My piles of junk are looking lonely ...

 

[flyingcheesehead]

So, go somewhere else if you don't like how they do it. I don't understand why people want to complain about how a business chooses to do its cost structure within the confines of the law, but then goes ahead and gives that business money.

The problem is, they ALL do it now. The place I was going was the only place that wasn't, but apparently they decided that their good practice was not bringing them enough additional business, so they started doing the same crap that every other station does.

It doesn't surprise me, either. Like I said, people are stupid. I was at a place somewhere out in PA a couple years ago. There were two gas stations right across the street from each other, and one was charging ~35 cents a gallon more than the other. I was only after a donut, so I went to the one closer to me, the more expensive one. I asked the station manager what was up with the difference. He said "I don't know how he can do that, he's charging less than my cost." But the crazy thing is that there were JUST AS MANY people fueling up at the expensive station as there were at the cheap station! I mean really, open your frickin' eyes, people!

In the businesses I've run, I kept customer service as #1 priority. That's why I would get lots of repeat business.

My entire business was based off of repeat business and word of mouth... Ya don't need to tell me how to do it! But again, when every business in town has the same crappy practice, and they're selling a necessity like gas, how do you not give them your money?

 

[kkoran]

I think it should be about fairness and responsibility.
If the station buy's their gas for $2.00 a gal.,mark it up .20 a gal,sell it till that load is gone, fine.
But this demand stuff is ridiculous. I've seen the price change 3 times in one day and I'm sure they have not gotten in new inventory at a different price.
We sell products that we buy in bulk, we don't change pricing unless the next load goes up or down,IMHO the only fair way to do it.
Scam ,probably not, but down the same path of business ethics wall street has gone.

Using that logic, people shouldn't be able to sell for more than their cost plus a set markup. I guess you would support the government establishing the allowable markup rates for each commodity to cover costs and allow for a "reasonable" profit. To be fair, this should apply to everything. Buy a house for $200K, tack on the allowable 10% markup, you can sell it for no more than $220K. Doesn't matter that the demand for housing in the area far exceeds the supply.

On the other hand, if the wholesale price of gas were to go down after a station purchased a big load, his compeditors who purchased gas later at a lower cost could undercut him. Would you buy gas from the high-priced station? That would seem to be the fair thing to do. To really be fair, maybe the government should just set all the wholesale and retail prices, ala the Soviet Union. Of course we'd end up with shortages of products people wanted and piles of unwanted stuff.

 

[wabower]

All these years I've been told that the early bird gets the worm, and have learned to react accordingly. Now you guys are suggesting that all the birds can sleep 'til noon and expect the same share of the vittles.

But then again, it's hard to argue against that philosophy now, based on the policies of the new guys in charge. Next year there will probably be a law. In the meantime, if you want cheap gas just get your ass out of bed 10 minutes earlier.

 

[flyingcheesehead]

Using that logic, people shouldn't be able to sell for more than their cost plus a set markup. I guess you would support the government establishing the allowable markup rates for each commodity to cover costs and allow for a "reasonable" profit. To be fair, this should apply to everything. Buy a house for $200K, tack on the allowable 10% markup, you can sell it for no more than $220K. Doesn't matter that the demand for housing in the area far exceeds the supply.

I don't think the above is a good idea for all markets, but it is a good idea for some.

For example, here in Wisconsin there is a minimum markup on "motor fuels" I think is the wording, of 32%. Apparently at some point, the big oil companies were trying to move in and undercut the little mom-and-pop stations, so this law came about.

Predatory pricing is the real issue. Oil companies, starbucks, and even some airlines have certainly done it (which is how Go put Aloha out of business). Come into the market, saturate it, sell your goods at cost or even at a loss until all your competitors go out of business, then mark everything WAY up and make all your losses back and then some. When consumers complain, just say a lot of stuff about "the market" and vote Republican.

I don't want the government to mandate x amount of markup, but I don't have an easy answer. Greed is the problem, and it's one that's not easily solved.

 

[flyingcheesehead]

All these years I've been told that the early bird gets the worm

Ah, you've given me the excuse to post one of my favorite quotes:

"I think we consider too much the good luck of the early bird and not enough the bad luck of the early worm."

-- Franklin Delano Roosevelt

 

[kkoran]

I don't think the above is a good idea for all markets, but it is a good idea for some.

For example, here in Wisconsin there is a minimum markup on "motor fuels" I think is the wording, of 32%. Apparently at some point, the big oil companies were trying to move in and undercut the little mom-and-pop stations, so this law came about.

Predatory pricing is the real issue. Oil companies, starbucks, and even some airlines have certainly done it (which is how Go put Aloha out of business). Come into the market, saturate it, sell your goods at cost or even at a loss until all your competitors go out of business, then mark everything WAY up and make all your losses back and then some. When consumers complain, just say a lot of stuff about "the market" and vote Republican.

I don't want the government to mandate x amount of markup, but I don't have an easy answer. Greed is the problem, and it's one that's not easily solved.

I was simply responding to 'el con's' assertion that prices should be based on what a retailer paid for something on the price dictated by supply and demand. I agree that predetory pricing is a problem, but I think it needs to be dealt with on a case-by-case basis. but, if a company can come up with a cheaper way to produce or distribute a product, why shouldn't they be able to sell it for less and I be able to buy it for less? In the long run, a governent-mandated minimum price or markup tends to protect inefficient companies at the expense of consumers.

 

[wabower]

Anybody who confuses any tax or economic policy that originates in Wisconsin (with Minnesota running a close second) with logic or common sense needs a check-up from the neck-up. They are among the the best money-disposal machines in the country.

I don't think the above is a good idea for all markets, but it is a good idea for some.

For example, here in Wisconsin there is a minimum markup on "motor fuels" I think is the wording, of 32%. Apparently at some point, the big oil companies were trying to move in and undercut the little mom-and-pop stations, so this law came about.

Predatory pricing is the real issue. Oil companies, starbucks, and even some airlines have certainly done it (which is how Go put Aloha out of business). Come into the market, saturate it, sell your goods at cost or even at a loss until all your competitors go out of business, then mark everything WAY up and make all your losses back and then some. When consumers complain, just say a lot of stuff about "the market" and vote Republican.

I don't want the government to mandate x amount of markup, but I don't have an easy answer. Greed is the problem, and it's one that's not easily solved.

 

[Let'sgoflying!]

In Virginia, it would be illegal - the pump must display the price per gallon before activation. .

It probably is here too. Many things are, just no enforcement!

 

[Maxmosbey]

I live in a big college town. The local gas stations really crank the price of gas up on the weekend when all the parents show up to move their kid's home for the summer. It is just their way of saying, "can't wait to see you in the fall." That's when they crank the price up again. Locals fill up before the price goes up, or go ten miles down the road, where they can get it a little cheaper. It is only for a few days.

 

[NetSpeaker]

" but I don't have an easy answer. Greed is the problem, and it's one that's not easily solved."

Actually, greed is not the problem, and the problem is easily solved. Remove the barriers to competition and let greedy competitors drive prices down to true equilibrium between supply and demand.

Predatory pricing (selling below cost to drive competitors out of the market) does happen but it is very rare because it only works in markets where other competitors cannot enter the market.

Where it does occur, it is usually caused by government erecting barriers to entry that prevent competitors from stepping into the breach. In those rare situations where actual predatory pricing does occur, I agree that it is the obligation of government to prevent it through regulation.

But most of the long term market imbalances that consumers pay for are actually caused by governmemt overregulation. In general, industries love to be regulated, because regulation protects them from competitive forces.

 

[sba55]

Actually, greed is not the problem, and the problem is easily solved.

Another economist, I assume. Finally!

 

[Capt. Geoffrey Thorpe]

But again, when every business in town has the same crappy practice, and they're selling a necessity like gas, how do you not give them your money?

Walk
Ride a bike
Take the bus
Car pool
Combine and reduce trips - plan the route.
Walk INTO Tim Hortons instead of using the drive through.
Shut your car off when in line at the drive through.
Don't let your car sit and idle with the a/c running because you will be in the store for "just a minute"
Slow down
Coast up to traffic lights and stop signs - the two biggest wastes of fuel are using the brakes and letting the car idle.
Change your driving habits. Google 'hypermiling techniques'
Lay off the air conditioning
Keep your tires inflated
Unload the H2 and buy something that makes sense.
(Europe vs US number 1 selling vehicles: US - Ford F150, Europe - Ford Fiesta. Think about it)
Cruise at 65% instead of 75% (gotta put some aviation content in here somehow)

Cut the demand in half and watch the prices drop.

 

[flyersfan31]

I think it should be about fairness and responsibility.
If the station buy's their gas for $2.00 a gal.,mark it up .20 a gal,sell it till that load is gone, fine.
But this demand stuff is ridiculous. I've seen the price change 3 times in one day and I'm sure they have not gotten in new inventory at a different price.
We sell products that we buy in bulk, we don't change pricing unless the next load goes up or down,IMHO the only fair way to do it.
Scam ,probably not, but down the same path of business ethics wall street has gone.

You're kidding right? It has nothing to do with Wall Street. The concept of demand and supply, and market-clearing prices, has been with us, whether we knew it or not, since the Stone Age. Prices set by a central body? That's a scam. Pricing where the demand curve intersects the supply curve? That's just basic common sense.

 

[LearDriver]

There is also another way to look at the situation as well. Some cheap buggers will gripe at the price of everything given half a chance. If the price is too high then ride your bicycle.

 

[mikea]

There is also another way to look at the situation as well. Some cheap buggers will gripe at the price of everything given half a chance. If the price is too high then ride your bicycle.

And then they leave a $20 on the bar on Saturday night.

 

[JeffDG]

I live in a big college town. The local gas stations really crank the price of gas up on the weekend when all the parents show up to move their kid's home for the summer. It is just their way of saying, "can't wait to see you in the fall." That's when they crank the price up again. Locals fill up before the price goes up, or go ten miles down the road, where they can get it a little cheaper. It is only for a few days.

Honestly, that's the market working. Spike in demand causes a spike in price. Good for the stations that they have good enough information to anticipate that they're getting an uptick in demand.

 

[flyingcheesehead]

Walk

I live out of town. There is approximately nothing within walking distance.

Ride a bike

I do live within easy riding distance of a good network of trails - One even goes to C29. Unfortunately, I fly out of MSN which is a half-hour drive away, with no good way to get there on a bike. Maybe I'm a chicken, but having spent the last 5 years dealing with idiot drivers from the cab of a HUGE vehicle (and almost getting killed by one even then), I have no doubt that they'd happily kill me on a bike. Now, I avoid everything except side roads and bike trails.

Why am I talking about the airport? That's probably where I go most frequently. Whether it's to fly, or to go to a meeting, or whatever - It's my most frequent destination in the car. And it's a half hour away at highway speeds for most of the way. Aside from the danger, it'd be a two-hour one-way trip on a bike.

Take the bus

I'm too far out of town - No busses out here.

Car pool

I don't even know anyone anywhere near me who goes where I want to go. I don't have a 9-to-5 that I go to, my driving is pretty random.

Combine and reduce trips - plan the route.

Already done.

Walk INTO Tim Hortons instead of using the drive through.
Shut your car off when in line at the drive through.

I don't eat fast food any more.

Don't let your car sit and idle with the a/c running because you will be in the store for "just a minute"

I don't.

Slow down
Coast up to traffic lights and stop signs - the two biggest wastes of fuel are using the brakes and letting the car idle.
Change your driving habits. Google 'hypermiling techniques'

Already do. Except I try not to impede traffic if there is any. I almost never use my brakes. All those engineering classes I didn't want to take (I was an EE major and didn't much care for Thermo, etc. at the time) did teach me something.

Lay off the air conditioning

Dude, I live in Wisconsin. The A/C is free here.

That said, if it is hot, A/C is better than opening a window (and adding the associated aero drag) these days.

Keep your tires inflated

Yup.

Unload the H2 and buy something that makes sense.
(Europe vs US number 1 selling vehicles: US - Ford F150, Europe - Ford Fiesta. Think about it)

Volvo S60 (2.3 liter straight 5). I got it instead of the S80 because I didn't want to feed the V8.

I wouldn't fit in a Fiesta. I'd need to cut a hole in the roof and put a bubble for my head up there.

Cut the demand in half and watch the prices drop.

I already buy very little gas - I don't drive much. I buy a tank every 3 weeks at most. I started changing my driving habits back in October, got into the hypermiling stuff (though a lot of what they do is silly as it costs them more money in parts than they'd save on gas!) but even though I don't spend a lot of dough on gas, I'm very conscious of the prices and HATE spending a lot. I was starting to get comfortable with the sub-$1.75 prices, and then they went back up a little.

Oh well.

 

[Ddayle]

Wrong on the A/C. If you are driving freeway speeds you will get BETTER gas milage with the ac on and the windows rolled up for aerodynamics. Also a pickup truck gets better aero with the tailgate UP.. both have been proven .DaveR

 

[flyingcheesehead]

Wrong on the A/C. If you are driving freeway speeds you will get BETTER gas milage with the ac on and the windows rolled up for aerodynamics.

Yup, like I said.

That said, if it is hot, A/C is better than opening a window (and adding the associated aero drag) these days.

 

[pookies]

Wrong on the A/C. If you are driving freeway speeds you will get BETTER gas milage with the ac on and the windows rolled up for aerodynamics. .DaveR

I thought they busted that on Mythbusters?

 

[Let'sgoflying!]

I thought they busted that on Mythbusters?

seems like it depends on the speed?
http://news.carjunky.com/air-conditioning-versus-open-windows-abc477.shtml

 

[jesse]

I really don't think shutting your car off while in line at the drive through and then constantly starting it every 10 seconds when the line moves forward is a very good idea. Way too much unnecessary wear.

 

[sba55]

seems like it depends on the speed?
http://news.carjunky.com/air-conditioning-versus-open-windows-abc477.shtml

In addition, it depends on your car. My car, for example, has a very efficient A/C system. It uses an unnoticable amount of gas to run it, so I always have it on. YMMV.

Felix

 

[Capt. Geoffrey Thorpe]

Wrong on the A/C. If you are driving freeway speeds you will get BETTER gas milage with the ac on and the windows rolled up for aerodynamics. Also a pickup truck gets better aero with the tailgate UP.. both have been proven .DaveR

Best is with windows up and A/C OFF. I'm willing to bet that windows cracked is better than A/C on even at highway speeds.

Yes, gate up is best. I spent some time in a wind tunnel with some guys who had done a bunch of testing on this - tailgate up is better than down. Those "air gates" or whatever they are called are the worst. Best is a tonneau cover.

 

[JeffDG]

Best is with windows up and A/C OFF. I'm willing to bet that windows cracked is better than A/C on even at highway speeds.

Yes, gate up is best. I spent some time in a wind tunnel with some guys who had done a bunch of testing on this - tailgate up is better than down. Those "air gates" or whatever they are called are the worst. Best is a tonneau cover.

I did some unofficial wind tunnel testing (driving faster than I should) back when I owned a truck, and found a very substantial boundary layer formed over the box of the truck with the tailgate up...enough that so long as I was over 40-50mph, it took one heck of a rainstorm to get anything in the back wet!

 

[mikea]

I really don't think shutting your car off while in line at the drive through and then constantly starting it every 10 seconds when the line moves forward is a very good idea. Way too much unnecessary wear.

In the old days, with carburetors you might blow more gas priming the carb than you saved while is was off. These days with fuel injection you use exactly what gas that's required. Consider that hybrid cars start and stop the gas engine constantly.

That said, I was in a drive through once behind an old lady who couldn't restart her Lincoln(!) because the steering/ignition lock jammed up. I fixed it for her easily by muscling the steering wheel a bit to free it.

 

[jesse]

In the old days, with carburetors you might blow more gas priming the carb than you saved while is was off. These days with fuel injection you use exactly what gas that's required. Consider that hybrid cars start and stop the gas engine constantly.

That said, I was in a drive through once behind an old lady who couldn't restart her Lincoln(!) because the steering/ignition lock jammed up. I fixed it for her easily by muscling the steering wheel a bit to free it.

I'm not talking about the fuel--I'm talking about the unnecessary wear that is starting most cars. The starters in most of our cars aren't designed to be used 45 times on a single drive while you stop and start your car constantly. On some cars, it is a royal ***** to replace too.

Your hybrid cars generally start the vehicle in a different way. For example, some of the GMs, replace the alternator with an electric motor that also serves as a generator. When the vehicle needs to be started the electric motor turns the engine over via the accessory belt.

I'm not completely sure how other manufacturers do it--but I'm positive that all of them are doing something else other than cranking a traditional starter 200 times on a single drive.

 

[Cap'n Jack]

I have heard about some engines using "indexing" where the engine shuts off with a piston just past top dead center on the compression stroke. To restart the engine, just spark that cylinder (it still has the fuel air mixture) and the engine is running.

I don't remember if anyone has it in production or if it is still experimental.

 

[gismo]

In the old days, with carburetors you might blow more gas priming the carb than you saved while is was off. These days with fuel injection you use exactly what gas that's required. Consider that hybrid cars start and stop the gas engine constantly.

That said, I was in a drive through once behind an old lady who couldn't restart her Lincoln(!) because the steering/ignition lock jammed up. I fixed it for her easily by muscling the steering wheel a bit to free it.

I don't think Jesse meant it would waste gas, just that constantly starting the engine every time the line moves one car length is gonna wear out the starter faster than normal driving and I think he's right.

In the line for the car wash, I do shut down, but I also wait until the line's moved 3-4 cars before starting up so it might only take one or two starts for the whole wait. I don't think that would work in a drive thru though once you've gotten past the order taking squawk box though as it would hold up the cars behind you before they get to place their order.

 

[flyingcheesehead]

I'm not completely sure how other manufacturers do it--but I'm positive that all of them are doing something else other than cranking a traditional starter 200 times on a single drive.

I've heard that the Toyota system has a way of holding all the valves wide open when it starts, and the starter motor spins the engine at full speed (1000+ RPM?), then the fuel injection starts and the valves are let go and it starts pretty much instantaneously.

 

[flyingcheesehead]

In the line for the car wash, I do shut down, but I also wait until the line's moved 3-4 cars before starting up so it might only take one or two starts for the whole wait. I don't think that would work in a drive thru though once you've gotten past the order taking squawk box though as it would hold up the cars behind you before they get to place their order.

Oh come on, that would work great! You'd free up the employees inside to do nothing but work on completing your order.

 

[Capt. Geoffrey Thorpe]

In addition, it depends on your car. My car, for example, has a very efficient A/C system. It uses an unnoticable amount of gas to run it, so I always have it on. YMMV.

Felix

Driving without A/C:

http://www.youtube.com/watch?v=lPIHs5u6-Jo

(Tom is a friend / cow-orker)

 

[gismo]

Oh come on, that would work great! You'd free up the employees inside to do nothing but work on completing your order.

I didn't mean it wouldn't work out well for me, but I'd be a bit concerned about the folks getting angry behind me.

 

[sba55]

In the line for the car wash, I do shut down, but I also wait until the line's moved 3-4 cars before starting up so it might only take one or two starts for the whole wait. I don't think that would work in a drive thru though once you've gotten past the order taking squawk box though as it would hold up the cars behind you before they get to place their order.

I bet it would make people angry. 99.9% of drivers aren't smart drivers, and if you try to do anything but their idiotic "tailgate the guy in front of me, then pass him even if there's a car in front of him and passing him doesn't actually help you, then tailgate the next guy" approach to driving, they get confused.

This reminds me of driving in slow/stop-go traffic. I always keep enough distance from the guy in front of me that I can minimize braking and maintain a relatively constant speed without having to stop. Very few other people get that concept....

 

[mikea]

I bet it would make people angry. 99.9% of drivers aren't smart drivers, and if you try to do anything but their idiotic "tailgate the guy in front of me, then pass him even if there's a car in front of him and passing him doesn't actually help you, then tailgate the next guy" approach to driving, they get confused.

This reminds me of driving in slow/stop-go traffic. I always keep enough distance from the guy in front of me that I can minimize braking and maintain a relatively constant speed without having to stop. Very few other people get that concept....

I agree and do the same.

There's a site which I aint' gonna look for now where the guy proved that gap makes traffic move much faster. Less stop and go and less fear of sudden death. Not that those facts will stop the guy behind you in the pickup determined to give you a push.

You know it's also a law that if the guy cuts in front of you and you give him exactly the same interval he gave you he'll start flashing his brake lights, right?

 

[sba55]

Not that those facts will stop the guy behind you in the pickup determined to give you a push.

That's the funniest part to me. If I'm driving along, in my 2008 car with ceramic brakes, I'll be able to stop more quickly than about 95% of cars on the road. And I can most definitely stop MUCH more quickly than that guy in a 1985 pickup that that always seems to be tailgating me. People just don't think. If you're in a F430 and you're following a pickup, maybe your distance can be a little less. But not it it's the other way around.

You know it's also a law that if the guy cuts in front of you and you give him exactly the same interval he gave you he'll start flashing his brake lights, right?

Yeah. I've just learned to ignore every stupid thing people do on the road. It used to annoy me that people can't drive. Now I make sure I'm safe and if you're tailgating me, that just means that the closer you get, the more distance I need to the guy in front of me to make sure I can stop slowly enough so that you won't run into me. People don't get that, either.

-Felix

 

[Everskyward]

Yeah. I've just learned to ignore every stupid thing people do on the road.

What is more annoying to me is driving with people who provide a running commentary on the things other drivers do which annoys them.

 

[sba55]

What is more annoying to me is driving with people who provide a running commentary on the things other drivers do which annoys them.

Yeah. Just got to live with and ignore it....