Why is Arco so cheap?
Gas prices in 2012 don't look so good. It'll probably be just as high as it was in 2011 if not higher, according to today's front page article.But if you go to GasBuddy.com, you can find the cheapest gas in the city. Today for instance, the cheapest place to go in Rancho Cucamonga is the Arco on Arrow Route and Etiwanda Avenue at $3.51 per gallon. The cheapest place is almost always Arco or Costco. Why is that?
Well, it's not because some stations sell poor quality gas. By law, gasoline has to meet certain standards and must be tested, said Patrick DeHaan, senior petroleum analyst for GasBuddy.com.
"You can go to Exxon or Arco and you'd be getting the same gas at Costco," DeHaan said.
The main reason Arco might be cheaper is because it doesn't take credit cards. Gas stations typically pay 7 cents to 11 cents per gallon to process credit card payments and since Arco doesn't take credit, the company can charge less.
Also, Arco and other big chains are at an advantage over smaller independent gas stations because they can afford to hire a pricing manager to keep a close eye on constantly changing prices of wholesale gasoline. When prices dip, big chains can buy quickly.
Now about Costco. DeHaan believes cheap gas is used as a lure.
"It gets people in the door to buy 50,000 rolls of toilet paper," DeHaan said. "Selling gas 10 cents cheaper speaks volumes to Americans. They get people to sign up (for membership.) It's a big boon for them and they're not necessarily losing money on it."
Photo by LaFonzo Carter/Staff Photographer
Gas stations actually make very little profit of the gas they sell. Their biggest margins are for the things found in their convenience stores. Even bigger than service and maintenance.
So in that regards, Costco isn't that much different than an AM/PM, only they sell stuff in bulk. :)
ARCO is cheap because it is BP (British Petroleum), the company that gave us great hits like "Deepwater Horizon Spill", "Texas City Disaster", and "Tony Chase". When a company isn't spending money on safety, oversight and environmental they are able to sell the gas for a few cents cheaper.
I refuse to go to Arco because of the .35+ cent fee they charge you to use debit/credit cards. The lower price per gallon ends up being a wash.
I used to have a Sam's Club membership and would fill up there whenever convenient, but I wouldn't go out of my way to drive there for that specific purpose.
I stick with Mobile because I have a Speedpass tied to their credit card which gives great cash rewards. Convenience is key for me these days...
What about gas at supermarkets like Vons or Ralphs, where you use points (earned from grocery purchases) to lower the pump price? There will be a Ralphs' fuel station at Haven & Base Line.
Supermarket gas is pretty cheap, too, from my experience. The price of gas at the Vons near my house is usually similar to Costco's. Like Costco, supermarkets use cheap gas as a way to get you to shop in their markets.
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