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    The $1.99 Game

    C-store retailers in Alabama, South Dakota drive competition by going under $2.

    HARTSELLE, Ala. -- A Cowboys convenience store in Hartselle, Ala., dropped its gas prices Thursday to $1.99 per gallon for regular unleaded, The Decatur Daily reported.

    "Nobody else was willing to do it," said owner Mike Peebles. "I thought it was a nice thing to do for Mother's Day."

    Peebles had employees set the pumps at $1.99 for regular, $2.09 for midgrade and $2.19 for premium. He said costs could change, but he would sell it below $2 as long as he could.

    Peebles said the stations around him would change their prices to match his. About 10 minutes later, The Daily learned that nearby Jonathan's I-65 Shell and Tankersley's Chevron posted $1.99 prices on their signs.

    Peebles said he was making a little money even though he dropped his prices.

    "The price for crude oil dropped below $50 a barrel, and that dropped our price tremendously," Peebles said. "You can tell what gas prices are going to do -- or should do -- by watching oil prices."

    Jonathan Arndt, owner of Jonathan's I-65 Shell, said he matches prices with his neighboring station, Tankersley's Chevron. Tankersley matches Cowboys, Arndt said, but owner Joe Tankersley was not in to confirm that. If this is the case, Peebles is effectively setting the price.

    Alabama has a law that prevents gasoline retailers from selling their product below cost. This, according to lawmakers, keeps corporations from running independent owners out of business, limiting competition.

    Peebles said he's not selling below cost, but he said the Morgan County district attorney's office does not worry itself with the matter and lacks the manpower to enforce the law.

    Meanwhile, in Sioux Falls, S.D., R&M Convenience Store issued a challenge to local competitors by dropping prices first to $1.96 per gallon and then to $1.91, according to Keloland-TV.

    Cashier Jim Bees said, "You look at all the chains around Sioux Falls. We want to see what we're doing as the little guy and ask them, why can't they do the same?"

    R&M said its marketing strategy is already paying off. Bees said, "I can list off five or six different stations we have seen that this has impacted them to the point of they've dropped their prices as well."

    R&M doesn't want to predict how low prices will go. But this independent dealer is confident that even a "little guy" in the in market can have a big impact on the price of gas in Sioux Falls.

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