“When losses happen, somebody’s got to pay for it.”
Called Freedom Fuel Network, the enterprise encompasses dozens of gas stations throughout Pennsylvania and New Jersey, USA Today reported, although it isn’t exactly clear which locations are open for business. Plastered in American flag decals and “Freedom Fuel” branding, the gas stations seem to be selling unleaded gasoline for the fixed-price of $3.47 per gallon, about 32 cents cheaper than the current average price in the US.
According to GasBuddy, nearby prices range from $3.85 to as much as $4.49 — no doubt reflecting the slower drip of oil from the president’s costly war on Iran, which burst back into active fighting this week.
As head of petroleum analysis at GasBuddy Patrick De Haan told the Philadelphia Inquirer, the current price of crude oil means there’s no way Freedom Fuel’s $3.47 price point can turn a profit.
“Stations selling at this price, it’s not sustainable,” De Haan explained. “Generally, when losses happen, somebody’s got to pay for it.”
De Haan raises an obvious question: who is paying for it? If the stations are losing money on every gallon, somebody has to make up the difference somewhere — whether out of Trump’s pocket, that of a friendly donor, or the taxpayer’s. And if it’s a private company taking the hit, how long until they stop subsidizing Pennsylvania drivers?
Already, the stunt seems to be distorting local markets. As of Wednesday, a nearby Sam’s Club in Dresher dropped its price to match the $3.47 figure — surely good news for anybody buying gas in South Eastern Pennsylvania, but as always, the devil is in the details.
Gas in Wisconsin has been fluctuating around $3.40-3.60 the last two weeks, today its $3.49. This is not just Costco and Woodman’s, but also some pure gas stations like Citgo. According to the article they must all be loosing money. Is there anything I’m missing here?
My guess would be that different regions have different costs associated with transport and different tax requirements.
Taxes on gas seem to be particularly high in Pennsylvania and Philadelphia. Nevertheless, after searching a bit, there is also a Philly gas station around Philadelphia selling it for… $3.47. To me, this outrage about Freedom Fuel feels either like effective marketing, or its other Petro companies trying to keep out a competitor to justify their profitable “market prices”. Even if its something else, it seems effective enough to have Democrats defending the Petroleum industries pricing practice.
Well, you see, different areas of the country have different prices for things. For instance: a 1200 sqft house in Los Angeles might sell for $1.5M, while the same house might sell for $300k in Lake Minnetonka. Due to real estate costs, simple things need to be sold for more money to make up the cost of renting/buying that store space. A gallon of milk is only $2 in Danville, IN but costs $5 in Los Angeles. Gas can cost $6.39 in Los Angeles at the same time as only being $2.89 in Tuscaloosa, AL.
Proximity to refineries also makes a difference in price. So, if you see all the stations in NJ and PA charging $3.85 to $4.49, then that is going to be the rough cost for that area, even if it is much higher than in your area.
EDIT: States also charge different taxes on gas.