Welcome to the 76th installment of The Wal-Mart Weekly, a column dedicated to bringing you insight, wit, facts, results, opinions, and just a bit of everything else when it comes to a very hot topic these days: Wal-Mart.
This week, I'll be taking a look at Wal-Mart Stores Inc.'s (NYSE: WMT) apparent unwillingness to lower gasoline prices along with the thousands of other price rollbacks on its store shelves. In fact, a possible price hike was on tap for the retailer's Murphy USA gas stations just last week in Texas as thousands of residents were urged to evacuate their homes as Hurricane Ike roared towards the U.S. shoreline in the Gulf of Mexico.
As oil barrel prices dropped last week and hurricane situation became worse and worse for South Texas, Wal-Mart gas stations saw a $0.12 per gallon price increase in less than 12 hours. On the day the official call was made for South Texas residents to flee their homes, gas was raised another $0.10 per gallon. While Murphy USA is the actual gas provider (not Wal-Mart itself), how could such a drastic increase in such a precarious position come to pass? The evacuating folks sure were not given a break on this one. In fact, the word "gouging" comes to mind. Was it really that severe?
The emergency evacuation notification goes out
The Texas Department of Transportation announced a few weeks ago that folks needed to fill up their tanks in preparation for evacuating the South Texas areas as Hurricane Ike approached. At the same time this was happening, a very popular refueling location in Lumberton, Texas, was seen raising prices $0.22 over a few day's time. Regular unleaded fuel prices jumped from $3.37 per gallon to $4.29 per gallon, then to $3.59 per gallon.
At the same time, Wal-Mart's stations were seen raising gas prices, Valero retail gas stations and Kroger grocery stores were all below $3.39 per gallon just 20 miles down the road. No price hikes there -- at the same time. Naturally, some believed Wal-Mart intentionally hiked prices to siphon off a good deal of money as customers filled up tanks as they headed out of town. Do gas stations raise fuel prices every time a storm comes to town?
Since retailers seem to have very little control over what prices to charge, the actual gas producers dictate fuel price updates. But, does a retailer like Wal-Mart have any control over ensuring customers are not gouged by a major fuel partner located in its parking lots in a time of crisis? Apparently not, even though it is the largest retailer on the planet.
Texas law
Texas does have an "exorbitant pricing" law that prevents this kind of price gouging for items deemed as necessities during times of disaster. Fuel for vehicles definitely qualifies, just like food and other survival items. So, at the same time oil barrel prices went from $118.15 per barrel to $115.46 per barrel, gas prices surged from $3.37 per gallon to $3.59 per gallon at some Murphy USA/Wal-Mart gas locations. That seems a bit squirrelly to me. You?
The price of gasoline in other parts of Texas at these same Murphy USA/Wal-Mart locations was significantly lower than the South Texas locations on these days of need, it was reported -- as much as $0.10 per gallon cheaper. And, of course, that just fed customer speculation that Wal-Mart gas-selling locations along the initial evacuation route in south Texas were just taking advantage of the situation. Even if that is not true, that was the perception. Hence, it was reality -- and it's not the kind of image Wal-Mart needs, even as the retailer is doing well in 2008 because of higher prices just about everywhere you look in retail.
What was curious was that the one gas station that hiked gas prices $0.22 in a few days shut its doors after most residents driving by had already evacuated.The competition stayed open to serve customers, but not the Lumberton Wal-Mart location. That's customer service, yes? Commitment to the community should be a motto for Wal-Mart, but in this case it certainly wasn't.
After the evacuation order was lifted and the Lumberton store reopened, the gas price was $3.44 per gallon -- $0.15 per gallon cheaper than when the store closed up shop once the evacuation was underway. Calls to Wal-Mart were referred to Murphy USA's location in El Dorado, Arkansas, and no comment was offered via phone or e-mail.
Wal-Mart's image again takes a hit
Even if Wal-Mart has very little to no control over the gasoline prices at its contracted Murphy USA locations (highly doubtful), ensuring gas prices remained consistent in a crisis would seem a natural order of the day. But, from the available evidence here, it seems the opposite was true. We all see gas prices fluctuate daily in what oil honchos call "market pricing," which is absolute nonsense.
Big oil is a cartel similar to any tightly-controlled trade anywhere in the world in the history of civilization. Prices are dictated through a highly complex series of price fixing and speculation. Any "free market" talk when it comes to fuel prices is utter rubbish and will always be, but punishing the folks trying to evacuate a major coastal area in an emergency is appalling to most of us. But, for the rest of us, we take the brunt of it every single day.
Stay tuned right here next week for another edition of The Wal-Mart Weekly. Until then, make sure you find the lowest gas prices in your area and stock up.











Reader Comments (Page 1 of 1)
9-15-2008 @ 4:10PM
willshar said...
You are being unduly harsh about Wal-Mart. In my town Wal-Mart had the lowest gas prices since Thursday, September 11th. If you want to talk about gouging, a local oil company that owns five stations went from $3.799 per gallon on Thursday and Friday a.m., to $4.999 by Friday midday and continuing through Sunday a.m., then went to $4.299 and remains at that price at present.
9-15-2008 @ 5:18PM
jeremy said...
Market pricing is not nonsense. When demand spikes for a product, the price should rise for several reasons, all of which benefit everyone. First of all, one problem with rising demand is that the existing supplies of the product will be exhausted too quickly, causing a shortage. I understand that you only want what's best for consumers, but how happy do you think they will be when they arrive at the pumps and find out there is no gas left to buy because of your proposal of keeping the price down in spite of high demand? Also, higher prices will bring more product more quickly if competing stations are able to order more supplies at a higher price. This is a basic economic concept: Price ceilings cause shortages. If it's possible to make money without running out of gasoline, the stations across the street could simply beat them by a few cents and get a large portion of their business. There is no need to impose fines and laws, the market does this with precision on its own. Besides these reasons, the article also points to lower oil prices as a reason the price at the pump should be lower, ignoring the fact that 20% of the country's refining capacity was in danger of being harmed by a hurricane. This caused an increase in the price of wholesale gasoline.
9-15-2008 @ 4:51PM
gary said...
The way I understood it was that companies that sell gas like the station down the block cannot raise or drop these selling price until the next truck load arrives. I guess I was wrong and there are a lot of towel heads out there making a killing in more ways than one...
9-15-2008 @ 5:21PM
RickRussellTX said...
Raising prices when demand goes up is gouging? Gas stations need to have enough cash to buy the *next* delivery. It doesn't matter what they paid for the gas they already have.
If you restrict their ability to raise prices, and they ring up their supplier to find that they can't pay the going rate, then they'll have to buy less gas, and that means gasoline shortages. If I'm fleeing a hurricane, I'll pay $10 per gallon if I have to. I'll pay whatever it takes to make sure there is *plenty of gas in the storage tank* when I'm ready to fill up.
9-15-2008 @ 5:28PM
Butcher said...
Not Funny......since their gas is being delivered
at approx. $2.60 a gallon.
9-15-2008 @ 5:31PM
xray said...
Mr. White here speaks against the market and for government intervention. Never mind that the only true "gouging" comes from government. Another point to make here is that the appropriately higher prices also ask the consumers to conserve resources.
9-15-2008 @ 5:32PM
urashithead said...
listen you fools, if you think you can make a profit at a lower price, THEN DO IT!!
9-15-2008 @ 9:06PM
andrew said...
I wonder why competitors don't lower their price and put the greedy, gouging wal-mart out of business? Oh, because they have economic sense and understand basic supply/demand.
9-15-2008 @ 7:43PM
cliff corson said...
in most states a station can only raise a price 1 time during the course of a day, usually that time being prior to the station opening or 8am (for 24 hr stations and automated stations)
if a station raises their prices more than twice in a day they can be fined by the company that owns the station as well as be investigated by weights and measures as well as other state/federal oversight groups
9-16-2008 @ 12:54AM
Joe Boyle said...
Where did you get your facts about Wal-Mart's current gas prices?
Nationwide, Murphy Oil is only one of several Wal-Mart and Sams gas surpliers and these companies' prices allow Wal-Mart and Sams to deliver the lowest prices in most parts of the U.S. day in and day out.
I've driven about 500,000 miles in the last 10 years in all of the lower 48 and I watch gas prices like a hawk. For the past three weeks I've been in Arizona.
I've read most of your Wal-Mart comments
during the last year and a half and you see something in a Wal-Mart store you visit and rationalized that represents all Wal-Mart stores.
Wise up.
Joe Boyle
Cheyenne WY
9-16-2008 @ 7:58AM
Vinny said...
Gas is delivered to gas stations at approximately $2:50 to $2:60 per gallon. The 'friendly' station on the corner then jacks it up to provide them with maximum profit. Don't be a fool and believe the $0.05 cent profit we are being fed by the industry. Since when did they ever tell the truth? Gasoline profits for the retailer have never been higher but the lazy parasitic liars cry, piss and moan that they aren't making enough. Greed has taken over every aspect of American business encouraged by Wall St. The new watchword is 'screw everybody' and let's rake in maximum profit.
9-16-2008 @ 8:03AM
will said...
9-15-2008 @ 9:06PM
andrew said...
I wonder why competitors don't lower their price and put the greedy, gouging wal-mart out of business? Oh, because they have economic sense and understand basic supply/demand...................
LOL. Supply and demand regulating the price of gas ? What planet are you talking about Andrew ?
9-16-2008 @ 8:54AM
TX CHL Instructor said...
Gasoline price is not directly connected to crude oil price. Shortly before the hurricane hit, most of the refineries in the area were being shut down to minimize any damage.
9-17-2008 @ 11:02AM
Joseph said...
Walmart doesn't sell a drop of gas other than what it sells at Sam's Club. Gas at it's stores is sold by Murphy USA, an independent lessee of the space they occupy. Also, many states have rules that prevent chains from selling fuel below wholesale cost, as an attempt to prevent them from bullying smaller players out of the market.