This is true. Lakeport Landing sells tons of gas so they are the price leader because of turn over. Thurston does not sell as much gas, turn over is low so their price is higher. However the opposite can happen Lakeport Landing may need to raise price when inventory cost more. Thurston price remains the same and eventually LL price may exceed Thurston's when inventory price is high. It's a crazy circle!
Quote:
Originally Posted by 8gv
I see this as a factor when the prices are dropping. Maybe someone in the business can chime in to correct me. How I think it works:
A station pays a back door price at time of delivery.
When a competing station gets a delivery with a lower back door price their retail price is lower.
The consumer chooses the lower price station thus expediting the liquidation of its inventory.
The higher priced station sells its inventory more slowly.
When the lower priced station gets another, cheaper, delivery the price difference is made even greater.
Now the higher priced station is really stuck and may have to capitulate to selling at a loss to keep the cash coming in and more importantly, get access to cheaper product coming into the back door.
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