Veazie gas station a lesson for the competition

Commentary

Any junior high student can tell you that the U.S. economy was built on the free enterprise system and competition.

But when it comes to the pricing of gasoline in the Bangor area, competition is, well, hard to find.

A case in point could be seen Friday. Prices for regular unleaded gasoline in the Bangor area hovered around $1.36. The most typical price was $1.369. The Maine Chapter of the American Automobile Association reported this week that the average price in Maine was $1.372.

A drive around the Bangor area showed how consistent the prices were. They varied a little, but generally were in the vicinity of $1.36.

But a short drive up Route 2 to Veazie produced a shock. A Mobil station was selling the regular unleaded for $1.299. And the Veazie Variety was selling Gulf gasoline for $1.269 a gallon.

How can Andy Freese, owner of Veazie Variety, offer this low price? Easy, Freese said, “I sell under contract to Dead River and they set the price. I simply get paid a commission.”

And Freese was delighted. It seemed that business in his convenience store never had been better.

“The gasoline brings people in and they end up buying things in the store,” he said.

F. Michael McClain, a Portland-based vice president of Dead River Co., said that his company set the lower price in Veazie because of competition with the other local station.

But, he said, the price probably soon would be raised to $1.299.

The gasoline pricing for the two Veazie stations poses some interesting questions. If wholesalers can allow these prices, why doesn’t it happen in more locations to lure customers?

And if profits are normal despite the now-higher prices, as oil companies say, how can these lower prices be offered without someone losing his shirt?

All media, newspapers included, have done a less-than-impressive job of explaining the oil-pricing situation.

But it seems clear that there must be more latitude in pricing than most companies are practicing. Witness Veazie.

Perhaps consumers are to blame because they don’t consistently seek the lowest prices.

Anyway, Andy Freese liked his situation with the low price. Wouldn’t it be nice to see some brave gasoline retailers try to expand their customers bases with lower prices? Profits, you see, depend on both price and volume.

That’s how the free enterprise system works.

Just ask that junior high student.