AREA MOTORISTS ARE REAPING BENEFITS OF `GAS WAR'

Area motorists are reaping the benefits of a "gas war" among Cape Girardeau service stations.

In the city Sunday, gasoline prices plummeted to 79.9 cents a gallon at stations owned by one company, the lowest motorists have seen for months.

Jim Maurer, general manager of Rhodes Oil Company the first retailer to drop the price to 79.9 cents Sunday said old-fashioned competition is at the root of the price war.

Gaye Blank, of Bi-State Oil Co., said Sunday the wholesale price is 89.9 cents a gallon, the price Bi-State was charging Sunday afternoon.

"There is no way anyone can hold it at 79 indefinitely," said Blank. Even selling at 89.9 only enables stations to recover the cost of gasoline and does not take into account all the overhead costs.

"When you consider wages, utilities, and other overhead costs, we're not at the break even point at 89.9," said Blank.

She noted that it was easier for larger companies that have a number of stations outside of Cape to compete in a gas war. "When you've got just two stations like we have, you just can't compete."

Maurer added, "Whenever this happens, people try to sell at their cost or below. It can't go much lower or somebody's going to go broke."

Maurer said wholesale prices have little to with the current decline in price.

Wholesale prices have changed slightly, he said, "But it's just been the normal fluctuation. Nothing substancial."

The gasoline business is a crazy one, he said, and fluctuations or this type happen every so often.

Maurer said it is impossible to predict if the price per gallon would fall lower than 79.9.

"It may not stay there too long, but that's where we're at."

Blank said she is unsure what exactly caused the price battle, but noted sometimes companies that are competing in other towns drop prices in one town in an attempt to get prices raised in another town.

"I don't know if that's the case here, but that is a possible reason," said Blank.

She explained that stations get information about changes in gas prices by driving around town and looking at posted prices. They then have to decide whether to lower the price to be competitive.

"It's just a matter of how far can you go, and we're at cost right now," said Blank.

She noted that in a price war, some loyal customers stay with the station they normally go to; however, some people go after the lowest price.

"Your business is definitely hurt over it," Blank observed. "You then run the risk of whether they (old customers) will come back."