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    North Carolina Fuel Price Wars Heat Up

    Neighborhood's ultra low prices prompt angry questions against Salisbury retailer who insists he's not gouging.

    SALISBURY POST, N.C. -- With the price of gas soaring in Salisbury Post, N.C. and neighboring counties, convenience store retailer Terry Hill is being forced to defend his pricing strategy. "In a year's time, 80 percent of the gas I sell, I break even or lose money on it," said Hill, the owner and operator of Hill's Minnow Farm.

    "I don't want people to think we're making a killing on gas because we're not. The storeowner is the last person who wants the price of gas to go up. That's what brings people in."

    After the Salisbury (N.C.) Post published an informal survey of area gasoline prices, Hill was found to have one of the highest prices in the market. He said he was worried that customers may think local service station and convenience store operators are gouging drivers on the price of gas. That's anything but true, Hill said.

    Based on the Post's survey and reader calls, the lowest gas price in the area is available at the Wilco-Hess in Kannapolis and Petro Express in Concord, N.C., where a gallon of regular unleaded sold for $1.249 this morning. By comparison, the cheapest price observed in Rowan County was $1.379 per gallon. Yesterday, the report said, a gallon of regular sold for $1.479 at Hill's Minnow Farm. And Hill said that even at that price, he's lucky to break even.

    He presented an invoice from his supplier, Mid-State Petroleum, showing he paid almost $1.44 a gallon for his gasoline. Factor in rental payments for the pumps and electricity and Hill figures he's probably losing money on every gallon he sells. Gas sales that customers charge to credit cards are even more of a losing proposition, Hill said, because he's required to pay card companies 2.5 percent of every sale. "When the price of gas goes up, I really take a beating," Hill said. "I hold my prices down as long as I can. I don't want to be the first to raise my prices."

    Hill said the price he pays for a gallon of gas has risen dramatically since the end of May when he was paying $1.30 for a gallon of regular. He said he's had numerous customers complain about the price of gasoline. They remind him that fuel can be had cheaper in Cabarrus County.

    Hill said places like Petro Express and Wilco are engaged in price wars with neighboring stations and are pricing gas low to attract customers to buy other more expensive products.

    "It's making us look bad," Hill said of Rowan County merchants who charge more. "I put gas in for a convenience for my customers. If people don't support us, why bother? I hate to see Rowan County lose the business. We need it."

    Jerry Rose, vice president of finance for Mid-State Petroleum, Hill's supplier, agreed that any station operator who is selling gas for less than $1.30 a gallon is losing money. "Competition sometimes drives those prices down," he said. "They're trying to get customers in the door to buy other products."

    Rose also agreed with Hill that service station and convenience store operators are doing anything but getting rich off the sale of gas.

    "The profit margin is very slim," Rose said. "We sell it to our customers at a very slim markup, and they sell it to their customers at a very slim markup. They certainly don't make 8 cents a gallon or anything like that on it."

    Tom Crosby, a spokesman for AAA Carolinas, said instances like those in Kannapolis where dealers sell gas at a loss are rare but not unheard of. "It's just an old-fashioned gas price war," he said. "They're trying to lure customers in."

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