N. Berkshires Co-op Could Put Dent in Gas Prices
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| Source: Energy Information Administration |
Vincent Melito is proposing a purchasing cooperative that could spark a grassroots revolution to bring prices down.
"People are asking Congress to do something, but we can do something here on the homefront," said the former city councilor last week. "It's just an idea. I'm trying to take some proactive action for the community."
Melito was looking for 100 motorists willing to pledge to buy from one local gas station that would, in turn, lower its price per gallon by 2 cents. He hit that mark within two days of his proposal appearing in the local paper.
A few pennies doesn't sound like much, but with prices already at $4 a gallon in some places, consumers are looking for any way they can to save.
"It's always good to save your money," said Robert West as he was gassing up his truck on Friday at XtraMart on Ashland Street. The owner of West Oil Co., he said he can see the cost issue from both sides. "There's not a lot of profit margin in this business."
The average price per gallon for the Pittsfield region is $3.77, according to AAA of Southern New England. That's up a dime from the week before and 40 cents last month; overall, gas has risen more than 20 percent over the past year.
The burgeoning price of crude oil is responsible for 70 percent of the cost of a gallon of gas, up from 30 percent a decade ago; on top of that are refining, retail and distribution costs, and state and federal taxes.
What most people don't know is that the proliferation of debit and credit card use at the pump is also a cost factor - taken out of the station's profits and eventually tacked back onto the consumer price. That's because bank and credit card companies charge retailers for accepting their cards.
Gas stations can have a profit margin of between 2 and 8 cents per gallon. According to a recent CNN Money report, retailers added just under 9 cents per gallon earlier this year to cover costs but processing fees for credit cards are taking a 7.5 cent bite, or some 83 percent of profits.
So why would a gas station owner be willing to cut 2 cents off his prices? Because Melito's proposal takes the cards out of play and draws consumers into the convenience store attached to the gas station, which is often more profitable than the gas.
All the details haven't been worked out yet, but co-op members would be given a card or some type of identification to show the clerk. The assumption is that motorists would pay in cash, making it worthwhile for the station owner; they'd also have to enter the store to pay, creating foot traffic. In fact, more and more gas station owners are finding that coffee is more profitable than fuel.
"It would bring people into the store. If they buy candy, cookies, Lottery tickets, it would offset the loss on gas for the station owner," said Melito last week.
Melito said he had spoken with the owner of the Getty station on State Road after mulling the idea over a few weeks ago. He'd seen how cooperative buying could be beneficial as a Peace Corps volunteer in his youth - it was just getting enough people to join and a gas station owner to agree.
The Getty owner was willing if he could come up with the 100 customers. "There's no obligation to go to him," said Melito on Monday, but co-op members who do would be guaranteed the 2 cents off. That could actually translate into savings of 10 cents or more compared to other stations; it could also force stations to reduce their prices.
Melito needed the 100 members by June 1; the cooperative will operate during the summer to see how it goes. Anyone interested in joining can call 413-663-9396; leave a name and telephone number on his answering machine.
"I'm just interested in the local community," he said. "It could make a dent in the price of gas."
