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OVERCAST Temp: 70 °F Wind: CLM at 0 mph Saturday, October 4, 2003 SECTIONS Home Page Local News Sports Business Obituaries Life Opinion - Politics AP News Weather Classified Archives Site Map EXTRA HomeLife Magazine Joy Magazine Tempo A & E RogueValleyAutoFinder RogueValleyHomeFinder Real Estate Showcase Wellness Connection Newspaper in Education Prime Times Outdoor Journal Personals Movie Times TV Times E The People CLASSIFIEDS Find a Car Find a Home Find a Job Find Everything E SOUTHERN OREGON Automotive Communities Entertainment Publications Recreation Calendar ABOUT US FAQ What's New Advertise Home Delivery Classified Ad Employment Contact Us Media Kit Email Story to a Friend October 2, 2003 Mike Siewert fills the 11,300-gallon Costco gas tank as cars line up for the low-priced gas at the Medford store. Station supervisor Cyndi Sorrels keeps an eye on the operation. Mail Tribune / Bob Pennell Costco’s cheap gas Customers line up for fuel that’s on average 28 cents per gallon cheaper than they can find in the rest of the valley By DAMIAN MANN Mail Tribune With Jackson County leading the state in gas prices, it’s no wonder motorists are lining up at Costco to take advantage of the cheapest rates in town. The price for regular at the Highway 62 store, which has doubled its volume over the past year, is about $1.60 a gallon — 28 cents cheaper than the average price per gallon in the Medford/Ashland area. "If these guys are charging less for the same gas, everybody else is trying to get too much," said Victoria Murray of Applegate, who fills up twice a week. Prices have dropped considerably since Sept. 2, when gas crested the $2 mark, making it the highest price in this area’s history. Advertisement According to AAA, the average price of regular in the Medford/Ashland area is currently the highest in the state at $1.879, compared to $1.821 statewide. Low prices at Costco are attracting lines of motorists who are willing to wait a few minutes to save $4.20 to fill up a 15-gallon tank. At least two and as many as three truckloads of gas — each containing 11,300 gallons — have been sold at the station every day recently. Thirteen percent of gas sold to motorists nationwide comes from this retail chain and others like Wal-Mart, Safeway and Albertsons that offer discount prices. "We only buy gas here. Everything is lower at Costco," said JoAnne Moyers of Sams Valley. Fred Willms of Medford explained why he thinks Costco doesn’t charge as much. "I guess they say, ‘We don’t try to get as much money out of our customers,’ " he said. Jim Sinegal, Costco president and chief executive officer, said his company is taking advantage of seasonally low wholesale prices and passing the savings on to its customers. "The price we’re selling at, we’re making a nice profit," he said. "We’re not in the business of selling at a loss." He didn’t know why other stations are selling at higher prices, but Sinegal said his company offers a no-frills approach that translates into generally lower prices. "I suspect the stations that are successful mom-and-pops provide a lot of extra services," he said. "There are some tradeoffs. This is a different type of service." Costco doesn’t clean windows or check the oil and it doesn’t have a convenience store next to the station, he said. It also takes only credit and debit cards, no cash. Sinegal’s company is known for its no-frills approach in general. For example, unlike most big companies, it doesn’t have a public relations department. "We can’t afford it," said Sinegal. Not everybody is convinced that Costco is making a profit on gas. "They sell it at a loss," said Lloyd Sloggett, owner of the Crater Lake Service Center, which sells Union 76 gas. "Everybody that purchases gas must have a membership card." Sloggett has noticed a decline in volume since Costco, Safeway and Albertsons opened gas stations. When he bought the station in March 1991, it was selling 55,000 gallons a month. By April 1996, he built his volume up to 110,000 gallons. "Currently our volumes are about one-third of that," he said. "They (Costco and others) use predatory pricing to undercut the market until they can control the market." Much of the gas comes from the same source, said Sloggett. However, he said places like Costco sometimes buy older gas that might make it more difficult to start a car in winter, or cause pinging or other problems. "It’s sort of like meat on a shelf," he said. "It gets discounted as it gets older." But Sinegal sharply refuted any assertion that his gas was inferior to other stations. "That’s a bunch of horsefeathers," he said. "We’re all buying gas from the same pipelines." Sinegal said gas, like all products sold by Costco, is first rate. Elliott Eki, a spokesperson for AAA in Oregon, said retailers like Costco and others are driving a lot of smaller stations out of business. It has been particularly difficult for the smaller stations because large oil companies had been subsidizing prices until this year to counter the market shift toward stations like Costco’s. "Everybody’s having to fend for themselves now," said Eki. Reach reporter Damian Mann at 776-4476, or e-mail [email protected] Printer Friendly Version Email Story to a Friend Subscribe Archive: Click to Search Mail Tribune Home Local News | Sports | Business | Obituaries | Life Opinion - Politics | AP News | Archives | Site Map E Southern Oregon | Classified Copyright © 1997-2003 Mail Tribune. All rights reserved. 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