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Holding Down Gas Price Gets Costly

Posted on: Thursday, 6 October 2005, 18:00 CDT

By Mark Johnson, The Charlotte Observer, N.C.

Oct. 6--DURHAM -- Steven Grover refused to raise his gas prices. He had seen enough.

Grover, co-owner of the A&P Minimart off Interstate 85, had watched single mothers put baby food back on the shelf because it cost so much to fill their gas tanks.

Last week, representatives from his gasoline wholesaler, McLeod Oil in Mebane, showed up and said he had to raise his prices by 40 cents a gallon.

"I said, 'I'm not going to have any part of that,' " Grover said during an interview Wednesday at the small store. "That's price gouging."

McLeod officials said they would send a truck to pump out the remaining gas in Grover's tanks and take it back, he said.

David Permar, a McLeod spokesman, said the gas isn't Grover's -- it's McLeod's. Grover sells it on consignment and is bound by a contract to sell at the company's price.

"We keep the (station's) tanks full. It's our inventory when it's in the tank," Permar said. "Prices are set based on what our costs are."

McLeod delivered a truckload of gas Sept. 26, and gave Grover a price of $2.86 a gallon, he said.

Grover, who abides by a contract negotiated by the previous station owner, acknowledged the gas is on consignment. He pays McLeod for it the following week, after it's sold. He drew the line when McLeod tried to boost the price mid-week.

"The gas is already in the ground," Grover said. "We know what they paid for it. ... They're going to raise the price? Not while I'm at the wheel."

While Grover was at church last Wednesday night, McLeod workers padlocked the pumps, which the company owns.

McLeod officials already had scolded Grover for posting his margin sheets, he said. He places copies of the documents showing what he paid for the gas and how much profit he's making for customers to see.

Permar said last week was unusual, with the major suppliers sharply raising prices. The company has to treat its customers equally, changing prices at all its stations, regardless of when the gas trucks arrived, he said.

"If we don't change the price here, there's some other station where we did change the price," Permar said, putting some customer stations at a disadvantage.

McLeod officials told Grover they will charge him for the gas they intend to pump out and take away, he said. McLeod workers showed up Wednesday afternoon and started removing pipe equipment.

Grover already had contacted the office of Attorney General Roy Cooper, to report possible price gouging.

"We are looking into it," said Noelle Talley, spokeswoman for Cooper.

Although McLeod requires all its stations to charge roughly the same price, there are multiple wholesalers with whom stations can contract, providing some degree of competition among stations.

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Copyright (c) 2005, The Charlotte Observer, N.C.

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GAP,

Source: The Charlotte Observer (Charlotte, N.C.)

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