COLUMBUS - The gauge hit empty at Doodles II gas station and convenience store at the end of the year, a victim of pricing policies that left the business gasping on fumes, the owner said.
Dick James, who also owns the original Dickie Doodles on East 23rd Street, said that gasoline pricing policies set by large corporations based outside of Columbus led to the demise of the more than 1-year-old business venture at the northeast corner of 14th Street and 33rd Avenue.
He said corporate-owned stations, such as Casey's, Hy-Vee, Sapp Bros., Holiday and Kum & Go, have set pricing policies in Columbus that have brought smiles from consumers but caused pain at the pump for independently owned stations.
James said the corporate-owned stations use gasoline as a loss leader, often pricing gas at the pump below cost, and making up the difference with in-store sales of other products.
It's a business strategy that James understands. There isn't anybody to blame. It just is, kind of like competing with Wal-Mart at the neighborhood gas pump.
“It's just good business for them. The (corporate) pricing decisions are made at some big desk in some big city. The corporations don't need to make money on gas,'' James said. “Consumers can't be blamed because they're just looking for the best price ... and they should.”
But Bill Walljasper, chief financial officer for the Ankeny, Iowa-based corporation, said Casey's General Stores does not use gasoline as a loss leader.
“Our gas pricing philosophy is to identify the competition, monitor their prices on a daily basis and adjust our prices accordingly,” Walljasper said. “Generally speaking, we
don't lead prices up or lead prices down.”
There are many factors, including “buying efficiencies” available to a large corporation, that influence whether a small, independent operator can remain competitive, Walljasper said.
A message seeking comment from Hy-Vee's corporate offices in West Des Moines, Iowa, did not receive an immediate reply.
Local gas prices peaked in midsummer, topping out at just more $3 a gallon in July before starting a descent as fall approached. Consumers' spirits were lifted in October as prices dipped below $2 a gallon before settling in the $2.25 range later.
Recent gas prices have again sunk below $2 a gallon, with prices of $1.93 and $1.99 common around town last week.
“When they (corporate-owned stations) go down, we go down,'' James said. While prices around Columbus were under $2 a gallon, he said his cost Thursday was $2.03. Use of a credit card for payment added another 2 percent (four cents) to James' cost.
Almost all stations pay the same wholesale price at the two area pipelines in Columbus and Osceola, with some individual stations able to save by owning the trucks that haul the gas, James said.
James said the national industry average retail margin for station operators is 15.5 cents a gallon. “I've never made more than five cents a gallon in the 20 years I've been in business.”
Bigness personified by Casey's 5,000 station/stores has shuttered Doodles II, but it is also having an impact on the region, James said.
James plans to continue to operate his East 23rd Street store, which is surviving because it doesn't rely totally on gas sales. The business also caters to construction workers and others on food sales and has 10 apartments adjacent to the store.
“This business is more diversified.”
Meanwhile, James was thankful for his Doodles II employees and the customers that patronized the station. He plans to remove the station's underground gas tanks and pumps while readying it for sale in the weeks ahead.
The property is located on a nice, visible corner in Columbus and has already attracted quite a bit of interest from potential buyers. When he bought Doodles II, James said he made sure the purchase price was about the value of the land. He said he won't have to take a big financial setback.
“There have already been quite a few calls (from potential buyers),” he said.
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