Shell station owner Bob Oyster is selling regular gas for over $4, but he’s not price gouging. He’s protesting Shell. What? From the San Francisco Chronicle:
There’s a much deeper story here, and it begins with Oyster, a respected, self-made businessman who turned a single station into Oyster Petroleum, a profitable firm in Redwood City. Oyster is nobody’s fool. Don’t think he isn’t well aware that the Chevron station across the street is selling regular for 70 cents less.
Putting the price way up over $4 a gallon isn’t about making a profit. It’s about making a statement to a multinational corporation. After Shell forced him to pay higher prices for gas in San Francisco and jacked up his rent, Oyster says, he decided to fight back.
“I got fed up,” Oyster admits. “It makes a statement, and I guess when people see that price they also see the Shell sign right next to it.”
In fact, far from making a huge profit, Oyster is going out of business. He has operated the Shell station at Sixth and Harrison for 22 years, but he’s walking away from it at the end of the month, handing over the keys to Shell officials and expecting them to shut it down.
“I’m getting nothing for the station,” he says. “I just give them the keys and walk away. They told me they were probably just going to fence it and bulldoze it anyway.”
Oyster says Shell jacked up his rent in an attempt to put him out of business so they could replace him with their own station and employees, and it worked. He says that independent dealers don’t make a profit on the gas they sell, much like the way movie theater owners make all of their money on concessions. Shell denies this.
“All I’ve got is gas and cigarettes,” he says. “And you can’t sell that many cigarettes.”So Oyster took matters to their logical conclusion. If it took $4 gas to get people’s attention, he’d give them $4 gas.
“I’m going out with a bang,” says Oyster. “And I don’t care if I don’t pump a gallon on the last day.”
Poor Bob. —MEGHANN MARCO
Dealer prices gas over $4 in protest [SFGate via Freakonomics]
(Photo: Liz Mangelsdorf)
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Is it just a coincidence that the guy’s name is Oyster and he owns a Shell?
@missdona: ROFL!
Phew, that shouldn’t be that funny. But anyway, hey, cheers to him for doing that. The irony must kill Shell, if they even notice.
@missdona: Oh god that was great! I just bursted out laughing immediately.
@missdona: You win the thread. Congratulations!
::blows kisses::
I love you all!
@missdona: What did the fish say when he hit his head on a cement wall?
(DAM!)
@missdona: Post of the month.
The bigger statement would have came from selling gas at $1.00 a gallon.
When people see that a station is selling gas for what it is actually supposed to be sold at they will go crazy.
He would have made national news and could have passed out flyers to his customers about how shell sucks.
In fact, I think he would have made every news station in the US if he sold for $1.00 a gallon.
@r81984: But I think its illegal to sell gas for way cheaper than everyone else. But you’re right.
Am I missing the ‘statement’ here? I just don’t get it.
@r81984: touche
The problem is, I’m sure Shell has some type of agreement where he cannot undercut the prices he buys from Shell’s Suppliers. Thus, if he pays 3.50 a gallon, he must sell for 3.50 or above a gallon. But I’m sure there’s no agreement that he can’t make a 1.00 markup on it, so that’s why he’s selling for 4.50 I’m sure.
I get it now. Everyday there is a “theme” on The Consumerist. Yesterday is was “Shitty Vacation Day”, today is “Cut Off Your Nose to Spite Your Face” day. I look forward to tomorrows theme, may I suggest Hawaiian Shirt day?
Hmm, yeah, I was a little curious about the feces theme yesterday.
Seriously though, if this guy wants to make a point, jack the price up to $10 or something. $4, unfortunately, isn’t all that shocking anymore.
Basically, it looks like he wants out and he’s leaving Shell with the crappiest situation: a gas station that is now “the most expensive in America” with full underground tanks.
Good for him. I hope he planned his retirement well. He might need legal fees.
Good for this guy. I doubt that he is going to even make a small dent in their overall profits but how many people have been forced out of business like this and just took it up the butt smiling? I doubt he is making Shell that much anyhow considering they said they were going to “bulldoze it” but at least he “went out with a bang” as he says. I agree with the above posts. This guy could have sold the gas for $1.00 and make national news and I guarantee he could get the online community to raise the money necessary to get him out of the bind he would be in. STICK IT TO THE MAN!!
@Insder: Don’t be so sure. Since Shell owns the site and this guy just ran the place, he is almost certainly under contract to sell gasoline for the price dictated to him by Shell. And if he thinks he is going to be able to just walk away at the end of the month or whatever with his middle finger firmly flipped at Shell, he probably has another thing coming.
I would be very surprised if Shell didn’t end up suing this guy for breach of contract and defamation.
The bottom line is this: If you signed a contract to do business a certain way, then you must abide by it. You don’t get to just ignore the contract because you feel slighted by Shell. I do not feel sorry for this guy at all. If he didn’t like the contract terms, he shouldn’t have signed the contract in the first place.
@ScramDiggyBooBoo: The only problem there is that if it’s illegal to massively undercut on gas prices (which I’m fairly sure it is), he’d have more troubles that Shell closing the station. The “send a ton of mixed nuts” trick probably doesn’t work on judges.
Actually, welcome to last month….
The day before he turned the station over to shell, he dropped the price of gas down to $1.99 a gallon, just to leave Shell with completely empty tanks.
If this man’s goal was to sell less gas then why didn’t he just shut down his pumps? How does over inflating the price to the public make a statement to Shell?
Slow news day ‘eh? If you want, I work in finance for a retail company, I can have our customer service reps screw over a customer if it helps.
Lowering prices isn’t illegal. Predatory pricing practices are illegal under antitrust legislation; that is when a large firm lowers its prices below a profitable level temporarily in order to drive a smaller competitor out of business, as it can sustain those low prices in the short run while the competitor can’t. This doesn’t really count; if he lowered his prices he would just sell all his gas extremely quickly, and the experiment would be over.
Here in Cleveland, Oh if you pay with a credit/debit card at the pump the price of the gas mysteriously goes up by 5 to 15 cents a gallon.
Has anyone experienced this? Is that even fair?
Here in Cleveland, Oh if you pay with a credit/debit card at the pump the price of the gas mysteriously goes up by 5 to 15 cents a gallon at some stations
Has anyone experienced this? Is that even fair?
I remember reading about this back in early May when the story was originally written! At least someone in the comments over @ Freakonomics had an update to the story — the owner has now closed the station and handed it back over to Shell…
@toddkravos: Shouldn’t be. To my knowledge, the credit cards will yank a merchant’s ability to accept their card (VISA, MC, Amex, etc) if they charge more for CC than cash.
Defeats the purpose of a CC getting their fees since it encourages cash use.
Just call VISA, MC or whoever’s card you use (the actual company, not the bank like BoA, Capital One or whoever) and they’ll take a complaint and investigate it.
Same goes for minimum purchase amounts. Lots of places have a sign posted for a minimum charge- they’ll get yanked real fast if VISA/MC start calling about that.
@toddkravos – I think it is fair, if they tell you. I think what they are giving you is a discount for paying by cash, because they take a hit when you pay by credit/debit card. It seems shady, but whenever I’ve seen it done, there is usually an inconspicuous notation that says the listed price is for cash payments. Recently the stations I’ve seen do the reverse, show the full price and say there’s a $.05/gallon discount for paying in cash, which I think is more aboveboard.
@r81984:
How much is gas supposed to cost?
There was a gas station here in Golden, CO that did this a year or two ago. It makes you think about the gas station owner though, they aren’t the ones that are making all the money (in most cases).
talk about deja vu…
autoblog had this posted back on 5/11:
[www.autoblog.com]
and a follow up on 6/1, after he got kicked out:
[www.autoblog.com]
on his last day, he drained all of his tanks at $2.99/gallon. he had lines going around the block…
how are people missing the point here? he was losing his station to shell b/c they wanted their property back. so, he put up a big neon sign in a competitive market that said “HEY, SHELL GAS IS $4+”. think about it.
sure, the world moves on, but there will be some people that drove by that station, immediately became outraged & vowed never to buy shell gas again.
@jeffeb3: no. station owners typically make close to nothing on gas (or so they claim). i tend to believe them. every station around me that didn’t have a convenience attached has gone out of business.
Hey, I’ll show ‘em! I’ll renege on my contract with Shell, and run myself out of the business, thus removing any shred of legitimacy I may have had.
Take that, Shell!
I wonder if Shell is going to sue him for not living up to his franchise agreement…..
I’m not sure, but I would think they might have a case. A franchise still belongs to the parent company, so if he does intentional harm to the brand, don’t they have a right to a remedy?
Interesting.
@gorckat:
There must be exceptions to that. In Missouri along major highways, often you see a “cash” diesel price quoted on the station sign.
@jeff303: I was just about to say the same. I’ve seen the cash/credit prices for diesel for awhile in the midwest, and I’m sure it’s because the semi tanks are so large.
“How much is gas supposed to cost?”
@jrford8:
There is nothing drastically different in the gas industry since 7 years ago, but 7 years ago gas was under $1.00 a gallon.
Its clear we are being gouged as gas should still be around $1.00 a gallon.
If you do not think so then tell me why gas has almost quadrupled in the last 7 years.
Also tell me why gas has fluctuated more than $1.00 a gallon in the short period of the last 6 months?
If its not gouging, is it just a sick joke???
Doh- I totally forgot the ‘discount for using cash’ “scam” the stations use to get around the credit prices being higher.
I’d still complain.
@r81984:
Nothing has changed? How about the fact that oil prices have gone from $60/barrel?
here in California, I see the “cash price” sign all the time. It’s usually cheaper stations, often “no name,” and usually just for the 87 grade. It’s normal here.
I’m glad this isn’t in Tampa — then Tampa Police would be refueling their cars at that station. Burns me up to watch the po po’s fueling up at wherever seems to be the most expensive station on the block, when gas is often 10-15 cents less at another station on the same block.
“Nothing has changed? How about the fact that oil prices have gone from $60/barrel?”
@JustAGuy2:
I thought I made it clear that nothing has changed to raise the price of gas which covers the statement that nothing has change to validate a rise in the price of oil to $60+ a barrel.
Based on your circular logic, I guess you will rebut this by saying the price of diesel that runs the oil extraction equipment rose so the price of the barrels have to rise to cover their cost??
@r81984: What’s changed in the last seven years is the increased demand, primarily caused by China, plus a reduced supply, which causes an increase in price.
Shell did $26B in profit on $320B in revenue last year, so I think they’ll be OK, the Oyster’s protest notwithstanding.
Guys, this is a kinda old story.
The gas station was closed down at the end of May, and currently has no gas, and no markings. (I live near it, it was always jacked up above the Chevron across the street and the Chevron also has Krispy Kreme donuts, so who the hell would use the Shell station anyway right?)
Regardless, it was kinda funny to see unintelligent consumers wait in a 2+hr line for gas that was 2.99 a gallon. Even if you’re filling up a huge tank, you’re not really saving any money if your time isn’t worth less than the difference it’d cost you to just go across the street to the chevron and leave in 5 minutes. (ie: you make $20/hr, unless you’re saving $40 on a tank of gas it’s really not an intelligent idea to wait 2hours to fill up on gas even if the gas is that much cheaper unless you just don’t value your time at the very least based on your hourly rate at your job. )
In SoCal I see prices all the time that are either marked Cash on one line and Credit on another. I know where I live they have to list the different prices if it’s different for credit and cash (and prices have to be listed at the same size, as well). I know know it’s law, just not sure if it’s a city, county, or state law.
I’m waaay off topic here, but since it was mentioned in the post:
Movie theaters don’t take any percentage of ticket sales? The studios get the whole $11? Can anyone confirm this?
Thanks for the info about the cash vs credit card price per gallon.
I was thinking along the same lines – credit card merchant fees were the root cause.
I spoke to the gas station manager this morning. That was like talking to a wall.
“I don’t know man, it’s the bosses doing”
So, I called Visa. They’re stance is that it is not something they condone.
While it’s something that is legal, in certain parts of the US, it’s certainly a shady practice because
the station likely does not indicate the cost of the gas prior to you swiping the card.
That is illegal in Ohio (as per Visa rep)
This same station also does the 10.00 minimum purchase requirement when paying with a credit card. Visa rep
said that they work on a 3 strike rule. This station is on strike 2 and because I called, Visa will be ‘sending a secret shopper to the location within the next week or so’.
They could be removed if that’s true (which it is)
Man , I want that shopper job!
The station in question here does have a TINY “CASH ONLY” indicator on the door, not the giant sign indicating the ’87 price.
And certainly nothing about the cost when paying by plastic.
A quick test this morning showed that ’87 = 5cent per gallon increase, ’89 = 10cent per gallon increase and “premium” = 15 cent per gallon increase. A 5cent surcharge, is acceptable but that sliding scale is outrageous.
Christopher writes:
“from Shell, et al. My in-laws have been fortunate to have a self-owned
gas station with various brandings (e.g., Texaco and now Citgo).
We know of another station own who was leasing a Shell station. Shell
raised his rent to $20,000 per month!! You can guess what happened..
The guy had to shut-down his business.
Gas stations make almost nothing on gasoline, unless the station is
one that sells 100,000+ gallons per month (they are few and far
between).
My parents receive a fax every day that lists their distributors gas
prices for the day. They pay the “going price” PLUS taxes and delivery
charge.. If, after added up, there is room for a mark-up, they mark
it up (pennies).
Sometimes when they add everything up, they cannot add a mark-up
because then their gas would cost a couple of pennies more than the
guy across the street. In that case, they have to sell the gas at
break-even, or sometimes, at a loss, just to get people to stop and -
hopefully – purchase concessions.
They make – AT MOST – a few PENNIES per gallon (e.g., $0.02 – $0.07)
and sometimes take a loss. Multiply this penny-per-gallon times X
gallons and do the math to find out how many gallons they would have
to sell to actually make a living.
What little penny-profit they sometimes make from gas is gouged away
by credit card fees, which can run as high as 3% (Amex). Next, they
have to pay for EPA permits, quarterly taxes, employees (they
themselves work at the station), utilities, and supplies.
Corporate-owned gas stations can afford to take a loss at a few dozen
stations because they have other stations around the state and country
that make up for the losses.”
So if the price of a barrel of oil has gone up, why not use cheaper barrels?