President Donald Trump is heralding a new chain of gas stations that are selling gas for $3.479 a gallon, well below both market prices and wholesale costs. The ‘Freedom Fuel’ stations, located mostly around Philadelphia and in southern New Jersey, have sparked questions about how they are able to keep prices so low.
Concerns Over Sustainability
According to Jeff Lenard, spokesperson for the National Association of Convenience Stores, there is no way the stations can be profitable – or even sustainable – charging that much below cost. ‘There’s no way those stations could operate the way a traditional retailer would, without at least breaking even on fuel,’ said Lenard.
Station owners set their own fuel prices, and the overwhelming majority of gas stations in the country are small businesses that run on thin margins, not the major oil companies that often have their brands on the stations. Many make most of their money on the convenience store items sold inside, like snacks and drinks.
Impact on Local Businesses
A competing independent gas station, Red Lion Fuel, is selling gas for $3.60 a gallon and has seen a decrease in sales since the Freedom Fuel station opened. Muhammad Irfan, the owner of Red Lion Fuel, said, ‘We cannot even compete… We are hardly breaking even when we pay off things like credit card charges. There’s no way I can go down to $3.47 unless I’m losing money.’
Original reporting: WPBF West Palm Beach — read the source article.
