WEST BEND -
The dark side of Garrison Keillor’s Lake Wobegon, “where all the
women are strong, all the men are good-looking and all the
children are above average,” is a place where all the drivers
are terrible, the streets are crumbling underneath and gas
prices are higher than anywhere else.
persistent belief that, on at least the last count, it’s West
An Aug. 21
story in the Daily News explaining why gas prices are typically
higher in West Bend drew pushback from readers.
emailed to say that “One person owns the majority of all the
stations and sets the price for all.”
published in the Daily News on Aug. 25 said the story “does not
explain why Hartford and Slinger are cheaper,” and, later, “why
is the same gas 20 cents cheaper in Kenosha and Milwaukee?”
According to gasbuddy.com, gas prices in Washington
County on Thursday morning were exceptionally uniform.
Several West Bend stations were at $2.55 a gallon for
unleaded gas, as were stations in Saukville, Port
Washington, Germantown and Jackson. Kewaskum was a penny
cheaper; Hartford and Slinger were at $2.49. Gas was as
expensive as $2.65 at a station in Richfield.
from the Wisconsin Department of Agriculture, Trade and Consumer
Protection belies the notion that there is a monopoly of
ownership among West Bend stations. Of the 15 registered in the
city by the state, three are owned by Mad Max Convenience Stores
(BP stations at 1211 W. Washington St. and 1229 S. Main St. and
a Clark station at 1512 W. Washington St.), two are owned by
Wisconsin Retail Property Management (BP at 2825 E. Washington
St. and Citgo at 1516 N. Main) and two are owned by Paradise
Mart Inc. (Shell stations at 815 W. Paradise Drive and 3100 W.
Washington St.). Brothers Steve Yahr and Bob Yahr own Shell
stations at 1650 N. Main St. and a Mobil station at 2333 W.
Washington, respectively. Owners of the remaining six stations
in West Bend have no other stations in the city.
Magestro, co-owner and president of Mad Max Convenience Stores,
laughed when it was suggested that there’s a “back-room deal”
among station owners to set prices.
is, I’d like to know about it,” Magestro said. “The way we do it
is, we go out and do sight surveys at every single one of our
locations. We compare what the competition is selling their fuel
through the stores in our area and write down their prices for
unleaded, mid grade, premium ... so we, in turn, basically can
match their price.”
A Mad Max truck sits in the back of a BP Gas Station as the
tanks are refilled Thursday afternoon in West Bend.
Photo by John Ehlke
Osowski, a partner and general manager of Paradise Mart
to see what the town does,” Osowski said. “We all kind of sit
and wait and pick out who’s going to lead. There is no daily
phone call where I figure out the price. A lot of times I lead
and sometimes we wait.
morning I look at the prices and have to figure out when we got
our load and how much we paid for it. I look at Menomonee Falls
and Germantown, Cedarburg to get an idea of where they are. The
only people I talk to about gas prices is our dispatchers at our
haulers and my father. I bounce ideas off him.”
a professor of economics at the University of
Wisconsin-Washington County, had a name for what Magestro and
economics there is the price leadership model of pricing,” Gomes
said. “The stations are looking at each other. If I’m going to
reduce prices, the others are going to match, so there’s nothing
have one or two they look at. They say, that guy, maybe it’s the
corner one or one in the middle, when that guy changes, we are
going to change.”
don’t conspire to set prices — collusion in the fuel industry is
a serious charge, punishable under federal law — why is West
Bend often a “bubble” of higher prices?
public affairs director with AAA Wisconsin, said “prices that
retailers charge are really dependent on what they have to pay
to supply themselves.
Milwaukee area is much more connected to the Chicago market.
They are purchasing their gas directly from refineries in the
Chicago area because of the pipelines that make it easier for
them to do that.”
most filling stations make more profit on the convenience store
than on the gas.
really is just to bring people in so they price to ensure they
aren’t going to lose money on that but they really make their
profit on the convenience store side,” he said.
of the answer may lie in zone pricing, a strategy employed by
oil companies to enhance profits by charging dealers different
prices for gas based on the number of vehicles, household
incomes, population density, the strength of competition and
A New York
law outlawing zone pricing was overturned in court, so while
controversial, it’s legal. It can result in gas stations only a
few miles apart selling gasoline at significant price
differentials. The short answer is “because they can.”
Essentially, a more affluent community is subsidizing other
City Administrator T.J. Justice said as much.
pretend to be an authority on this, but I believe West Bend
falls in a different distribution area than some communities to
our south,” Justice said. “I’ve never verified that but that’s
what I’ve been told by some of the providers. There’s
distribution zones for fuel no different than there is for other
... whether it’s Coca-Cola or Twinkies or cereal, you have these
distribution centers so pricing a lot of times is affected by
those businesses supplying the fuel.”
factor may be the cost of doing business in West Bend. Gasoline
often costs more in wealthier neighborhoods because stations
pass along higher real estate costs.
nicer stores,” Osowski said. “We have store owners who have
mortgages who want to pay their mortgages and keep their
some station owners who care about their stores."
sometimes we’re the highest, but there are times that we’re
lower than the Kwik Trips and we’re lower than Germantown and
Menomonee Falls. We only get the feedback when we’re higher.”
he tries to clear 10 or 15 cents a gallon.
10-gallon fillup, I’m making $1.50,” Osowski said. “But if you
use a credit card— 80 percent of the people do — they charge 2
percent. So if gas is $4 a gallon, we pay 8 cents, per gallon
(for the credit card fee), so now we’re only making 2 cents out
of that 10. If gas is $1 a gallon, we’re still paying (a credit
card fee of) 2 cents a gallon, so now we’re making 8 cents a
more money when gas is lower on our credit card charges,”
Osowski said. “People are happy and they’re buying more, so
trust me, we want lower prices, too.”
convenience overrides the economic forces of supply and demand
with regard to price.
“It’s a very
localized market when it comes to buying gasoline,” Gomes said.
“Even if it’s 5 cents or a dime, people won’t bother to drive a
mile. Convenience is a big factor. If I’m going to buy 10
gallons, it’s just a dollar or maybe $1.50 (saved), and the cost
of my time is higher.”
Reach news editor Ken Merrill at