In the Richwood section of Harrison Township, two gas stations have been fighting to have the lowest prices on Route 322, with the prices falling more than 20 cents in just a few days.
With the holiday weekend approaching, this trend is a welcome sight for many of the county’s travelers.
South Jersey AAA is predicting about 13.1 percent of the population in the mid-Atlantic region will be traveling for the Fourth of July weekend, which they define as Thursday through Monday.
“When we talk about travel we define it as 50 miles or more from home,” said Tara Woodside, a representative from AAA of South Jersey. “We are predicting 39 million Americans will be traveling.”
This number is down about 2.5 percent from 2010’s Fourth of July weekend, and the organization believes that gas prices are the main reason for the drop.
“Gas is approximately $1 per gallon higher than last year, so that’s the biggest contributing factor,” Woodside said.
For Paulsboro resident John Norvilla, the price won’t be affecting his travel this weekend, since the majority of his traveling is determined by his business. The owner of Kiss My Glass Home Window Repair, Norvilla spends his days driving to and from jobs, and that’s what he’ll be doing for the holiday as well. But the price has affected his profit margin as he travels.
“I go all over the place,” he said. “I don’t even look (at the price). If I look, I cry. The couple cents it goes down doesn’t make me smile. If it drops a dollar or two, then I might look.”
The price of filling a car or truck tank has fluctuated a lot in the last year, with prices peaking close to, if not over, $4 a gallon a few months ago. Although prices have begun to drop, they haven’t done so as quickly as they spiked.
Crude oil prices are affected by many things, from supply to political unrest. And although the price of crude oil — which was above $100 per barrel in May, according to the New York Mercantile Exchange — is down to $91.16, the price at the pump won’t necessarily go down as quickly.
“The research has shown that when oil prices go up, the gas prices go up immediately. But when the crude oil prices go down, the gas prices don’t go down right away,” said Robert Schindler, professor of marketing at Rutgers University. “When the general oil world markets go down, the retailers’ costs are going down as well. This is a situation that is ripe for price competition.”
These situations bring about a “price war” like the one that was witnessed along Route 322 this week.
Retailers will often keep their prices at the higher rate, because the customers are already paying it, making their profit margins larger, according to Schindler. But once a close competitor lowers its price, a gas station, like any other business, needs to lower its own to compete.
“In my view this is the free market working,” Schindler said. “The market is disciplining the retailers to set their prices.”
