Yo-yo effect

Many factors influence the price at the pump, but one thing's clear: Wherever you drive, it pays to shop around (and carry cash)

A silver Hyundai Tucson SUV pulled up to the Super Petroleum pumps at Joe's Service Station in Bridgewater. The driver, Dale Royer, rolled down his window and handed $30 in cash to the attendant.

Royer had driven a quarter of a mile out of his way to fill his tank at Joe's, but he says it's worth the trouble.

"Between here and Taunton, I pass a good 15 to 20 gas stations," said the 56-year-old Royer, "and in terms of pricing, I find this place to be the fairest."

Indeed, a consumer can find a wide range of gasoline prices, across Southeastern Massachusetts and even among nearby stations.

One afternoon last week, for example, Super Petroleum at Joe's in Bridgewater was selling regular unleaded for $3.33 a gallon. Less than a mile away, Lucky Star Gas was charging $3.40 per gallon. Meanwhile, over in Hingham, a Global station on Route 228 was advertising gas for $3.69 per gallon, and an Exxon station on Route 3A was selling gas for $3.81 per gallon.

Which naturally leads to the question: How can retail prices differ by as much as 50 cents a gallon?

The answer can be complicated. Traffic patterns, local competition, rents, wholesale prices, the cost of crude oil, refinery processing, and marketing strategies can all affect what customers pay at the pump, according to the federal Energy Information Administration.

Gasoline prices "go up and down like a yo-yo," said Fred Sassine, the manager and co-owner of Lucky Star Gas. His service station, next to Bridgewater State College, includes a repair garage and a small store that sells scratch tickets, candy, and snacks. His father, Al, operates the full-serve pumps.

Lucky Star's prices are determined largely by a piece of paper that rolls out of Sassine's fax every afternoon. That paper lists the latest prices offered by Kayrouz Petroleum LLC, a wholesale gasoline supplier based in Westborough. Sassine is one of Kayrouz's regular customers.

Lucky Star's storage tanks hold 12,000 to 14,000 gallons of fuel and must be refilled about every three days, according to Sassine. If the wholesale price of gas changes, Sassine adjusts his prices accordingly.

"We keep [prices] as low as possible without losing too much," said Sassine. "We don't change the price until we get a new shipment."

Credit card fees can be a significant expense for gas station operators, and Sassine keeps his prices lower than most by charging his customers two different rates. A red sign stating "CASH PRICE" is affixed to the advertised price advertised out front. Last Monday afternoon, customers who paid with cash were charged $3.40 per gallon, while credit card customers were charged $3.50 per gallon.

The Super Petroleum pumps at Joe's Service Station on Route 28 in Bridgewater work the same way. Instead of passing on the cost of credit card fees to every customer, Super Petroleum provides what it calls a "cash discount." Customers who use cash pay about 6 cents less per gallon, according to Muftah "Mike" Bugazia, president of Braintree-based Super Petroleum Inc.

"We try to be competitive, and I like to give deals to customers," said Bugazia. "People are watching their wallets, so we try to make [prices] very low. I like to be the lowest, if I can."

Bugazia said he pays 2.5 to 3 percent in fees for credit card purchases. On a cash transaction, he said, "I pass on that savings to the customer."

The cash discount system can be confusing to new customers, according to John Hauser, a longtime Super Petroleum employee who mans the four full-serve pumps at Joe's. Credit card users don't like having to pay more than folks who pay in cash. Many of those people end up becoming regular customers, anyway, he said.

"Most of the time the price draws them in, and most of them come back for the service, and the convenience of not having to get out their car," said Hauser.

And when they return, they usually have cash on them.

There are 25 Super Petroleum gas stations in Massachusetts and one in New Hampshire. Bugazia said the storage tanks that feed the pumps at Joe's Service Station hold 12,000 gallons, which can last anywhere from 2 1/2 to five days, depending on business.

Bugazia said he uses several suppliers - "I'm not stuck with anybody" - has contrcts with some of them, and also buys gasoline on the spot market. Spot market transactions are one-time deals in which a specific quantity of gas is purchased "on the spot" for a set price.

His situation has its pluses and minuses. As a chain of 26 stations, Super Petroleum is in a better position to negotiate deals than a single station. But it also has to compete with such well-known branded stations as Cumberland Farms.

The past year has been "very tough, extremely tough" on small gas station operators, said Bugazia. "Some people even closed" their gasoline business "and are just doing car repairs."

Gas station owners must pony up tens of thousands of dollars every few days to buy gasoline in bulk. When you're buying 12,000 gallons of gas at a time, a wholesale price increase of a few cents per gallon can add up quickly.

While some oil companies have been posting record profits this year, gas stations typically earn 10 to 12 cents per gallon of gasoline, according to the New England Service Station and Auto Repair Association. Credit card fees average about 2 percent, said association spokesman Matthew Lelacheur, who said credit card useage for gas purchases has risen substantially over the past decade.

"When gas costs $4, a 2 percent [fee] leaves the station owners with a margin of 4 cents or less to keep the lights on, pay their employess, and stay in business," said Lelacheur.

Many consumers aren't aware of the fees that merchants pay to process credit card transactions, said Palmieri. Credit card companies are "making cash off what we do every day," he said.

On the other hand, consumers are very much aware of fluctuations in gasoline prices, according to Palmieri. Every gas station has a large roadside sign with plastic numerals showing their current prices. Even if you're not looking to fill up your tank, you'll see the prices everywhere you go, he said.

"When was the last time the price of eggs went up? You probably don't remember what you paid for your last dozen," said Palmieri. "With gas, the prices are jumping out of the sidewalk, always in your face."

Palmieri said Super Petroleum's low prices have probably influenced the prices of other stations in that part of Bridgewater.

Indeed, there appears to be some lively competition among gas station owners in that area.

On Monday, the Energy Information Administration reported that the average price for regular gas in Massachusetts was $3.51 per gallon. But MassachusettsGasPrices.com, which tracks prices, showed a group of service stations offering prices below the state average. They were clustered around Bridgewater.

Emily Sweeney can be reached at esweeney@globe.com.