This seems insane to me. I live in a city where maybe 50-60% of people have cars, and most don’t drive them that much. Yet every grocery store I’m aware of with the sole exception of the expensive Whole Foods has a fuel rewards points program. Reasons this should be controversial enough to enable a low-cost alternative:
- Many people don’t drive and therefore pay a little more for groceries because it includes a perk they don’t use
- It seems like a very ardent pro-fossil fuel move that you’d think would cause some sort of negative attention from environment activists.
- The subsidy typically applies as an amount off per gallon, so you end up really subsidizing big vehicles with big gas tanks. Again, really makes some customers subsidize others and you’d think people (other than me) would be annoyed at this.
But yet, virtually every grocery store does this. Anyone know why? Does the fossil fuel industry somehow encourage this?
People are weird about gasoline. They’ll drive around looking for the cheapest option, to save 2 cents/gallon. Even with a huge tank, that’s less than 50 cents of total savings.
So a grocery store can offer, say, 10¢ savings, and it only actually costs them like $1.50-$2.00 per customer. That’s way less than other sales that are harder to advertise and don’t bring in the same amount of business.
Ultimately the psychological benefit for the shopper is more than the financial cost to the store. The others societal costs don’t come in to that equation.
People are weird about gasoline. They’ll drive around looking for the cheapest option, to save 2 cents/gallon. Even with a huge tank, that’s less than 50 cents of total savings.
Bless 'em for keeping the price pressure on, but this is so very true. Once I ran a couple of mental hypotheticals, I stopped giving a shit, beyond avoiding places right by airports that jack it up a dollar or more (Las Vegas and especially Orlando, with lots of tourists in rentals, are the worst offenders I’ve seen).
For a pretty extreme example consider, as you say, a large 25-gal tank, and filling up from dry twice a week, at an average of $0.10/gal non-optimal price: you pay an annual premium of $260 bucks not to drive yourself batty hunting for pennies, and burning at least a tiny bit more fuel to do it. Most people will pay far less. It’s just this weird thing that stuck in people’s brains long past the point where a cent increase was any significant percentage of the fuel purchase.
For a pretty extreme example consider, as you say, a large 25-gal tank, and filling up from dry twice a week, at an average of $0.10/gal non-optimal price: you pay an annual premium of $260 bucks not to drive yourself batty hunting for pennies, and burning at least a tiny bit more fuel to do it.
Since 2001 here in WA we have a system where petrol stations have to lock in their price for a day by announcing it the afternoon before. The highlights used to be mentioned on the local news and newspaper (maybe they still are, who knows?). But more importantly they all get published on https://www.fuelwatch.wa.gov.au/ so its pretty trivial to visit the site in the afternoon and check the stores along the commute home, plus you can also compare their tomorrow price to see if you should wait until then.
Looking at that site right now I can see 25% variance across my commute without even considering a detour. Its a pretty handy system.
Fair; I guess I should have run some data. I just used gasbuddy.com to run a similar track for what would have been my rather lengthy commute if my employer had asked us to return to office (and kept the lease on that building). Apart from a couple of outliers just outside the Dallas-Fort Worth airport, I’m only getting an 8% variance (about USD 0.23/gallon, versus your 25% and AUD 0.55/litre – is that right?).
That said, Iwill admit that $0.10/gallon suboptimal average price is probably more likely than I thought, though with a less intense driving situation one would still be well under the $260/year “convenience premium.” Outside the US and other oil-subsidizing countries, the numbers clearly work out very differently.
The numbers on fuelwatch have rolled over for the new day now but when I was looking last night there was around 5-10% variation within each day but also a 15-20% price drop from Tuesday to Wednesday. By min-maxing across both days I could a min that was 25% lower than the max.
The range would be much less impressive if we only had access to a single days prices.
First of all, you make some good points here already.
I think in addition to those, gasoline is often viewed as a “loss leader”. It’s a necessity that many people need, so they are hoping to draw a lot of people in to their storefront with low gas prices. They take a small loss on the gas, and then turn around and gouge the crap out of the customers on things like soda, batteries, snacks, sunscreen, etc.
On top of that, many competitors have the same idea, and/or feel they have to sell gas cheap in order to even compete. Gas prices are artificially low in the USA for this and other reasons, like government subsidies.
And the news media loves to cover fluctuations in gasoline prices. Easy content for them
It’s probably because the grocery store is part of a larger chain where most of the locations are in the burbs and the people who shop there are dependent on cars more than the city dwellers, and they don’t see the point of not having the program rolled out across the board.
They aren’t subsidizing anything. They aren’t losing money on the gas they are selling you. It’s just another way to profit from you after you’ve bought groceries from them.
my suspicions have always been that because they provide the goods in the fuel stop at a stupid markup as you think you are saving 3-5¢/l you are more likely to buy an overpriced snack which makes up for the loss in fuel sales.
There has been several consumer studies done where they identify these as traps and recommend not shopping at the national chain as shopping an smaller stores will save more money.
It’s so that they can advertise to you more. Giving them whatever information is ‘required’ to sign up for whatever ‘rewards’ they’re offering is more beneficial to them than it is to you, guaranteed. I just don’t buy in, if that means that I’m somehow paying more than so be it.
I think people have forgotten how to have principles these days, or just don’t care.
Out of curiosity, do you only pay cash when you’re at a grocery store? If not, all your purchases can be aggregated and a corresponding consumer profile built.
It’s a way to keep people shopping at the same store. Since most fuel perks are something like 10 cents off a gallon for every $100 spent, if you spend a lot of money at a store then you get more off of a gallon. It then discourages you from going to a different store because you may not have as many fuel perks and would have to spend more to get the same fuel perks you may already have with the first store. The stores of course don’t want you to go to their competitors, so it’s a win for them.
This makes me think of how my parents’ generation would drive across town to save 5 cents on gas. Assuming a 13 gallon tank, you’re saving about 65 cents. Congratulations, big winner coming through! I will pay that 65 cents to have an extra 10 minutes of time to myself and have a hard time seeing how anyone would rather have the 65 cents.
You live in a city, but most of the store chain’s customers live in the suburbs where gas is a major expense and fuel perks are a big incentive to shop at a particular store.
The store isn’t trying to promote fossil fuels. They only care about customer loyalty. Besides (they might rationalize), their customers have to buy gas somewhere so why not from us?
