Why It Pays to Live in Scioto County Anyway!

by Francesca Hartop
francescayost@gmail.com

Note: This commentary is in response to a recent editorial titled "It Don't Pay to Live in a Poor County."

As has been pointed out for a while, some things cost more in Portsmouth than they do in Columbus. A favorite target is gasoline prices, but recently even coupon value discrepancies between the Columbus and Portsmouth newspapers have been discussed. I don't disagree that the prices are often different. But you know what? In the end it doesn't really matter much. Why not, you ask?

(1) There is no conspiracy to punish small towns and non-metropolitan residents. The ultimate price of gasoline is set by the individual gas station owners. The refineries set their gas prices based upon several factors, but none have to do with "metropolitan" versus "rural" buyers. What plays into final gasoline prices that we pay? Lots of things of course, but here are some things to think about.

(a) Volume of gasoline business. As in any business, the more you buy, the better chance you have at a discount. For gas stations, the more they buy at once (i.e. the larger their underground pumps), the less they pay in filling/delivery fees per gallon. For example, suppose the delivery and fueling charge is a flat $800 regardless of how much gas you buy. The stations that can buy a full tanker truck will have a lower delivery cost per gallon than the smaller stations because it is averaged over more gallons.

(b) Volume of convenience store business. Ultimately, gas stations have to make enough money to pay their employees, utility bills, property taxes, repair bills, etc. For small stations in small towns, a 3% profit margin probably won't do that. They have to charge more to stay in business, because 3% of their sales won't cover their overhead. Small stores also don't do enough business in carry-out items to subsidize the cost of gas like some stations do in large cities where there is fierce competition between stations, and where the 3% is of a much larger total sales volume, so they can more easily cover their overhead.

(c) Business-related investments of gas station owners. Many gas station owners, especially those who own many stations, buy and trade gasoline options on the stock market as a hedge against gas prices. Being able to offset losses or reduce prices to remain "lowest price in town" is becoming a more common strategy of station owners. But how many small town independent gas station owners do you think have both the capital and stomach for investing in options? If they guess wrong, they could be out of business almost overnight. And do small towns want their few gas stations taking this risk? If a couple of gas stations close in Columbus due to a bad investment, this is not a big impact. If a couple of gas stations close in Portsmouth, this is critical.

(d) And finally, we have to ask whether or not the difference is even particularly significant. We have traveled to many areas with much higher prices, both in-state and out-of-state. Our gas prices are not that much higher here, and sometimes they are even lower. Even when they are higher than Columbus, most of us drive a lot fewer miles than people who work in Columbus and live in the outlying residential areas. If gas costs me 10% more, but I drive 30% less, I'm still ahead of the game.

(2) When coupon manufacturers decide how much of a coupon to offer, they look at cost versus return, just like any advertising decision. In other words, how much does it cost to run the coupons versus how much new business do they expect to garner? For smaller cities, with smaller newspaper readership, it might cost more to reach each person who will actually use the coupon. So the coupon value is lower, reflecting their higher costs. Or maybe they know that they don't have to offer as much to get new buyers in Portsmouth. There are reasons for the discrepancies that have nothing to do with "we don't like little cities" so we shouldn't turn this into something it's not. It's not "Corporate America hating small towns." They want sales, and they don't care where those sales are.

(3) People in Columbus still have a MUCH higher cost of living than we do in Portsmouth. Heck, maybe they need the coupons more than we do! The median home price in Portsmouth is $63,400 while in Columbus they will pay $116,200.

So let's get back to what matters. I'm really happy here. My quality of life is much better than when I lived in large cities, and I can afford a lot more house than I did before. There are downsides to living in smaller cities, of course, like less job mobility. But there are a lot of upsides as well (and anyone who thinks Portsmouth is dirty or run-down should visit Columbus or Los Angeles and take a good look around!). So my advice is that before worrying about the little things, take a look at the big picture. If you really think you'd be happier in Columbus, it's only a short move. For some of us, we're quite content right here. I've lived in large, medium and small cities across the U.S., and I can honestly say, there's nowhere that I'd rather be.

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Views and opinions expressed are not necessarily that of the staff and management of DawgByte Productions and RiverCities Ezine.

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