Wal-Mart Contradicts Itself

The past couple weeks have seen plenty of stories describing ways in which Wal-Mart has mobilized to aid the Gulf Coast in preparation and relief efforts during hurricane season.

It seems, however, that even though the corporation was making efforts to lessen the blow of the storm, they still haven’t lost sight of the bottom-line.  In a story posted yesterday in The Examiner, Wal-Mart was accused of price-gouging gasoline at one of their stations along an evacuation route in Southeast Texas. The Wal-Mart/Murphy USA located on U.S. 69 in Lumberton raised their price of gasoline a total of 12 cents in the day leading up to the evacuation for Hurricane Gustav, then another 10 cents when the evacuation was announced. 

These prices were NOT consistent with other gas-stations in the area and following the storm, prices dropped again to reflect market prices. And despite a gas station manager claiming that prices went up because of a “gas price rise”, the cost of oil per barrel dropped over each of the three days. 

Evacuation Gas Game [The Examiner (Texas)]:

In the days and hours leading to the potential call for a mandatory evacuation for Southeast Texas residents the Texas Department of Transportation (TxDOT) blasted across its electronic billboard alert system that a hurricane was coming and residents needed to fill up their tanks with gasoline.

According to a local wholesale fuel provider, most everyone heeded TxDOT’s advice, but The Examiner also kept close watch on one gasoline retailer located along the main evacuation route from Southeast Texas.

The Wal-Mart/Murphy USA located on U.S. 69 in Lumberton decided that it would hike its gasoline prices 12 cents in less than 12 hours, and then an additional 10 cents on the day the call was made to get out of town.

At 10 p.m. Aug. 28, two days before emergency management officials considered evacuating Southeast Texas, the Wal-Mart/Murphy USA in Lumberton was selling regular gasoline for $3.37 a gallon. At 9 a.m. the next morning, the price had jumped to $3.49 a gallon.

When the woman working inside was asked why the price had jumped 12 cents in less than 12 hours, she replied, “because of the gas price rise.”

In Beaumont, just 20 minutes later, the price of regular gasoline at the Valero station on Old Dowlen Road at Highway 105 was $3.37 a gallon and the price for regular gasoline at Kroger on Dowlen Road was $3.36 a gallon, and $3.33 a gallon with the use of a Kroger Plus Card. Down the road, the HEB was selling regular gasoline for $3.39 a gallon.

“It is outrageous. This time a year ago gas was cheaper, but every time a storm comes they raise the price,” said Gwendolyn Wilson, who was buying gas at the Kroger on Dowlen Road.

While there is no federal law against price gouging, Texas does have laws in place that prevent what is termed “exorbitant pricing” of necessities during a declared disaster. The law is part of the Texas Deceptive Trade Practices Act. A complaint regarding the pricing of necessary goods during a disaster declaration is to be reported to the Texas attorney general’s office in Austin.

On Friday, when the Wal-Mart/Murphy USA in Lumberton increased their gas prices another 10 cents to $3.59 a gallon, the price of a barrel of oil had dropped nearly $3 in two days from $118.15 a barrel to $115.46 a barrel. With gasoline prices linked directly to the price of a barrel of oil, several customers questioned said that any validity that Wal-Mart/Murphy USA gave to claims that wholesale gas prices increased was “a joke.” The wholesale price of gasoline is a closely guarded secret within the industry and could not be obtained by The Examiner on the days in question.

Murphy USA, which has its own refineries to produce gasoline, contracts to sell fuel at Wal-Mart stores in the southern and mid-west sections of the U.S. It also offers a three-cent fuel rebate to customers who pay for gasoline with a Wal-Mart credit card or Wal-Mart gift card, except in states that forbid loss-leader promotions. The company reports to the U.S. Securities Exchange Commission that it averages about 200,000 gallons a month in fuel sales at each of its locations.

Additionally, the price of gas at Wal-Mart/Murphy USA stores in other parts of the state were lower than what it was in Southeast Texas. In Houston, the price was as much as 10 cents lower per gallon, according to Southeast Texans who evacuated in that direction rather than north. In Tyler, regular gasoline was five cents cheaper at the Wal-Mart/Murphy USA than it was in Southeast Texas.

Eddie Bates, who owns C&I Oil Company in Beaumont, said the demand for gasoline went up as much as 600 percent in Southeast Texas and the Gulf Coast leading up to the storm, but he didn’t see the reason for the sudden increase.

“There are a lot of factors that go into the price of gasoline at the pump, and it is very difficult to defend Wal-Mart, and I am not going to,” Bates said. “There are two types of gasoline out there — branded and unbranded. And then there is Wal-Mart. They have their own scheme going on, and I am sure they use that as a loss-leader in some places to get people into the store. I sell Citgo gas, but it is not branded Citgo. Wal-Mart has their own arrangements with their suppliers and I am not sure what they are, though I would be willing to bet they are getting a volume discount. We did a study on Wal-Mart and they set up formulas and go to their suppliers and tell their suppliers how much they are going to pay for products based on what they calculate people are going to spend when they walk in the door, not just on gasoline but with everything they sell.”

The Lumberton Wal-Mart/Murphy USA also shuttered its doors and secured its pumps after most people had evacuated, leaving those who stayed behind without the ability to get gas with a credit card. That was not the case for other major gasoline retailers, which left their pumps on or kept stores open during the entire evacuation.

In fact, HEB was still selling regular gasoline for $3.49 a gallon while Wal-Mart/Murphy USA had closed its doors with gas prices advertised at $3.59 a gallon.

HEB’s decision to not only stay open but to keep its prices the same is part of their commitment to the communities they serve, said corporate spokesperson Cindy Garza.

“As soon as we got word that there was a strong possibility that the storm may head to Beaumont and Southeast Texas our primary concern was meeting the needs of our customers and our partners, which are our employees,” Garza said. “Making the decision to remain open and the decision to keep prices at the level they were was very important because we didn’t want to add to the extremely stressful situation that was already being placed upon people in your area. And, it wasn’t just a decision for Beaumont. We knew that there would also be people from Louisiana that might be passing through, and we wanted to lessen that stress for them, as well. Our commitment has always been to meeting the needs of those who depend on us and to giving back to the community. And keeping our pricing at the existing levels was of utmost importance to us, not only as a business but as a good corporate citizen.”

Adding insult to injury, when the Wal-Mart/Murphy USA reopened its Lumberton location after the evacuation order was lifted, it was selling gasoline for $3.44 a gallon — 15 cents cheaper than it did leading up to the evacuation. But the Wal-Mart/Murphy USA store located in Pasadena at 5204 Fairmont Parkway was selling regular gasoline for $3.31 a gallon on Tuesday. And, the Wal-Mart/Murphy USA store, in the upscale city of Katy, was selling regular gasoline for $3.34 a gallon.

A phone call to Wal-Mart corporate office in Bentonville, Ark., was referred to Murphy USA in El Dorado, Ark. A message left for Murphy USA spokesperson Katie Sandifer was not returned by press time, and an e-mail seeking comment on the price hike at the Lumberton location went unanswered.

Posted by Luke West on Tuesday, September 09, 2008

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