If you were trying to locate a super-expensive cup of Coca-cola, where would you go? I'd probably try a movie theatre.

A cup that sells for $1.29 elsewhere sells for $3.50 in movie theatres.

The Cokes in theaters are more expensive because there is absolutely no competition. You can try the snack bar downstairs near theatre 6 & 7, but the prices are exactly the same there.
 

Outside the theatre, Coke is always cheaper. If you began selling cups of Coke for $3.50 in a deli, I think there would be a sharp decline in sales.

Then again, if this deli was the only one for miles, maybe you could sell a few cups. Especially if you specialized in salt sandwiches.

Gasoline is different than Coke in a few ways, but the price is still dependent upon competition.
Extreme Competition Intersection

Imagine a world where insane city planners hi-jacked the development plans, and one busy intersection emerged, loaded with 16 gas stations. 

Every car in the area would be able to quickly survey the available prices, and most customers would favor the station with the lowest price.

The closeness of these 16 stations would do two things for the consumer. It would 

  1. Enhance each customer's ability to find the cheapest price
  2. Make it easier to move a vehicle to the cheapest station

What I'd like to do with the Sacramento Gasoline Connoisseurs project is to simulate the first benefit of the Extreme Competition Intersection. By monitoring the price of gas at every station in Sacramento, and posting the information online, we can increase competitive pressure and decrease the price.

 

 
 

Some gas stations never have the lowest price. I like to call these the luxury gas stations. They tend to be the cleanest, brightest stations. You are probably well aware that their prices tend to be 12-15¢ more than cheaper stations.

These stations will resist the pressure to drop their prices. They don't want to compete with their price, they want to compete with service, speed and status. In the fight for lower gas prices in Sacramento, it will be vital to do without these meager luxuries for at least a couple of months. 

Luxury gas stations will drop their prices eventually. They know that 15 cents more than average is the most they can ask for, or they will start seeing spider-webs around their gas pumps.

Getting people to buy the lowest priced gasoline is only the first step in the project.

The second step is to influence gas station owners to drop the retail price of their gas down to or near the lowest price in Sacramento. They will do this if they can make more money by lowering their price.

The third step isn't really a step. It is a continuous rolling decrease in the price at all gas stations. 

I don't want to save 5 cents. I want to save 80, and I'm willing to work for it.

This will require planning, organization, participation and action.

I cannot accurately predict where the price will fall to. I was taught that the price will fall until it reaches the minimum level possible for an efficient seller to stay in business.  Help me discover what that level is.

More information about Sacramento Gas Connoisseurs:

This page last updated April 10th, 2003 | Copyright © 2003 Rob Cockerham | Web h

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