Cry havoc, and unleash the unleaded dogs of war! A pair of service stations on West Flagler have declared gas war on one another, matching one another price-cut-for-price-cut in a nutty display of kamikaze economics that’s delighted neighborhood drivers but turned the stations’ profit margins to ashes.
“Can you believe these prices?” one driver chortled in delight Tuesday as he pumped $2.03-a-gallon regular into his car at the Gas Express station at the corner of Flagler and Red Road. Across the street at the Rocket Fuel station, customers were just as ecstatic, though manager Haseeb Khan looked a little queasy.
“This is the bottom, this is as low as it can go,” Khan insisted. “At this price, we’re selling at cost — we can’t sell it any lower with losing money.”
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That $2.03 price (though Rocket Fuel raised it to $2.05 a little later) was a full 30 cents below the average price at Miami-Dade gas stations, and even 12 cents below what the members-only gas pumps at big-box discounters like Costco charge. It’s the result of a series of mad price-slashing that started when Rocket Fuel dropped its rates twice in a matter of hours on June 8.
“It’s been like this all week,” said the counter clerk at Gas Express, who didn’t want to give his name. “They drop their price, we drop ours. You could call it a war, yeah. We’ve stayed more or less in accord with them on price.”
Also in accord: customers. There were 12 to 15 cars in lines for the pumps at each station Tuesday, and shop owners in the area say that at times, the lines have back up traffic on both Flagler and Red Road.
“There’s been a lot of traffic here since the prices went low,” said Maria Aroche, who sells flowers in the Gas Express parking lot. “I mean, mucho. Mucho-mucho-mucho.”
The fog of war is just as thick and confusing in gas wars as in the kind fought with rifles and machine guns, so what exactly triggered the financial aggression between the two scruffy little independent stations remains a mystery. (Gas Express is at 5688 W. Flagler, Rocket Fuel at 5695.) Their owners weren’t around, and their employees were no more willing to second-guess the boss than a private will talk about a general.
But Patrick DeHaan, senior petroleum analyst at the gas-price monitoring site GasBuddy.com., said a gas war is typically more of a temper trantrum than a coolly considered business strategy.
“These things usually start between stations that are pretty close together, where they can always see one another’s prices,” he said. “And maybe one guy sets a policy that his gas will always be cheaper. So he makes sure his price is always at least a penny lower, and after a while the other guy gets pissed off because he’s always getting undercut. And he tries to pull a little muscle-play off. ‘I’m not going to go down like this,’ he says to himself. ‘I’m going to screw him over.’”
Usually gas wars are over within hours, DeHaan said: “The angry guy says, ‘OK, I guess I’ve screwed the other station enough, time to quit before we both wind up in the financial ER.’”
But occasionally they turn into the gas-station equivalent of the Hundred Years War between England and France, with both sides bled dry, barely able to remember what started it in the first place.
The epic gas war of this century was fought last year between three stations in the little Michigan resort town of Houghton Lake. It lasted about 10 days and didn’t end until prices dropped to 47 cents a gallon.
“If they’d gotten much lower than that,” said DeHaan in a tone of wonder, “the price wouldn’t have even covered the taxes on the sale. Now that’s a gas war.”