Experts are warning we could see major spikes in the price of gasoline after Tropical Storm Harvey disrupted Texas Gulf Coast production. But gas prices tend to fluctuate even during times of relative calm -- WYSO Listener Chris Longo was wondering why that is?
WYSO Curious intern Liam Niemeyer investigates.
Finding the best gas prices can be crapshoot for most people -- prices can fluctuate from hour to hour. Jeff Lenard, spokesman for the National Association of Convenience Stores, knows how a sudden spike in gas prices can get people angry.
鈥淭here鈥檚 an emotional connection to gas that doesn鈥檛 exist for other products. You see the prices driving by at 45 miles per hour. It connects with you a little bit more directly than a gallon of milk, a loaf of bread, things like that.鈥�
But ultimately, Lenard says gas station owners don鈥檛 really have much control over the price, 鈥淕as prices fluctuate because they鈥檙e tied to commodities. They鈥檙e tied to oil prices. And just like commodities, oil prices go up and down by the minute. So right now we鈥檙e looking at summer gas prices that are about at 12 year lows.鈥�
Gas prices are so low this summer because the price of crude oil is also low. Crude oil is processed at refineries to make gasoline. And it鈥檚 cheap because there鈥檚 a lot of it out in the world right now. Tom Kloza with the Oil Price Information Service says we can thank U.S. fracking for that.
鈥淥il Shale is a big game-changer. And as recently as the Arab Spring back in 2011, there was very little oil coming from US shale. And that鈥檚 changed dramatically and will continue to change dramatically."
While there鈥檚 a glut of crude oil right now, Kloza says gas prices could still spike. Because gasoline is perishable, one natural disaster could wreck havoc on gas prices.
鈥淏ut when you have problems with hurricane impacts, and refineries going down, fires, events, then justin time and become just-intolerable with very brief gasoline price spikes.鈥�
In downtown Yellow Springs, a price bump can make or break the bank for Nipper鈥檚 Corner, a locally-owned independent gas station.
鈥淲e鈥檝e been through good times and bad times. A lot more bad times. [laughs]," says Ben Vannusdal, who runs Nipper鈥檚 corner with his in-laws, Jane and Dennis Nipper. Whenever he needs gas, he calls Hartley Oil Company in Washington Courthouse. They sell it to him usually 20 cents per gallon lower than what鈥檚 advertised to the consumer, what鈥檚 known as the 鈥渞ack price.鈥�
Add taxes and a small markup onto that initial price, and you get the gas prices everyone sees posted on the road. But usually gas station owners like Vannusdal only make a cent or two of profit off of each gallon.
鈥淲e get most of our profits from inside. If someone鈥檚 telling me making tons of profit off of gas, then they鈥檙e lying to you. If I have a major breakdown of one of my pumps, we鈥檝e probably lost money for the month.鈥�
The real money is in the chips, drinks and alcohol in the store.
鈥淭here is competition," says Jane Nipper, who helps inside the convenience store. "And Speedway, being one of the largest competitors, if not our largest competitor, we can鈥檛 compete on stuff like let鈥檚 say candy bars. And they may sell them for like 2 for 89 cents. We can鈥檛 buy in volume."
Speedway, owned by Marathon Gas, has numerous gas stations across multiple states. Speedway buys their gas, food and alcohol in bulk, which means they can beat Nipper鈥檚 Corner on price in many cases. So Nipper鈥檚 Corner has to find other ways to survive.
"We try to get to know our customers,鈥� says Ben.
Being a big part of the community is the heart of what keeps Nipper鈥檚 Corner going. Dennis Nipper, the person who the gas station is named after, lays out a red lawn chair in front of the store just to say hi to community members that pass by.
鈥淚 sit right here in the chair with a coke and just watch the world. Everybody that comes to town has to come by this corner.鈥�
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