ILLUSTRATION BY: CADY HERRING
Every two weeks, Tisha Coleman makes the 32-minute drive to Batesville from her apartment near the Ole Miss campus. She does not go to meet a friend or pass through on her way to Memphis. She simply goes to fill her 2007 Chevrolet Impala with regular gasoline.
Coleman, a senior journalism major from Americus, Georgia, budgets herself each month to ensure that she has enough money to cover all of her bills. Coleman pays for her cell phone and health insurance and is a community assistant, which covers her apartment living costs. However, she found that her on-campus job does not pay for all of her bills.
Coleman decided she needed to look for other ways to cover her essential costs. She has a steady job, so she wondered what else she could do. It was not until Christmas break that she learned about the sizable gap between gas prices in Batesville and Oxford.
“My friend told me about the difference when she was coming back from Christmas break, and she had to pay for someone to pick her up,” Coleman said. “And she was like, ‘Did you know that gas in Batesville was really cheap?’ And I was like, ‘No, what is the price difference?’ And at that time I want to say it was $1.72 in Batesville, and here in Oxford it was $1.92.”
The 20 cent difference from the neighboring town’s gas stations prompted Coleman to begin driving to Batesville to fill up the gas tank of her sedan. She immediately noticed a difference.
“The last time I went, I filled up my tank for $30, and, before I started going to get gas in Batesville, it was $50 to fill it up,” Coleman said. “I can see the difference in just like budgeting my money – the difference in how much it costs.”
R.R. Morrison and Son Inc. was a retail chain operator of convenience stores that sold gasoline in Mississippi, Tennessee and Louisiana. They operated about 50 stores in 20 different markets and had a data management operation called Fuelman.
“Gasoline is a very price sensitive commodity,” said Bob Morrison, retired president of R.R. Morrison and Son Inc. “People will drive a long way to save one or two pennies on a gallon of gasoline. It is irrational, really. That is the truth of the matter. But bigger places like Kroger are smart in that they have used that sensitivity.”
“I told my mom about driving to Batesville for gas and she did not quite understand it,” Coleman said. “I am still at a full tank when I get back to Oxford after filling it up.”
According to Morrison, the price of gasoline in each town depends on their market. He explained that markets are established from town to town; Batesville represents one market, and Oxford is its own.
“Every market is different, and it has to do with the competitive set there,” Morrison said. “For instance, if there happens to be a Wal-Mart or Kroger in one of those markets that uses gasoline as a loss leader to sell groceries, which they do, then the gasoline folks at smaller stores are on the horns of a dilemma. They try to meet the gas prices that grocery stores use as a loss leader or get close to it.”
Coleman believes the prices of gasoline in Oxford are a direct result of it being a popular college town.
“Because it is a college town, I feel like they think that they can get more for their buck,” Coleman said. “Since there are so many of us, I feel like it could be cheaper. However, I think the higher prices are just because of this area and its students.”
In order to have competitive gasoline prices, R.R. Morrison and Son Inc. had managers of individual stores report their competitors’ prices daily. Their goal was to meet the lowest price in town, whatever that was. Morrison himself would then set the price for all of his company’s gas stations.
Morrison said a company’s supply cost, along with its competitor’s prices, will generally set what its gasoline will cost at the pump for its customers.
“What happens is the costs rise, and you get a lot of pressure,” Morrison said. “Your margins at your end of the deal compress because you are getting increase cost that you can not really pass through at the pump because your competitors will not let you.
“Again, generally, it varies from market to market, but if gas stations do not get 10 or 12 cents a gallon between what you pay for it and what you sell it for, if you do not get that, then you can not pay the bills.”
