By Kaden Buss
Wawa is set to open a new gas station this year in the Lexington area, where drivers pay some of the highest prices in the region.
The Pennsylvania-based chain hopes to offer competitive fuel prices when it opens the new location sometime this summer, according to Wawa spokeswoman Alyson Mucha.
Gas in Lexington costs 33 cents more per gallon than in Raphine, 17 miles north, and 29 cents more than in Fairfield, 11 miles north, according to data from GasBuddy, a Dallas-based technology company whose popular app helps customers find cheap fuel. The average cost rises to nearly 50 cents more than in Roanoke and 41 cents in Staunton.
Lexington residents say they feel price pains at the pump
Robert Foresman, a Lexington resident who works in Roanoke, said he fills up there weekly.
“It does save me over the course of a month, about $40 to $60,” Foresman said. “I commute every day, and, typically, what I see is gas anywhere from a 15 to 25 cent difference.”
Melissa Spangler, a single mother from Lexington, said she feels the pain at the pump.
“A $20 fill-up versus a $28 fill-up is bread, milk and a pack of hamburger for dinner,” Spangler said. “That’s a difference in my budget as a single mom. That’s a day’s worth of food for my family.”
In 2019, the Virginia state legislature approved a regional fuel tax along I-81 to fund highway improvements. The tax adds around 9 cents per gallon and applies to all I-81 stations between Bristol and Winchester, according to Morgan Dean, public affairs manager for AAA.
But the tax isn’t the reason why gas is more expensive in Lexington, according to Dean.
“Look at Roanoke,” Dean said. “Roanoke’s paying those I-81 gas taxes every time somebody puts a gallon of gas in their tanks. But Roanoke has some of the cheaper gas prices across the state of Virginia.”
There is no Lexington-specific tax on gas, Lexington City Manager Tom Carroll said in an email.
A Rockbridge Report analysis found that five of the area’s gas stations are Exxons. Three of those are owned by Jack Woodfin, a Richmond-based businessman, according to Jennifer Stevens, manager of the Lexington Exxon at 62 E. Midland Trail.
Woodfin did not respond to an email and phone message requesting comment.
Experts say competition drives up gas prices
Multiple experts pointed to Lexington’s lack of competition as the cause for its higher prices.
“Clearly there’s not a level of competition in Lexington that exists in some of the other markets,” said Patrick DeHaan, head of petroleum analysis at GasBuddy. “It doesn’t look like there’s a whole lot of diversity amongst stations, and as a result of that, the level of competition is probably reduced.”
Stevens, who has worked in Lexington for 15 years, agreed.
“We need more competition here, because there’s nothing,” Stevens said.
Stevens said 90% of her store’s business comes from locals, not interstate travelers like the stations alongside I-81 in Raphine and Fairfield. When it comes to setting prices, she said, her station follows competitors.
“Honestly, we just go off Sheetz,” she said. “We used to ride by each station and see what their prices were, report to the office, and they would tell us what to do.”
Foresman added that Lexington residents are used to the high prices.
“I think it’s something that a lot of people, especially who’ve lived here most of their life, have just accepted,” Foresman said. “It is frustrating, especially when you go to other localities up and down the I-81 corridor and it is a lot cheaper.”
Art Goldsmith, a Lexington resident and economics professor at Washington and Lee University, said Lexington’s gas market can be seen as an oligopoly, where a small number of stations control the market.
“It’s a small enough market with a small enough number of producers that they can see what each other’s doing,” Goldsmith said. “This is common sense, and it makes no sense. You would think, ‘Oh, maybe there’s a difference in taxes across municipalities.’ There’s no tax difference.”
price in the Lexington area. Photo by Kaden Buss
It’s unclear if Wawa will lower prices
DeHaan said stations in Lexington are content with keeping prices high.
“As you get to know your competition, you’ll get to know how aggressive they are,” DeHaan said. “It looks like everyone’s just kind of happy with the status quo.”
When Sheetz opened in June 2013, it initially drove gas prices down, according to the Rockbridge Report. Today, Sheetz charges $2.99 per gallon, one cent above the Lexington average.
Sheetz did not respond to emails requesting comment.
DeHaan said Wawa, like Sheetz in 2013, will likely lower prices initially.
“The one way they get people to their location to try them out, is the lowest price, and sometimes it’s crazy low,” DeHaan said. “Whether or not it’s going to be a long term, higher level of competition, it’s too early to tell.”
Goldsmith said Wawa might see an opportunity in Lexington’s market.
“It wouldn’t surprise me if Wawa comes in and they’re in the middle between the bottom, Staunton, and what it is in Lexington,” Goldsmith said. “There’s some low hanging fruit for them.”
But Spangler is skeptical about the prospect of getting long-term relief.
“I expect prices will be low for the ‘grand opening’ period, just like when Sheetz first came here and then within six months they went right back up,” Spangler said.
Whether or not Wawa brings prices down, the higher costs have a real impact.
“I think it’s a struggle, especially when you are on a limited income,” Foresman said. “It does cause problems, especially when the price is so much more here.”