Looking For Even Cheaper Gas? Go Generic At An Indie Station The prices that gas stations charge for fuel can vary widely. Smaller, independent stations are able to sell the cheapest gas because they undercut competitors by buying unbranded gasoline.
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Looking For Even Cheaper Gas? Go Generic At An Indie Station

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Looking For Even Cheaper Gas? Go Generic At An Indie Station

Looking For Even Cheaper Gas? Go Generic At An Indie Station

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AUDIE CORNISH, HOST:

For the first time in months, the price of gas has actually crept up. Mind you, it's still lower than it's been in years - around $2.06 a gallon. But that's not enough for some drivers who make it their business to find the cheapest pumps, and they've noticed a trend. Small, independent gas stations often have the best prices. As Mose Buchele reports from member station KUT in Austin, Tex., that has a lot to do with how gas is bought, sold and carried from pipeline to pump.

MOSE BUCHELE, BYLINE: These days, stories about gas prices usually start like this...

(SOUNDBITE OF GAS PUMP)

BUCHELE: I guess that's the sound of savings.

DOUG WARDEN: It's definitely savings (laughter). It's like I got a bonus.

BUCHELE: Doug Warden's filling up at Pronto Food Mart in Austin. It's a tiny neighborhood gas station - one of the first places here to slash prices after the cost of crude oil dropped. In fact...

AL MAK: How are you today?

BUCHELE: I'm doing all right. How are you doing?

MAK: Good, sir.

BUCHELE: The guy behind the counter insists they were the very first.

MAK: Because no one was going down. The gas was coming at a lower cost, but people sustained the higher prices.

BUCHELE: Store manager Al Mak says their gas prices keep people coming back to buy other stuff.

MAK: Different teas, lots of energy drinks, lots of wine and beer selection.

BUCHELE: It's smart business, but how can they afford it? Across the country, shops like this undercut competitors by buying what's called unbranded gasoline. There's no big oil company sign at Pronto Food Mart. When Mak sees a station with a Shell or Chevron sign, he thinks one thing.

MAK: Under contract, my friend, for 15, 20 years - can't offer best price like we do.

BUCHELE: Here's how it works - Pronto gets its gas from a fuel distributor known as a jobber. Their trucks pick up gas from a distribution hubs linked to refineries by pipeline. When a gas station is in a branded contract, it needs to buy that brand of gas. When it's unbranded, it basically buys it on the spot market, taking advantage of that day's lowest prices.

And so here I am, one more step up the distribution chain. I'm at Tex Con Oil in Southeast Austin. I'm standing next to a big tanker truck. Every morning, trucks like this one deliver fuel all over the region.

CLAY JOHNSON: Obviously, if we're delivering to a Shell store, we'll go pick up the Shell gasoline. If it's a Texaco store, we'll pick up Texaco gasoline.

BUCHELE: Clay Johnson is president of Tex Con.

And so are you - you're a jobber?

JOHNSON: I'm a jobber, yeah, a fuel distributor. Jobber is an old-school name for just a fuel distributorship.

BUCHELE: In recent years, big oil companies have been getting out of the retail gas game, selling stations to focus on drilling and production, where they can make more money. That keeps jobbers like Johnson busy as more stations have a choice - contract with a brand name or go generic.

JOHNSON: If it's not a branded convenience store, typically they don't really care what brand it comes from. And you do get different pricing from each major oil company every day.

BUCHELE: Johnson doesn't like generic. He calls himself a believer in the benefits of the extra additives brands put in their gas, though many experts say they don't make much of a difference. There's also a business argument for contracting with a big name oil company.

JOHNSON: When you have a branded relationship, you're basically having a contracted relationship with that supplier. And they protect that product before product that's not under a contract, so that supply agreement comes in handy when product gets tight.

BUCHELE: Of course, if supply gets tight and prices jump...

(SOUNDBITE OF BELL)

BUCHELE: Well, there's a solution for that back at the neighborhood gas station.

MAK: Pronto Food Mart, how can you forget (laughter)?

BUCHELE: It will cost station managers like Al Mak more, so drivers like Doug Warden have to pay extra. You probably forgot about Doug, the guy gassing up his car at the start of this story.

Do you expect it'll stay this way?

WARDEN: No (laughter). Nope, they'll figure it out. They'll want their money back. I'll pay it (laughter).

BUCHELE: But, he says, he'll enjoy it while he can. For NPR News, I'm Mose Buchele in Austin.

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