Speedway Effect

DISCLAIMER: When gasoline prices fall over an extended period of time (Mid September thru November 2008), and there aren’t RECENT PRICE HIKES, the Speedway Effect becomes irrelevant since it is based on prices on the wholesale market rising and falling. Without these price fluctuations, there is no dominance in any market. Studies have proven this.

Here, we’ll show you what having a “Speedway State” or Speedway controlled city can do to local gas prices. Much of this data is from Gas Buddy, and the station data is taken directly from Speedway.com.

First, lets run down how many stations Speedway owns in each state. You’ll eventually see that the more stations Speedway owns, the larger the price spikes are in their respective areas. Instead of having a “stable” market where prices rise following rack prices, they can climb upwards of 30 cents.

According to Speedway.com, Speedway operates the following number of stores in their respective states:
44 in West Virginia, 73 in Wisconsin, 96 in Illinois, 136 in Kentucky, 228 in Indiana, 300 in Michigan, and 443 in Ohio, Speedway’s “home state”. They had 217 “SuperAmerica” locations in Minnesota that have since been sold. This will be very important to show you what relation prices have where Speedway has more stations. The time period I’ll be using for each chart is one month, this helps you to see clearly.

So, according to the data, the states with the most stations would be (in order from highest to lower) 443, 300, and 228. We’ll take a look at the three top states just because of the concentrated amounts of stations in certain cities.

Comparing these three states together, you’ll notice a VERY similar pattern. High spikes, a drop in prices, then another spike:

Now lets compare three cities in those states that have high concentrations of Speedway stations. For this, we’ll use Grand Rapids, MI, Indianapolis, IN, and Columbus, OH.

See a pattern here? In states that Speedway own a large share of the market, prices are quite active. Now, lets put in two cities that have the least amount of Speedway stations to see if their price charts are similar. For this, we’ll use Charleston, West Virginia, and Milwaukee, Wisconsin, and compare it to Cincinnati, Ohio:

As you can easily see, the lines are much different. The cities where Speedway doesn’t have as many stations are typically much less active- gas prices don’t take as big of a “roller coaster ride” as they do where Speedway dominates the market.

Again, lets do the same demonstration with two states that don’t have as many Speedway stations. Lets use Illinois and Wisconsin and benchmark it against Speedway dominated Michigan:

Notice the green line (representing Michigan) is like a roller coaster compared to the red and blue lines representing Illinois and Wisconsin, respectively. The blue and red lines are much smoother, meaning those states have slow gradual price hikes instead of a price “spike”.

The question is… would you rather have a gradual price increase or a sudden spike? If you want a gradual climb, then you should let Speedway know you’re sick of their price hike strategy!

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