Gas prices spike... Again

University of Cincinnati economist Gary Painter weighed in on how gas stations use promotions during oil price spikes to retain loyal customers.

“Each company is going to be thinking about a strategy to minimize the pain to their consumer base, but at the same time not lower their profit margin because we are so thin to begin with,” said Painter, professor and academic director of the Lindner College of Business’s Real Estate Center. 

He explained how gas stations have to decide how much of the higher oil costs pass along to customers at the pump, making calculated risks in launching promotions. 

“They’re willing to take at least a 30 to 35 percent hit on every gallon of gas they’re buying because they want to signal to their consumers that they care about them,” Painter said. "What they're hoping to do is retain brand loyalty."

The goal for these companies is to give customers a reason to return even after the promotion ends. 

See the full Spectrum News report. 

Featured image at top of a person refueling a car. Photo/Unsplash