posted 03-17-2005 08:47 PM         

Gas station owners' dilemma: too few twos

It turns out that when regular gas prices top $2 a gallon, it can be a pain for station owners, too — sometimes there aren't enough twos to go around for their signs.

As average prices for regular unleaded topped the $2 mark in Nashville yesterday, there's been a growing demand for the number 2 from some convenience-store and gas-station owners, said Bobby Joslin of Joslin and Son Sign Co.

''The large numbers cost about $150 each, so stores don't keep a large inventory of them around,'' Joslin said yesterday.

There was a significant run on twos last year, when premium prices first crossed the $2-per-gallon threshold in the area, Joslin said.

There was a lull when prices dropped, but there's been a surge again as prices for regular unleaded have jumped almost 20 cents a gallon in the past month.

''You've got to have so many more (twos) when each grade goes to $2,'' said Jay Perkins of Scot Market, a convenience store chain based in Nashville. ''If you post three grades, you've got three twos right there.''

It gets even trickier when prices edge toward $2.02 for regular, $2.12 for mid-grade and $2.22 for premium, he said.

Scot Market felt the two crunch last year and ordered extras, Perkins said. So far this year, it hasn't been too big of a problem.

''I stocked up last year,'' he said. ''I've got plenty.''

Higher demand for twos prompted a primary supplier for convenience store signs in the United States to adjust the packet of numbers that it routinely ships to gas station and convenience store customers for fuel signs.

''We've added more twos and threes,'' said Bobbie Shosty, marketing director of May Advertising in Fort Worth, Texas. ''We used to put in a lot more ones than we do now.''

Higher gas prices have prompted changes in the way gas-station signs are designed, with companies allowing extra room for a wider first number.

''For years, it's always been with the one in front of it,'' Joslin said. ''The number twos are even wider, so it's complicated that situation somewhat.''

A few rural stations may run into problems with older mechanical pumps that don't have digital readouts and can't display revolving prices higher than $1.99 a gallon. But there's been no serious shortage of twos for their signs, said Marylee Booth, executive director of the Tennessee Oil Marketers Association.

''Nobody has complained to me about it, but I suspect they scrambled just as hard as everybody to get everything in place'' when prices started to rise, she said.

A daily survey of gasoline sales by travel company AAA South pegged the average price for regular, self-service unleaded at $2.004 in Nashville yesterday, the highest it's been this year. The national average was $2.05 a gallon.

The federal Energy Information Agency predicted yesterday that regular unleaded gas prices will hover around $2.15 a gallon through the spring, with further spikes during popular travel times.

Shosty said it could get worse in some parts of the country if her company's orders are any indication.

''We did get a few calls for threes in California,'' she said.

posted 03-17-2005 09:05 PM         

I hear ya,,,,,nothing we can do,,,,total eclipse of the billfold.

posted 03-17-2005 09:08 PM         

prem $2.44

posted 03-18-2005 07:29 AM         

Their cost of inventory has gone up 120 to 140% over the last 14 months while their margins have completly disappeared. I live it every day and most nights that I can't sleep.

posted 03-18-2005 09:27 AM         

I got one of our accounting staff to bring me a typical invoice.

This is ExxonMobil branded gas delivered to a dealer (has one c store) that operates here in Greensboro. Lowest possible freight since the terminal is here also. It is the typical load of 6,500 Reg., 1,500 Mid Grade & 1,000 Prem. for a total load of 9,000 gallons. Included is the rack cost of the gas, plus State/Federal taxes/fees, freight, plus our margin (gross profit) of 1/2 cent. The total invoice is $18,252.05.

No one believes me when I tell them that we (distributor) are only making 1/2 cent per gallon, which equates to $45.00 for an $18,252.05 transaction.

posted 03-18-2005 10:10 AM         

$150 for a number has to be a gigantic one for a truck stop. We use electonic numerals on this type of sign.

The ones that go into a standard price and ID sign cost me $6 to $8 each when purchase in bulk. You need either 6 or 12 depending on the location.

I check with our contoller and we have either paid for, have invoices for or have on order over $6,800 in interchangable 2s for mechanical per signs and have spent or are going to spend another $2,000 for programming of the electronic signs.

Almost 9 grand total to post for $2+ fuel!

posted 03-19-2005 05:15 PM         

quote:

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Originally posted by ed monahan:
...
We need to change something drastically. It is hard to believe they are pushing the Hemi's, the BIG trucks, etc. I would think we would see some small cars being pushed in the near future. It takes a long time to change the public's way of thinking, however.

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posted 03-21-2005 08:24 AM         

No you are not beating me up, you are just thinking rational and the gas business is totally irrational!

Local street to street competition actually dictates short term retail prices more than wholesale prices. Of course wholesale increases can only be absorbed so long, but retailers are reluctant to be the first station to raise retail prices when wholesale prices increase due to a loss of volume. Less low margin gas sold = less high margin Twinkies sold. Thus margins are squeezed when wholesale prices increase. Retailers just hope to weather the storm until wholesale prices decrease. Retailers get killed in increasing markets and hope to make it up in decreasing markets. Long "up markets" is what kill most retailers.

You are most definitely right in that not all stations get loads the same day. In these times, due to costs alone most dealers need to wait until their tanks are almost empty before taking a load and everyone is typically on a different cycle. I know it would appear that some stations may have lower cost inventory in their tanks, but with the consolidation in the business plus the volume driven economics of the business most of the surviving stations today pump enough volume that it warrants them getting a load every day to every third day, so their inventory turns are fairly quick. Even in rural areas, if a station is not getting at least 5 loads a month they will be closing down soon. The economics are volume driven. Shipments are often at night, so deliveries are made to stations more often than the general public realizes.

posted 03-21-2005 08:58 AM         

I'm not in your market, so I don't know the particulars, but I've seen the same thing happen.

Most dealers are independent business people and some are good, some OK and some bad. I had a case similar to this last week with one of our retailers. The dealer returned from at trip and saw the invoice for the last load (which had an increse of 10 cent from the previous load) and knee jerk reacted with an 18 cent increase.