Gas Station sued for offering cheap gas.

[Wagner]

CNN had a link to a video on this. A gas station in the US was selling gasoline under cost (basically taking a personal hit on profit with Premium costing 2.80). So as a direct result they were sued by another gas station claiming unfair trade practices. Saying it was not legal for the station to take a profit hit (aka selling under cost).

I would want the name and location of that suing gas station if I lived there and would set up my own personal boycott and drive that place to the ground.

They estimated that the lower prices saved consumers nearly 160,000.00.

[drex]

that other gas station needs to lighten up.


as in literally

[JV]

Some states actually have laws forbidding the sale of gas for less than their cost

JV

[bozo]

That is TOTAL bullsH@#!!! A boycott is definitiely in order...

[Eric5273]

Originally Posted by JV

Some states actually have laws forbidding the sale of gas for less than their cost

There actually is a point to those laws. They protect smaller businesses.

Imagine this: Imagine you are the independent owner of a small gas station. Now imagine that the rest of the gas stations in your town are owned by Exxon-Mobil. Maybe your market share of the gas sold in this town is 10%. Exxon-Mobil decides that they want your market share. So their business analysts do the math and figure out that if they sell gas for less than cost, they will put you out of business within 6 months. They determine that the loss they will take over that 6 months can be made up during the following 2 years by gaining your 10% market share, and then after that it is all extra profit.

See where I'm going with this?

[JV]

Originally Posted by Eric5273

There actually is a point to those laws. They protect smaller businesses.

Imagine this: Imagine you are the independent owner of a small gas station. Now imagine that the rest of the gas stations in your town are owned by Exxon-Mobil. Maybe your market share of the gas sold in this town is 10%. Exxon-Mobil decides that they want your market share. So their business analysts do the math and figure out that if they sell gas for less than cost, they will put you out of business within 6 months. They determine that the loss they will take over that 6 months can be made up during the following 2 years by gaining your 10% market share, and then after that it is all extra profit.

See where I'm going with this?

I see where you're going with it, but most of those laws were in the books before the merger of ExxonMobil and ChevronTexaco, etc. Selling under cost is a genius marketing strategy for the little guy in all this. They get millions in advertising and positive public perception free.

[Bavarian]

Originally Posted by Eric5273

There actually is a point to those laws. They protect smaller businesses.

Imagine this: Imagine you are the independent owner of a small gas station. Now imagine that the rest of the gas stations in your town are owned by Exxon-Mobil. Maybe your market share of the gas sold in this town is 10%. Exxon-Mobil decides that they want your market share. So their business analysts do the math and figure out that if they sell gas for less than cost, they will put you out of business within 6 months. They determine that the loss they will take over that 6 months can be made up during the following 2 years by gaining your 10% market share, and then after that it is all extra profit.

See where I'm going with this?

You got it right on! There was a scam several years ago with our biggest cell phone provider here in Canada called Rogers. They were undercutting everyone with unreal low prices.

While there wasn't a big court case and such, it is a time I remember. Unfortunately, what Rogers ended up doing was buying out their main competitor (Fido), so they won in the end I guess.

Less competition frightens me. In the US, you people have like 3-5 big name choices; here we have 2 nationwide.

[Eric5273]

The reason I know this is from personal experience. I'm own a music publishing company and our main business is licensing background and theme music for television & film production. Our clients are mostly studios and television stations & networks. It is a family business and has been in my family for over 70 years.

Back about 10-15 years ago, most of our competitors were also private small publishers like ourselves. But now, my 2 largest competitors are owned by EMI and BMG, 2 very large corporations.

I'm having a really hard time competing with them, especially with the company that's owned by BMG. I know for a fact that this company has lost money in each of the last 5 years. Yet with their super low prices and huge advertising campaigns they continue to gain market share. My understanding is that they also continue to lose more and more money each year. But this company is such a small part of BMG as a whole, that them losing a few million dollars per year is a drop in the bucket for BMG. I'm sure once they put everyone else out of business and have a monopoly in the industry, then they will raise their prices back to a reasonable level so they can be profitable.

I'm sure the same thing is going on in other industries as well. I've heard similar stories about WalMart putting local family owned stores out of business. Is this still the land of opportunity?

[RuppX5]

Walmart hasn't put one company out of business. Consumers that used to shop at the mom & pop local store and went to the Walmart put the small companies out of business.

I haven't spent a dime at Walmart in years, have you?

[Wagner]

Originally Posted by RuppX5

Walmart hasn't put one company out of business. Consumers that used to shop at the mom & pop local store and went to the Walmart put the small companies out of business.

I haven't spent a dime at Walmart in years, have you?

Good point. The consumer has power, they just don't realize it.

Figure this, if a small company takes a profit hit by selling fuel at a 5 cents profit per gallon. To average Joe consumer the gas seems less expensive and as such little mom and pop have now tripled their customer base there from now making 15 cents on the gallon to what they were selling. Just a thought.