Friday, March 7, 2014
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In this November 20, 2013 photo, the Cumberland Farms convenience store on Route 1 in Yarmouth. Gas prices are begin to go up again after reaching a three-year low, just in time for Thanksgiving travel.
John Ewing/Staff Photographer
In this November 26, 2013 photo, the Cumberland Farms convenience store on Roure 1 in Yarmouth. Gas prices rose an average of 6 cents in a week across the state of Maine. At this station, the price rose 10 cents, but was still below the $3.45 per gallon state average.
Similar trends were recorded for the three metro areas. Bangor’s average price fell to $3.38 early last week, a 17-cent drop from Jan. 1. Lewiston-Auburn was at $3.34, a 16-cent drop. Portland stood at $3.40, down a dime. On Tuesday, average prices in the three major markets had climbed to about the same level, $3.43 to $3.45 a gallon.
Drivers reporting for GasBuddy.com have been finding statewide low averages in Norway and neighboring South Paris. That may seem unusual, because of the added cost of trucking gas to rural areas.
“Localized prices are due to local competition,” said Jamie Py, executive director of the Maine Energy Marketers Association.
A C.N. Brown-operated Citgo station in South Paris and a Cumberland Farms in Norway have been in a price war. Both were selling regular gas for $3.28 early last week, according to drivers reporting on GasBuddy.com, and edged up to $3.30 later in the week. By Tuesday, both were at $3.41.
Neither company talks publicly about price competition. A woman who identified herself as the manager of the Cumberland Farms in Norway said she isn’t allowed to speak to the media, and the corporate office declined comment. C.N. Brown executives didn’t return repeated calls.
PROFIT MARGINS THIN – OR NONE
Gasoline demand in Maine is modest, when compared nationally. A typical station pumps less than 750,000 gallons a year, according to the Maine Energy Marketers Association, a third of what a big-city outlet might do.
That’s why most major oil companies have moved on, even if some of their brand signs remain, through operating agreements and other partnerships. Behind the signs are regional players such as South Paris-based C.N. Brown and Cumberland Farms/Gulf Oil of Framingham, Mass., and Canadian ventures such as Irving Oil and Circle K’s global, convenience-store parent, Couche-Tard.
The owners strive for a profit margin, after expenses, of at least a few cents on every gallon. To get that, they constantly check the wholesale price of gas. They tack on taxes, plus what it costs to truck fuel from the terminal to the pump. Then they factor in business expenses, everything from rent and salaries to credit card fees.
The cost of real estate and labor are higher in Greater Portland, experts point out, and the economy is stronger than in most of Maine. Those factors can push up prices, they say.
But gas wars do break out in Greater Portland. A battle for customers has played out in Yarmouth. Here’s how the math works out:
The wholesale price of gas in Portland Harbor early last week was $2.77 a gallon. Add 50 cents for taxes and fees. Then add a few cents to truck it to Yarmouth. That’s $3.30 a gallon.
But that price doesn’t include business expenses, which range from 10 to 15 cents a gallon in Maine. So anyone selling a gallon in Yarmouth last week for less than $3.40 was probably losing money.
Two convenience stores on Route 1 had been doing that, advertising $3.28 to attract customers. One is a decade-old C.N. Brown, Big Apple/Citgo store. Across the road is a new Cumberland Farms.
The Cumberland Farms was busy during the morning commute last week.
Jennifer Gardner drives from Cumberland to Bath and had been getting gas in Topsham. But she found the Cumberland Farms to be less expensive so she was stopping in Yarmouth once a week to fill up.
Was it worth coming in to save a few cents?
“For sure,” she said, pointing to her Toyota Highlander SUV, which averages about 22 miles per gallon.
Cyndy Thayer commutes from Richmond to Portland, 40 miles. She was filling her Subaru Impreza and using a Cumberland Farms “Smart Pay” card that saves her 10 cents a gallon. She said she previously stopped at the Big Apple, but recently switched to the Cumberland Farms.
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