Expensive gas has affected the amount of money that most Mankato consumers are spending  at gas stations on items from gum to cigarettes.

The recent trend of rising gas prices has sparked a change in the way Mankato residents have been spending at gas stations.  Gas prices are currently at $3.85 per gallon in Mankato, anywhere from $0.03-$0.10 cheaper than gas prices in the Twin Cities.

Over the last month, the average price per gallon for unleaded gasoline has risen almost $0.40. This recent trend of high gas prices seems to be the long and expensive beginning to an even longer and more expensive summer full of changes in consumer spending.

There are several factors that go into determining the price of gasoline other than the price of oil.  These factors are:

  • the amount of taxes paid
  • the cost to refine oil into gasoline
  • the transportation costs
  • the profit of the gasoline dealer

It seems very evident and has been predicted by many experts that gas prices will rise to well over $4.00 per gallon by the time summer rolls around, a time when motorists spend a lot of time on the road.

Once this happens, there is no doubt that consumers pockets will be taking a huge hit as they spend less on unnecessary consumer items sold at gas stations, and more on gasoline.

Changes at SuperAmerica

Super America, a large gas station chain that is most commonly found in bigger towns around Metro areas, has already seen some noticeable changes in their sales caused by gas prices.

“Ever since gas prices were over $3.50 per gallon, sales have been down about 10%,” says John Faramah, General Manager of the SuperAmerica on Riverfront Drive in Mankato, east of Highway 169.  “People spend less on drinks and cigarettes now than they ever have before because of gas prices.”

Like most gas stations, SuperAmerica makes little profit off of gasoline sales alone. “We only make 3-4 cents per gallon of gas that customers put into their cars,” Faramah says.  “Gas stations make more money off of product sales so they try to promote the sale of products as often as they can.”

SuperAmerica has also seen a change in the amount of gas that customers have been putting into their cars each time they fill up at the pump.

“Since gas prices have been on the rise lately, we have seen customers filling up only five to ten dollars at the pump,” Faramah explains.  “This is enough for a day full of running errands or something.  When gas was cheaper, people would wait until they needed to fill their whole tank up before they went to the gas station.”

Now that gas prices are close to $4.00 per gallon, customer service is more important than ever.

“We have always stressed customer service.  I don’t think that there is ever a time when customer service isn’t important, but it’s times like these where it is more important than ever,” Faramah says.

“We have been giving out free coffee to all customers who come in.  We have also been giving away free lighters to people buying cigarettes in an attempt to keep them coming back again and again.  Because of these escalating gas prices, we have been forced to raise the prices of items inside the store.  We have raised the prices of some certain candy bars from $0.99 to $1.19 to make up for the decrease in sales we have been seeing”

A smaller perspective

The recent trend of rising gas prices has affected gas stations of all shapes and sizes.

Lor Ray Deli Mart, a small, privately owned gas station in North Mankato has seen a drop in sales as well.

“We have seen a slight decrease in sales, but surprisingly it isn’t as noticeable as you’d think,” Jesse Enggren, the owner of Lor Ray Deli Mart says.  “Inside sales have suffered more than anything because people spend too much at the pump and can’t afford to buy items from inside.”

Enggren also goes on to explain how gas prices work. “There is a state law that says gas stations are allowed to sell gas for no more than $0.08 per gallon more than the actual price.  For example, if gas is $3.50 per gallon, we are allowed to sell it for $3.58, according to the state.  The state allows us to do this as a way to make a few extra bucks here and there.”

Enggren also says that he hasn’t noticed much of a change in the way that people are filling up their cars with gas.

“From what I have noticed is that people still seem be filling up their cars at their normal rates.  There are still those people who wait until their tank is close to empty and spend close $60.00 on gas, depending on the car they drive.  There are also those people that wait until they have a half a tank of gas left and spend between $25.00 and $30.00.  The thing people don’t realize is that they will save themselves a little bit of money if they fill up their tank less often.”

Like every retail business, customer service plays a huge role in the way things operate and now that gas prices are on the rise.  Smaller establishments like Lor Ray Deli Mart have to stress good customer service as well.

“Every customer that comes through the door is so important regardless of gas prices.  It is true that the gas prices have affected our customer service but it has only made our customer service improve.”

The Oddball

Another primary gas station in the Mankato area is Kwik Trip.  Kwik Trip is another large chain of gas stations located primarily in smaller towns located away from metro areas.

Unlike SuperAmerica and Lor Ray Deli Mart, the recent escalating gas prices haven’t turned away Kwik Trip customers from spending.

“Sales at Kwik Trip haven’t been affected at all the way you’d think given the high cost of gasoline.  As a matter of fact, throughout the recession over the last two years, this particular Kwik Trip has actually had record setting sales both years,” said Chris Erickson, the general manager of the Kwik Trip on the corner of Riverfront Drive and Stolzman Road in Mankato.

“I think that one of the reasons that we have experienced such high sales over the last two years has to do with our location.  Obviously, Mankato is a college town with a lot of students being from the Twin Cities or the surrounding area.  Our gas station is the first one that students come across once they get off the highway, and a lot come in to buy something after their long drive down here,” Erickson explains.

The hot food that Kwik Trip sells has also helped contribute to their record sales over the last two years.

“Most of the money we make here comes from our hot food program,” Erickson says.  “This is because our hot food is independently made.  It doesn’t come from an outside provider so there is no middle man.”

Erickson also explains that one of  the ways that Kwik Trip has been able to maintain high sales over the last two years despite high gas prices and a recession is its competitiveness.

“We always try to stay as competitive with other gas stations around town.  If someone else offers a promotion to its’ customers, we will do whatever possible to make sure we can offer our valuable customers the same promotion.”

However, there is one similarity between Kwik Trip and Lor Ray Deli Mart, the small privately owned gas station in North Mankato.

Erickson claims that he hasn’t seen much of a change in the amount of gas that customers put into their cars.  “Like every gas station I would imagine, there are those customers that put gas into their cars every day and others that wait until their gas light is on.  It just depends on the customer.”

What’s next?

The recent trend of rising gas prices and the amount of money that customers spend inside the gas station has become more hand in hand over the last few months.

Customers are spending more of their hard-earned cash on gasoline and have less to spend on luxury items inside the store such as soft drinks, chips, other food items, gum, and even tobacco products.

Gas prices in Mankato are currently $0.68 per gallon higher than the entire price per gallon state average was on February 14; almost three months ago.

Could this be the time for people to consider becoming members of bulk shopping outlets such as Sam’s Club in order to take advantage of their discounted gas prices?  Sam’s Club on Madison Avenue in Mankato offers gasoline exclusively to its members for $0.07 per gallon cheaper than the average gas station in Mankato.

It seems that there is no end in sight, as gas prices have been projected as high as between $4.00 and $5.00 per gallon by the middle of summer.