While many gasoline stations whine about pump prices being too low to stay in business, a regional convenience store chain has turned stiff competition along the Wasatch Front into a marketing ploy.
Maverik Country Stores Inc. has been promoting itself as the lowest-price gasoline retailer by guaranteeing it won't be undersold by the competition.If a motorist finds gasoline less expensive than Maverik's, he must fill out a "flub stub," indicating where the cheaper gasoline is being sold. The motorist will then receive a coupon good for a free sandwich, yogurt cone or drink refill.
The campaign has been blasted as deceiving and illegal by Maverik's competitors.
Competitors in Idaho have accused Maverik of deceiving the public and violating a state law requiring a minimum markup on retail fuel. Utah has a similar law.
But Maverik spokesman Joe Shaw said the charges are unfounded and indicate competitors have misunderstood the campaign. He explained that the guarantee means Maverik will match the lowest price of its competitors and not be undersold.
Regarding Idaho and Utah laws prohibiting retailers from selling below cost, Shaw said it is not illegal to match a competitor that is selling below cost, but Maverik can't be accused of taking the lead in dropping prices to an illegal level.
Some competing service stations have also grumbled that stores selling gasoline at low prices sell poor-quality fuel. But Shaw said those complaints are what prompted Maverik to market itself as the lowest-priced gasoline retailer in the first place.
"We all buy our gas from the same loading docks and all of the gas meets the same standards, including the same additives," said Bill Call, president of Maverik Country Stores.
While there is very little difference in the street price of unleaded regular, the price among competitors for mid-grade and premium levels of gasoline can vary from 3 to 7 cents a gallon. Shaw said that price difference is primarily the result of major oil companies blending their trademark additives into fuels sold only at "branded" stations - outlets selling fuel under a major oil company label, such as Chevron, Texaco or Phillips 66.
"We question the so-called secret ingredients the major oil companies add at the refinery to warrant a higher price," Shaw said.
Oil companies say studies by automakers and consumer groups prove that special additives sold only at branded stations clean engine in-take systems, which can keep an engine running longer.
"Do additives justify a higher price? I don't know what they cost a refiner, but if it adds life to an engine it is worth 5 cents a gallon more" than the fuel without them, said a fuels expert with a major oil company who requested anonymity.
Competitors may not like Maverik's low-price guarantee, but Shaw said it has resulted in a 24-percent increase in gallons of gasoline Maverik has sold in the past month.
Based in Afton, Wyo., Maverik operates 112 convenience stores in six states, including 41 outlets in Utah.
Shaw characterized the Wasatch Front as one of the most competitive retail gasoline markets in the country, where battles for market share result in retail outlets earning just a penny or two a gallon and at times operating at a loss for several days.
But Maverik can survive on razor-thin margins at the pump, Shaw said, because it carries very little debt. This helps keep its operating costs lower than the industry average.
And like most retail gasoline outlets, Maverik makes a healthy profit margin on food, drinks and other convenience store items to offset the unprofitable gasoline sales.
"No one could survive just selling gasoline. That's why so many of the old corner service stations are out of business," Shaw said.